Question
From: (redacted)
Sent: Friday, October 09, 2009 2:57 PM
To: Verne, B. Michael
Subject: Reportability Question -Merger of Non-Stock Corporations
Michael,
I write to describea fact situation that I would like to discuss with you at your convenience. Thefacts are somewhat similar to a 2008 transaction on which I was co-counsel with(redacted) and which he discussed with you at that time.
The 2008 discussionconcerned the treatment of a statutory merger of two nonprofit, non-stockcorporations (e.g., Y into X). I believe your advice at the time was that themerger itself would be considered neither an acquisition of voting securities(i.e., because there are none) nor an acquisition of the assets of Y by X, andtherefore not reportable. However, if Y had holdings of other entities, X wouldbe deemed to acquire those holdings and, if the size-of-transaction thresholdwere exceeded (and assuming the size-of-person tests were met), the acquisitionof Y's holdings by X would be reportable.
My instant questionconcerns the following variation on those facts.
A, the acquiring person, is anonprofit, non-stock corporation
BP is the parent holding company,and is a nonprofit non-stock corporation.
B1, B2, and B3 are eachnonprofit, non-stock corporations of which BP is the sole member.
B4 is a business corporation withvoting securities, of which BP is the sole shareholder.
In the transactionas contemplated, the following will occur.
Prior to the closing, the assetsof B3 will be transferred to B1, and B3 will be dissolved.
All of the outstanding stock ofB4 will be transferred to a person within A.
Each of BP, B1, and B2 will mergewith and into A (or into a nonprofit, non-stock person within A) through astatutory merger.
If any initialpremise above concerning the 2008 discussion is correct, it would seem that theonly potentially reportable aspect of the transaction would be A's acquisitionof the stock ofB4 (but which, in this case, would not have fair market value inexcess of the size-of-transaction threshold).
That is thequestion I would like to discuss and in particular to make sure (if the premiseis correct) that the separate mergers of the various corporations does notchange the analysis. I would note that the structure of the transaction wasdetermined for business reasons and not based on any consideration of reportingrequirements.