[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: 16CFR802.64]

[Page 613-614]
 
                     TITLE 16--COMMERCIAL PRACTICES
 
                   CHAPTER I--FEDERAL TRADE COMMISSION
 
PART 802_EXEMPTION RULES--Table of Contents
 
Sec. 802.64  Acquisitions of voting securities by certain institutional 
investors.

    (a) Institutional investor. For purposes of this section, the term 
institutional investor means any entity of the following type:
    (1) A bank within the meaning of 15 U.S.C. 80b-2(a)(2);
    (2) Savings bank;
    (3) Savings and loan or building and loan company or association;
    (4) Trust company;
    (5) Insurance company;
    (6) Investment company registered with the U.S. Securities and 
Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 
80a-1 et seq.);
    (7) Finance company;
    (8) Broker-dealer within the meaning of 15 U.S.C. 78c(a)(4) or 
(a)(5);
    (9) Small Business Investment Company or Minority Enterprise Small 
Business Investment Company regulated by the U.S. Small Business 
Administration pursuant to 15 U.S.C. 662;
    (10) A stock bonus, pension, or profit-sharing trust qualified under 
section 401 of the Internal Revenue Code;
    (11) Bank holding company within the meaning of 12 U.S.C. 1841;
    (12) An entity which is controlled directly or indirectly by an 
institutional investor and the activities of which are in the ordinary 
course of business of the institutional investor;
    (13) An entity which may supply incidental services to entities 
which it controls directly or indirectly but which performs no operating 
functions, and which is otherwise engaged only in holding controlling 
interests in institutional investors; or
    (14) A nonprofit entity within the meaning of sections 501(c) (1) 
through (4), (6) through (15), (17) through (20), or (d) of the Internal 
Revenue Code.
    (b) Exemption. An acquisition of voting securities shall be exempt 
from the requirements of the act, except as provided in paragraph (c) of 
this section, if:
    (1) Made directly by an institutional investor;
    (2) Made in the ordinary course of business;
    (3) Made solely for the purpose of investment; and
    (4) As a result of the acquisition the acquiring person would hold 
fifteen percent or less of the outstanding voting securities of the 
issuer.
    (c) Exception to exemption. Notwithstanding paragraph (b) of this 
section:
    (1) No acquisition of voting securities of an institutional investor 
of the same type as any entity included within the acquiring person 
shall be exempt under this section; and
    (2) No acquisition by an institutional investor shall be exempt 
under this section if any entity included within the acquiring person 
which is not an institutional investor holds any voting securities of 
the issuer whose voting securities are to be acquired.

    Examples: 1. Assume that A and its subsidiary, B, are both 
institutional investors as defined in paragraph (a) of this section, 
that X is not, and that the conditions set forth in paragraphs (b)(2), 
(3) and (4) of this section are satisfied. Either A or B may acquire 
voting securities of X worth in excess of $50 million as long as the 
aggregate amount held by person ``A'' as a result of the acquisition 
does not exceed 15 percent of X's outstanding voting securities. If the 
aggregate holdings would exceed 15 percent, ``A'' may acquire no more 
than $50 million worth of voting securities without being subject to the 
requirements of the act.

[[Page 614]]

    2. In example 1, assume that B plans to make the acquisition, but 
that corporation B's parent, corporation A, is not an institutional 
investor and is engaged in manufacturing. Subparagraph (c)(2) provides 
that acquisitions by B can never be exempt under this section if A owns 
any amount of X's voting securities.
    3. In example 1, the exemption does not apply if X is also an 
institutional investor of the same type as either A or B.
    4. Assume that H is a holding company which controls a life 
insurance company, a casualty insurer and a finance company. The life 
insurance company controls a data processing company which performs 
services for the two insurers. Any acquisition by any of these entities 
could qualify for exemption under this section.
    5. In example 4, if H also controls a manufacturing entity, H is not 
an institutional investor, and only the acquisitions made by the two 
insurance companies, the finance company and the data processing company 
can qualify for the exemption under this section.

[43 FR 33544, July 31, 1978, as amended at 66 FR 8694, Feb. 1, 2001]