Framatome Connectors USA, Inc. - Page 22




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               2.   Whether Burndy-US Owned More Than 50 Percent of the               
                    Total Combined Voting Power of the Stock of Burndy-               
                    Japan                                                             
               Petitioners contend that Burndy-US owned more than 50                  
          percent of the total combined voting power of Burndy-Japan                  
          because Burndy-US owned 50 percent of the stock of Burndy-Japan             
          and, according to petitioners, had the following powers:                    
          (a) Burndy-US could select Burndy-Japan’s board of directors and            
          president and control the board’s tie-breaking vote; (b) Burndy-            
          US could dissolve Burndy-Japan; and (c) Burndy-US had management            
          control of Burndy-Japan.  Petitioners point out that neither                
          Furukawa nor Sumitomo exercised the veto powers created by the              
          1973 agreement and contend that Burndy-US paid Furukawa and                 
          Sumitomo a control premium in 1973 when Burndy-US obtained 50               
          percent of the stock of Burndy-Japan.                                       
                    a.   Petitioners May Not Rely on the Doctrine of                  
                         Substance Over Form                                          
               In 1973, Burndy-US, Sumitomo and Furukawa changed the                  
          structure of their ownership of Burndy-Japan so that Burndy-US              
          would own 50 percent of the stock of Burndy-Japan and the two               
          other Japanese companies would each own 25 percent.  It is clear            
          that this change did not give Burndy-US more than 50 percent of             
          the voting power of Burndy-Japan if “voting power” refers to the            
          shareholders’ percentage of stock ownership.  Nonetheless,                  
          petitioners now contend that Burndy-US owned more than 50 percent           
          of the voting power of Burndy-Japan.                                        





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Last modified: May 25, 2011