802.35—Acquisitions by employee trusts.
An acquisition of voting securities shall be exempt from the notification requirements of the act if:
(a)
The securities are acquired by a trust that meets the qualifications of section 401 of the Internal Revenue Code;
(b)
The trust is controlled by a person that employs the beneficiaries and,
(c)
The voting securities acquired are those of that person or an entity within that person.
Code of Federal Regulations
Examples:
1. Company A establishes a trust for its employees that meets the qualifications of section 401 of the Internal Revenue Code. Company A has the power to designate the trustee of the trust. That trust then acquires 30% of the voting securities of Company A for in excess of $50 million (as adjusted). Later, the trust acquires 20% of the stock of Company B, a wholly-owned subsidiary of Company A, for in excess of $50 million (as adjusted). Neither acquisition is reportable.
2. Assume that in the example above, “A” has total assets of $100 million (as adjusted). “C” also has total assets of $100 million (as adjusted) and is not controlled by Company A. The trust controlled by Company A plans to acquire 40 percent of the voting securities of Company C for in excess of $50 million (as adjusted). Since Company C is not included within “A,” “A” must observe the requirements of the act before the trust makes the acquisition of Company C's shares.
Code of Federal Regulations
[52 FR 7082, Mar. 6, 1987, as amended at 66 FR 8694, Feb. 1, 2001; 70 FR 4995, Jan. 31, 2005]