In two previous procedural agreements, control was considered a factor in determining the transaction price, but the control requirements in the ETF agreement are totally different. In a case where an ESOP is considering acquiring a majority stake in the sponsor of the plan, the ETF may only authorize the payment of a dominant interest if ESOP does obtain the right to control the company from which it acquires the shares. Although this basic concept is not disputed, the ETF agreement lists a number of “unre-contaminated” control elements that DOL appears to want to acquire for the management of a control premium by the DOL. These include several rights that controlling shareholders would normally own, including: as we did in previous tenders, you visit the Holland-Knight website for an updated detailed graph that summarizes the terms and highlights the similarities and differences between the five agreements. In the complex world of ESOP regulation, it is essential that the agent follow all Ministry of Labour (“DOL”) guidelines. As DOL has become increasingly vigilant and new procedural agreements have been concluded, ESOP administrators must increasingly adhere to compliance protocols. This is not the place to go beyond limits or express creativity. Finally, the ETF agreement provides for a new section on compensation for ESOP directors. The agreement provides that ETF does not establish an agreement below the above of compensation for damages, expenses, liability or losses resulting from a faithful injury shell, prohibited transaction or other violation of the Employeee Retirement Security Act 1974 (ERISA). This provision applies whether the company is wholly or partially owned by ESOP. This section also provides that the ETF does not agree with the compensation provisions that result in an increase in royalties and defence costs, unless an independent third party finds that there is no breach of the trust obligation. Even if such a finding has been made, there must be a prudent regime to ensure that anticipated costs and fees will be reimbursed when a breach of the trust is found by a court.
These provisions apply whenever a participant, plan agent or DOL has made a “measurable allegation of violation.” ESOP cases are often settled, but what makes this transaction agreement unique is that it goes beyond a cash payment in relation to this case, removing (1) possible other contentious cases between DOL and GBTC and (2) establishing very clear protocols regarding the broader relationship between ESOP directors and their financial advisors. The minutes deal not only with the specific issue of analytical review and the use of projections, but also with the process of assessing the qualifications and independence of ESOP`s financial advisors. Prudent buyers, trustees and agents are intelligent in seeking expert advice throughout the ESOP process to avoid violations, initiate investigations, litigation and ultimately face sanctions. Simply put, strong financial advisors will help you color inside the lines.