Framatome Connectors USA, Inc. - Page 27




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               In any event, for the purposes of completeness, we consider            
          petitioners’ contention on the merits.  We conclude that the                
          outcome is the same because, as discussed next, Burndy-Japan was            
          not a CFC of Burndy-US in either form or substance.                         
                    b.   Power of Any Burndy-Japan Shareholder To Block               
                         Various Actions by Burndy-Japan                              
               The articles of incorporation require a vote of shareholders           
          holding more than 80 percent of the stock to:  (1) Amend the                
          articles of incorporation; (2) elect directors and auditors;                
          (3) change capital; (4) assign the entire or an essential part of           
          the business of the company; (5) entrust a third party with                 
          management; (6) dispose of profits; (7) acquire or dispose of               
          shares of other companies; and (8) make or alter license                    
          agreements.  Under the 1973 basic agreement, Burndy-US, Furukawa,           
          and Sumitomo each had the power to veto six important categories            
          of decisions by Burndy-Japan:  (1) Changes in capital; (2)                  
          changes in license agreements; (3) acquisition or sale of shares            
          in other companies; (4) payment of dividends; (5) transfer of a             
          major part of the business; and (6) entrusting management to a              
          third party.                                                                
               The six veto powers and the 80-percent supermajority                   
          requirements permitted either Furukawa or Sumitomo to block a               
          wide range of important actions by Burndy-Japan.  We believe the            
          veto powers and supermajority requirements were among the factors           
          that prevented Burndy-US from controlling Burndy-Japan in 1992.             





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