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Date

Tags:

Rule
801.11
Staff
Kristin Shaffer
Response/Comments

Yes, that is correct.

Question

From: Shaffer, Kristin


Sent: Tuesday, September 11, 2018 9:34:27 AM (UTC-05:00) Eastern Time (US & Canada)


To: [Redacted]


Cc: [Redacted]


Subject: RE: Size of Person Test

Yes, that is correct.

Best regards,

Kristin

 

From: [Redacted]


Sent: Monday, September 10, 2018 7:02 PM


To: [Redacted]


Subject: Size of Person Test

Hi folks.

I have a question about the size of person test and would appreciate your guidance.

Company Y is acquiring certain voting shares of Company X and we are assessing whether the HSR size of person test would be satisfied. If Company X’s UPE has less than $16.9 million in total assets, the size of person test would not be satisfied because Company X (including its UPE) is not engaged in manufacturing and had less than $168.8 million in annual net sales in its most recent year.

Mr. A holds 49.5% of the voting shares of Company X under 16 C.F.R. Section 801.12 and also holds an irrevocable proxy to vote Mr. B’s shares of Company X. Because of the irrevocable proxy, Mr. A is the UPE of Company X because he has the power to vote over 50% of the Company’s voting shares for directors.

When Mr. A is assessing whether he has at least $16.9 million in total assets, may he disregard the value of his 49.5% interests in Company X (whether such interests are recorded on his regularly prepared balance sheet or whether he has to create a pro forma balance sheet) because he will have to include 100% of the assets of Company X with his other qualifying assets?

Thanks for you help.

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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