CCCP Mergers & Acquisitions Compliance 3 — Questions and Answers
Question 1: In a cross-border acquisition, which international framework most directly governs anti-bribery compliance obligations for US-listed acquirers?
- OECD Anti-Bribery Convention only
- The Foreign Corrupt Practices Act (FCPA) (Correct answer)
- The UK Bribery Act exclusively
- The Basel Committee Guidelines
Correct answer: The Foreign Corrupt Practices Act (FCPA)
The FCPA applies to US issuers and their agents worldwide, making it the primary anti-bribery framework for US-listed acquirers in cross-border deals.
Question 2: What is a 'carve-out' in the context of M&A compliance due diligence?
- A provision excluding certain liabilities from indemnification coverage (Correct answer)
- A regulatory exemption from HSR filing requirements
- A tax structure used to reduce acquisition costs
- A clause allowing the seller to exit the deal without penalty
Correct answer: A provision excluding certain liabilities from indemnification coverage
A carve-out excludes specific known liabilities or issues from the indemnification scope, allocating that risk explicitly between the parties.
Question 3: During integration planning, a compliance officer identifies that the target uses a third-party vendor flagged in a prior sanctions screening. What is the correct compliance response?
- Immediately terminate the vendor contract without investigation
- Conduct enhanced due diligence and escalate to OFAC counsel before continuing the relationship (Correct answer)
- Transfer the vendor relationship to a non-sanctioned subsidiary
- Disclose to the target's employees only
Correct answer: Conduct enhanced due diligence and escalate to OFAC counsel before continuing the relationship
Sanctions-flagged vendors require enhanced due diligence and OFAC counsel review before any decision is made to continue, modify, or terminate the relationship.
Question 4: Which type of M&A structure generally provides the buyer greater protection from inheriting the target's undisclosed liabilities?
- Merger (statutory)
- Asset purchase (Correct answer)
- Stock purchase
- Reverse triangular merger
Correct answer: Asset purchase
An asset purchase allows the buyer to select which specific assets and liabilities to acquire, generally limiting exposure to undisclosed legacy liabilities.
Question 5: What is the 'waiting period' under the HSR Act after submitting a pre-merger notification?
- 30 days (15 days for cash tender offers), with possible early termination (Correct answer)
- 60 days with no exceptions
- 90 days for cross-border transactions
- 10 business days for all transaction types
Correct answer: 30 days (15 days for cash tender offers), with possible early termination
The HSR waiting period is 30 days (15 days for cash tender offers), and the agencies can grant early termination or issue a Second Request to extend review.
Question 6: A compliance officer is reviewing employment contracts of key target employees post-LOI. Which clause is most relevant to M&A compliance continuity?
- Non-compete and change-of-control provisions (Correct answer)
- Health insurance benefit elections
- Vacation accrual policy
- Office location preferences
Correct answer: Non-compete and change-of-control provisions
Change-of-control clauses may trigger severance or allow employees to exit, while non-competes affect talent retention and competitive risk post-close.
Question 7: Which regulatory body must approve certain financial institution mergers in the United States beyond standard antitrust review?
- Securities and Exchange Commission (SEC)
- Office of the Comptroller of the Currency (OCC), Federal Reserve, or FDIC depending on charter (Correct answer)
- Department of Labor (DOL)
- Consumer Financial Protection Bureau (CFPB)
Correct answer: Office of the Comptroller of the Currency (OCC), Federal Reserve, or FDIC depending on charter
Bank mergers require approval from the relevant federal banking regulator (OCC, Fed, or FDIC) based on the institutions' charter types, in addition to DOJ antitrust review.
CCCP Mergers & Acquisitions Compliance 3
In a cross-border acquisition, which international framework most directly governs anti-bribery compliance obligations for US-listed acquirers?