[Code of Federal Regulations]
[Title 16, Volume 1]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 16CFR802.35]

[Page 609-610]
 
                     TITLE 16--COMMERCIAL PRACTICES
 
                   CHAPTER I--FEDERAL TRADE COMMISSION
 
PART 802_EXEMPTION RULES--Table of Contents
 
Sec. 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.

    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

[[Page 610]]

the trustee of the trust. That trust then acquires 30% of the voting 
securities of Company A for $120 million. Later, the trust acquires 20% 
of the stock of Company B, a wholly-owned subsidiary of Company A, for 
$58 million. Neither acquisition is reportable.
    2. Assume that in the example above, ``A'' has total assets of $100 
million. ``C'' also has total assets of $100 million 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 $80 
million. 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.

[52 FR 7082, Mar. 6, 1987, as amended at 66 FR 8694, Feb. 1, 2001]