Question
May 27, 1994
Richard B. Smith
Bureau of Competition
Federal Trade Commission
Room 323
6th Street & Pa. Ave., N.W.
Washington, D.C. 20580
Dear Mr. Smith:
I am writing to confirm our recent conversations regarding the appropriate manner in which to handle Hart-Scott-Rodino filing with respect to a particular transaction involving tow existing non-profit corporations, described here as corporation A and corporation B. As we discussed, both A and B are non-profit, non-stock corporations. A new corporation X will be established. Through enactment of bylaw provisions, X will become the sole corporate member of both A and B. It will also have certain reserved powers over the operations of A and B, such as the power to control incurrence of debt, approve strategic plans, adopt marketing and business strategies, and direct asset transfers. Both A and B will have the right to make a specified number of nominations of individuals to serve on the board of X, but Xs board will have the power to approve all appointments to Xs board. X will also elect directors to the boards of A and B. X could reject nominees made by the A and B boards, until nominees from A or B were made who would be approved by Xs board.
You advised me the FTC Premerger Office position with respect to such a situation is that Hart-Scott-Rodino filing should be handled by identifying either A or B as the acquiring person, and identifying the other as the acquired person. You indicated that either A or B could be identified as the acquiring person . The designated acquiring person should file in that status, along with the $25, 000 filing fee. The designated acquired person should file in that status. No filing should be made by X itself. You further indicated that the filing should be treated as an assets acquisition for reporting purposes.
You indicated that the same approach as outlined above would apply would a third non-profit, non-stock company, corporation C also be included in the arrangement in the same manner as A and B. Again, either A, B or C would be identified as the acquiring person and the other two would be identified as acquired persons. X would not file. One filing fee would be paid.
I appreciate your cooperation in my inquiries. If I have in any way misstated the substance of our discussions, please let me know as soon as possible.
Sincerely,
(redacted)