ERISA issues

[fidu]

Through Limited partnership fund, Corporation A investment manager is about to purchase additional shares in a company that would result will own a majority (about 60%) of Company B. Does owning a majority of a company have any

accounting consequences for the Fund?

any ERISA issues????

[fidu]

i realize this purchase would create additional party in interest rules, but am unaware of other ERISA issues involved with the additional control over the second (smaller) company.

Thanks in advance.

[Ron Snyder]

An ERISA analysis would raise the following questions:

Is the ltd partnership simply an indirect route? It is likely that It would be viewed as such.

Is the company to be acquired related in any way to any fiduciary or party in interest?

Does Company B do business with the plan sponsor, any other fiduciary or party in interest?

Is the balance of the ownership of Company B owned publicly or privately held?

Is the purchase of the stock purchase prudent? Is purchasing through the LP prudent?

Who is the General Partner? Does the GP have any relationship with a fiduciary, party in interest or Companys A or B?

It does not appear that the acquisition would have accounting consequences other than disclosure if the plan is audited.

[fidu]

Thanks VEBAGURU:

can you offer a bit of clarification on the potential issues you outline. I have taken a stab at what i think you are referring to in each, but would greatly appreciate if you would confirm, deny, or add any additional relevant details.

Is the ltd partnership simply an indirect route? It is likely that It would be viewed as such. (is this a 13G reporting issue you are raising??)

Is the company to be acquired related in any way to any fiduciary or party in interest? (QPAM issues under 84-14 to facilitate any biz btw the two?)

Does Company B do business with the plan sponsor, any other fiduciary or party in interest? (party in interest issue in general??)

Is the balance of the ownership of Company B owned publicly or privately held? (not sure where you are going here!! )

Is the purchase of the stock purchase prudent? Is purchasing through the LP prudent? (diversification and prudent man, investor rule under ERISA 404 A(1)© i presume)

Who is the General Partner? Does the GP have any relationship with a fiduciary, party in interest or Companys A or B? (affiliate and party in interest issues?)

It does not appear that the acquisition would have accounting consequences other than disclosure if the plan is audited. (non erisa issues that create accounting concerns or reporting requirements)

thanks again

[Ron Snyder]

Q. is this a 13G reporting issue you are raising??

A. Looking for indirect PT

Q. QPAM issues under 84-14 to facilitate any biz btw the two?

A. Don't know what you mean here. Not RP 84-14. Not RR 84-14. Not PLR 84-14. Not Notice 84-14. Not Announcement 84-14.

Q. party in interest issue in general??

A. PT issue.

Q. not sure where you are going here!!

A. Looking at prudence requirement.

Q. diversification and prudent man, investor rule under ERISA 404 A(1)© i presume

A. Right

Q. affiliate and party in interest issues?

A. Yes, for PT analysis.

Q. non erisa issues that create accounting concerns or reporting requirements

A. Not that I'm aware of, although I suspect that control would require disclosure on audit. However, since A & B are not a controlled group, consolidation would not be required.

[fidu]

VEBAGURU - thanks once again.

84-14 was a reference tp the QPAM PTE.