USA Law and Practice Contributed by: Bradley Justus, Lisl Dunlop, Josh Jowdy and Sandhya Taneja, Axinn
2.4 Definition of “Control” . Restructurings or reorgan - isations in which the ultimate parent entity does not change generally do not require an HSR filing. Entity Formation HSR notification is required for the formation of cer - tain types of joint ventures. The formation of corpo - rate joint ventures is treated under the HSR Rules as acquisitions of voting securities of the venture by the venturers. The formation of non-corporate joint ventures requires HSR notification only when one of the parties will “control” the new venture. See 2.10 Joint Ventures . 2.4 Definition of “Control” “Control” is defined under the HSR Act as either: • holding 50% or more of the outstanding voting securities of an issuer or, for an unincorporated entity, having the right to 50% or more of the entity’s profits or, upon dissolution, its assets; or • having the present contractual power to designate 50% or more of the directors of a corporation or of the trustees of certain trusts. An entity or individual that is not controlled by any other entity is considered the Ultimate Parent Entity (UPE). The relevant “persons” for HSR Act purposes are the UPE of the acquiring party, together with all entities it controls directly or indirectly (the “Acquiring Person”), and the UPE of the acquired party, together with all entities it controls directly or indirectly (the Minority acquisitions of corporate voting securities – even small percentages – may be reportable if they meet the HSR thresholds and no exemption applies. In contrast, acquisitions of interests in non-corporate entities (such as limited liability companies or partner - ships) are only reportable if the acquisitions confer control. 2.5 Jurisdictional Thresholds Three jurisdictional tests determine whether a transac - tion is within the scope of the HSR Act: “Acquired Person”). Minority Acquisitions
• the commerce test; • the “size-of-transaction” test; and • the “size-of-person” test.
HSR thresholds are adjusted annually based on changes in the US gross national product. The revised thresholds are typically announced by the FTC in January and take effect 30 days later. The following discussion is based on the thresholds in effect from
February 2026. Commerce Test
The commerce test is met if either party is engaged in commerce or any activity affecting commerce; there - fore, nearly all transactions will satisfy the commerce test. Size-of-Transaction Test The size-of-transaction test is met if, as a result of the transaction, the Acquiring Person will hold vot - ing securities, assets or non-corporate interests of the Acquired Person valued in excess of USD133.9 million. The size of the transaction includes the pre - sent value of any voting securities and non-corporate interests of the Acquired Person already held by the Acquiring Person. For asset acquisitions, the size of transaction includes the present value of any assets acquired from the Acquired Person within the previous 180 days and the present value of any assets of the Acquired Person to be acquired pursuant to a letter of intent executed in the preceding 180 days. Depend - ing on the transaction structure, valuing the size of a transaction can be complex. See 2.6 Calculations of Jurisdictional Thresholds . Size-of-Person Test The size-of-person test is applicable for transactions valued at more than USD133.9 million but not more than USD535.5 million. Transactions valued at more than USD535.5 million will be subject to HSR notifi - cation without regard to the size of the parties if no exceptions apply. In general, the size-of-person test is met if one of the persons involved in the transaction has USD267.8 million or more in annual net sales or total assets, and the other has USD26.8 million or more. If the acquired person is not engaged in manufacturing,
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