Ga. Comp. R. & Regs. R. 80-12-11-.03 - Lawful and Unlawful Acquisitions by a Company

(1) It shall be unlawful for:

(a) a holding company to acquire direct or indirect ownership or control of any voting shares of any MALPB, if, after such acquisition, such holding company will directly or indirectly own or control five (5) percent or more of the voting shares of such MALPB, or

(b) any company to become a holding company as a result of the acquisition or control of such MALPB,

unless the MALPB has been in existence and continuously operating as an MALPB for a period of three (3) years or more prior to the date of acquisition and the company has sought and obtained written approval from the Department prior to acquiring voting shares or the control of the MALPB.

(2) Notwithstanding the express provisions of Paragraph 1, a holding company is authorized to acquire or control an MALPB through formation or chartering of an MALPB in Georgia.

(3) The Department has the discretion to waive the three (3) year minimum age requirement set forth in Paragraph 1, if it has issued a written determination, prior to acquisition, that the waiver will not adversely impact the MALPB or the merchant acquiring industry. In making such a determination the Department will take into consideration competitive, financial, managerial, safety and soundness, compliance and other concerns.

(4) No holding company shall acquire control of any MALPB if it will result in the holding company having control of more than two (2) MALPBs in a five (5) year period. The Department has the discretion to waive this restriction, if it has issued a written determination, prior to acquisition, that the additional MALPB the holding company seeks to own or control is insolvent or in an unsafe or unsound condition to conduct business.

(5) Acquisitions of ownership or control of less than twenty-five (25) percent of any voting shares of a holding company that is a public company are not subject to the requirements of this Rule if:

(a) the company has acquired such voting shares solely for investment purposes and not with the purpose or the effect of changing or influencing the control of the holding company, nor in connection with or as a participant in any transaction having such purpose or effect, and provides written notice of the acquisition to the Department, in the form and manner prescribed by the Department, no later than thirty (30) days following the end of the quarter in which the acquisition occurred; or

(b) the company submits a written application to the Department seeking approval of the acquisition of the shares or control no later than thirty (30) days after (i) the acquisition has occurred, if the preceding paragraph (a) does not apply, (ii) the transaction was made under the preceding paragraph (a) but no longer qualifies under such paragraph as a result of the company's change of purpose such that the company's purpose is to change or influence control of the holding company either individually or in concert with others; or (iii) the Department determines that the company is seeking to change or influence control of the holding company either individually or in concert with others and informs the company of such determination; provided that, within thirty (30) days after receiving the company's application under this paragraph (b), the Department may disapprove in writing the acquisition of shares or control, in which case the Department may require the company to unwind the acquisition, take other appropriate action to limit or otherwise restrict the ability of the company to exercise control over the holding company or, if the acquisition involves a transaction to which the holding company was a party, for the holding company to sell or surrender the charter of its MALPBs, in each case subject to a reasonable transition period determined by the Department in its discretion.

(6) Subject to Paragraph 7, the provisions set forth in Paragraph 1 shall not apply to the direct or indirect acquisition of the voting shares or control of a holding company as a result of any of the following transactions which are internal corporate reorganizations of a holding company:

(a) merger of holding companies that are subsidiaries of a holding company;

(b) the formation of a subsidiary holding company; or

(c) the transfer of control or ownership of a subsidiary MALPB or subsidiary holding company to another subsidiary company.

(7) An acquisition described in Paragraph 6 qualifies for this exception if:

(a) the transaction represents solely a corporate reorganization involving one or more non MALPB subsidiary companies that, both preceding and following the transaction, are controlled by the holding company;

(b) the transaction does not involve the acquisition of additional voting shares of a subsidiary MALPB that, prior to the transaction, was less than majority owned by the holding company;

(c) the holding company provides written notice to the Department no later than ten (10) days after the internal corporate reorganization has taken place; and

(d) the transaction is in compliance with all legal requirements, including, but not limited to, the Act and the related regulations, and all other required regulatory approvals and authorizations have been obtained prior to the transaction.

(8) Any fines or penalties arising under Rule 80-12-12-.01 that are applicable to prohibited acquisitions of shares or control of a public company under this Rule shall be assessed against the acquiring company rather than the MALPB whose shares, or as to which control, is acquired.

Notes

Ga. Comp. R. & Regs. R. 80-12-11-.03

O.C.G.A. §§ 7-1-73, 7-9-3, 7-9-6, 7-9-13.

Original Rule entitled "Lawful and Unlawful Acquisitions" adopted. F. Dec. 3, 2013; eff. Dec. 23, 2013. Amended: F. Jun. 10, 2014; eff. Jun. 30, 2014. Amended: New title "Lawful and Unlawful Acquisitions by a Company." F. Dec. 5, 2014; eff. Dec. 25, 2014.