Question
From: (redacted)
Sent: Monday, April 30, 2007 3:07 PM
To: Verne, B. Michael
Cc: (redacted)
Subject: Question about"investment only" exemption
Mike
We had a question whether thefollowing situation qualifies for an exemption from filing. It deals with the"investment only" exemption.
There is a corporate reorganizationof a Bermuda company. As a result, one U.S. shareholder will obtain more than10% of the shares that carry voting rights. However, under the by-laws of the Bermuda company, a U.S. shareholder can NEVER exercisevoting rights that amount to more than 9.8% of the company's total votingrights. This by-law is, apparently, triggered by the tax-free status of Bermuda reinsurers and for that reason isunlikely ever to change.
The result is that this shareholderwill never be able to vote more than 9.8% of the outstanding voting shares. Hesimply will never be able trigger the corporate control or influence concernsthat were behind the 10%+ provision. He is not involved in management andtherefore qualifies for the investment exemption on every other ground.
Since, as a matter of fact and law,he is a shareholder with a maximum of 9.8% in voting rights, it seems that heshould be exempt from an HSR filing requirement.
We spoke with James (Ferkingstad) whothought this sounded right but asked us to verify with you. We would appreciateyour guidance.