0707020 Informal Interpretation

From: (redacted)

Sent: Tuesday, July 24, 2007 3:58 PM

To: Verne,B. Michael

Subject: Veto Over Appointment of Directors (NegativeControl)

Mike,

Corporation X has two classes ofshares -- A (voting) and B (non-voting, but convertible into voting). Holdersof B shares have an absolute veto over the directors selected by A. Does aholder of 100% of the B shares control Corporation X for HSR purposes?

I believe the answer is "no" for the followingreasons:

1.Theholder of the B shares does not have the right to designate anyone. Thedefinition of control references a right "presently to designate".All B can do is veto those designated by others.

2.Ifthe by-laws of a corporation required a 2/3rds super-majority vote for theelection of directors, a shareholder with 34% of the voting shares would have ade facto absolute veto over the appointment of the directors. Such "defacto" control has not been viewed as conferring control (see InformalStaff Opinion 0404018). There does not appear to be reason to treat an explicitveto right any differently.

As always, I am grateful for yourguidance.

Regards,