I understand the basics of Sec. 382. Read most of the rules. I need to get an answer in the morning.
I have a situation where Company A and Company B went through a double reverse merger. The shareholders of both Company A and Company B become shareholders of Company C (and Company C owns 100% of Company A and Company B). Originally, Company B was formed from the same shareholders of Company A, so they have very similar shareholders, but Company has changed over time.
I understand one looks at all the 5% shareholders. I would identify the 5% shareholders of Company A, and the same of Company B. I also understand that for each Company, the remaining shareholders are put into a single class of shareholders.
In the restructuring, only 10% of Company C is owned by "new" shareholders not previously a shareholder of either Company A or Company B.
Since many of the 5% shareholders of Company A are also 5% shareholders of Company B, together they retain a significant percentage of Company C.
More importantly, and the need for an answer, some of the non-5% shareholders are also common to both Company A & Company B.
Is it only the 5% shareholder's that you track for the change, but also the pooled group of non-5% shareholders.
If so, is there are rule or regulation that requires, or allows, the creation of a class of non-5% shareholders that are "common" to both Company A and Company B to determine if combined with the common 5% shareholders whether 50% or more of the control has changed.
Can I combine the common 5% shareholders, and the common non-5% shareholders (who had control of Company A & Company B prior to the reverse merger) and see if they have change by more than 50% in the new ownership of Company C.
It seems logical, but cannot determine if it is allowed, required, or whether there is some Rev. Rul, or Regulation that provides for such example.