Skip to main content
Date
Rule
802.35
Staff
Kristin Shaffer
Response/Comments

We agree that this is exempt.

Question

From: Shaffer, Kristin <kshaffer@ftc.gov>
Sent: Tuesday, November 9, 2021 3:50:29 PM (UTC-05:00) Eastern Time (US & Canada)
To: [Redacted]
Cc: HSRHelp <HSRHelp@ftc.gov>
Subject: RE: 802.35

[Redacted]

We agree that this is exempt.


Best regards,

Kristin

From: [Redacted]
Sent: Monday, November 8, 2021 1:44 PM
To: HSRHelp <HSRHelp@ftc.gov>
Subject: 802.35

Dear PNO:

I have a question about 802.35. The Company is an LLC, and the managers would like to establish an ESOP for its employees. To do so, they must convert the LLC into a stock company. It is disadvantageous from a tax perspective to do so directly, so they propose creating an S corp and a merger sub wholly owned by the S corp, have the ESOP acquire the S corp and then merge the LLC into the merger sub. The merger sub would be an entity within the ESOP when it acquires the LLC. The ESOP is a trust that meets the qualifications of Section 401 of the IRC. The ESOP is controlled by the LLC. And the S corp will have less than $10 million in cash when it acquires the LLC.

Does this transaction qualify for the exemption under 802.35? 

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.

Learn more about Informal Interpretations.