Markets Wired

The Federal Trade Commission, with the concurrence of the Antitrust Division of the U.S. Department of Justice, has published in the Federal Register proposed amendments that clarify whether a transaction is exempt from premerger notification under the Hart-Scott-Rodino Act because the entity involved is foreign.

Determining whether an entity is a foreign person or issuer is often a necessary first step in analyzing whether the entity must file premerger notification or is exempt from those filing requirements. Under the current Hart-Scott-Rodino Rules, the determination often relies on the location of the entity’s “principal offices,” a term that has not previously been defined in the Rules.

Under the proposed amendments to the Rules, an entity’s “principal offices” will be determined by the primary location of its executives and assets. Under the proposed definition, an entity’s principal offices are in the United States if:

• 50 percent or more of the officers reside in the United States;
• 50 percent or more of the directors reside in the United States; or
• 50 percent or more of the company’s assets are located in the United States.

By simplifying the definitions of “foreign person” and “foreign issuer,” the amended rules will more accurately identify and exclude from the filing requirements those transactions that have a limited nexus with the United States.

A notice in the Federal Register provides more information.

The Commission vote to approve the amendments to the Hart-Scott-Rodino Rules was 5-0. (FTC File No P989316; the staff contact is Robert L. Jones, 202-326-2740.)

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