Rule(s):	801.1(f)
Staff:	Michael Verne
Response / Comments:	01/06/2012 – Agree.
	Original Image File

From:	(Redacted)
Sent:	Thursday, January 05, 2012 5:03 PM
To:	Verne, B. Michael
Subject:	Nonvoting Securities Question
Mike

Happy new year, I hope you are well. I have a quick question. I understand the PNO's position is that convertible nonvoting securities coupled with a contractual right to appoint 50% or more of a target company's board of directors may be treated as voting securities in determining whether a filing is required for the sale of the Target. My client has the contractual right to appoint five of seven board members of the Target company and owns nonvoting preferred stock of the Target which is not convertible into voting shares (the shares are guaranteed an annual dividend and are more like debt than equity). We believe that the preferred nonvoting, non-convertible shares should not be treated as voting securities even if the holder of those nonvoting shares has the right to appoint a majority of the board. Do you agree?