USA Law and Practice Contributed by: Bradley Justus, Lisl Dunlop, Josh Jowdy and Sandhya Taneja, Axinn, Veltrop & Harkrider LLP
3. Procedure: Notification to Clearance 3.1 Deadlines for Notification
may close the transaction. There is no formal notification of clearance. In cash tender offers and certain bankruptcy transactions, the wait - ing period is shortened to 15 days. The waiting period extends to the next business day when a waiting period expires over a weekend or on a federal public holiday. 2.13 Penalties for the Implementation of a Transaction Before Clearance Parties that close a transaction or transfer ben - eficial ownership prior to the expiration or ter - mination of the waiting period (conduct com - monly referred to as “gun-jumping”) are subject to civil penalties of up to USD53,088 per day. Although in the majority of cases the Agencies have imposed penalties substantially less than the maximum permitted by law, gun-jumping fines commonly range in the hundreds of thou - sands, if not millions, of dollars. See 2.2 Failure to Notify . 2.14 Exceptions to Suspensive Effect There are no exceptions to the waiting require - ment of the HSR Act. Parties to all reportable transactions must observe the applicable wait - ing period prior to consummation. 2.15 Circumstances Where Implementation Before Clearance Is Permitted Under no circumstances will the Agencies permit closing before expiration or early termination of the applicable waiting period. Carve-outs, ring fencing or hold-separate agreements are not permitted. Premature closing may subject the parties to civil penalties of up to USD53,088 per day of non-compliance and potential additional equitable relief.
There are no deadlines for making HSR filings; under current rules, parties can submit HSR fil - ings at any time after executing a transaction agreement or sufficiently detailed term sheet. See 3.2 Type of Agreement Required Prior to Notification . Once the waiting period ends, the parties have one year to close the transaction before a new filing is needed. In the case of an acquisition of less than a controlling interest in a corporation, the Acquiring Person has one year to meet or cross the notification threshold (based on size- of-transaction) it reported on its filed HSR Form. Once the reported threshold is met or crossed, for four more years, the Acquiring Person may acquire further voting securities from the same Acquired Person without further HSR filing as long as the sum of the initial and further acquisi - tions does not cross the next, higher HSR noti - fication threshold. 3.2 Type of Agreement Required Prior to Notification A signed agreement, such as a detailed term sheet, merger agreement, or purchase and sale agreement, typically must be submitted with each HSR filing, with the exception of certain types of transactions, such as tender offers, secondary acquisitions and certain bankruptcy transactions. Agreements need not be formal or binding, but parties must attest to a good faith intention to complete the transaction. Prior to the HSR revisions that became effective on 10 February 2025, parties were permitted to file an HSR filing on the basis of a simple letter of intent. Following the HSR revisions, parties
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