change of control vs assignment

The aim of a transaction is usually to take over a company as a "going concern", i.e. continuing to run the target company together with all its business relations and processes. The buyer is convinced that the integration of the target (if he is planning one) into his own structure will have a positive impact on the financial results of the resulting enterprise as a whole.

In order to achieve these positive effects, it is therefore important for the buyer that the transaction does not impair the existing essential business relationships of the target. In extreme cases, the existence of a few selected or even only one contractual relationship may be decisive for the acquisition from the buyer's point of view.

Therefore, every legal due diligence review should include an examination of whether essential contracts with the target’s business partners have a "Change of Control" clause.

Such "Change of Control" clauses enable the benefitting party to assert certain rights when certain changes occur within the target company. The main idea behind agreeing on such a clause is that under certain circumstances it should be possible for a contracting party to release itself from its contractual obligations, for example in the event of a takeover by a competitor or other significant changes in the other contracting party's shareholder structure. Normally, the opposite party must be notified of such changes, but even if such a duty of notification is not contractually agreed, it should generally be assumed that contractually agreed circumstances constituting a "change of control” must be reported to the other party, since it is precisely by agreeing on such a clause that the parties have documented the materiality of these changes for the decision to continue the business relationship.

These changes include mainly changes in the (shareholder) structure of the target that give a third party a controlling influence on the decision-making processes within the target. This is certainly the case if the buyer acquires all shares. However, the parties may agree to include other, sometimes more far-reaching arrangements, e.g.:

In some jurisdictions, the criteria for a change of control are defined by law, although differing contractual definitions may be admissible.

While supply or service contracts may in some rare cases foresee the adjustment of  conditions, but usually allow terminating termination of the contractual relationship without notice, loan agreements may also provide for other possible rights of the lending bank and loan covenants, such as the provision of additional collateral or a partial repayment of the loan. However, even in such financing agreements, termination and repayment of the entire outstanding loan amount is always incorporated into the agreements as ultima ratio.

As described above, the contracting parties are normally obliged to inform one another of the existence of circumstances which could give rise to a change of control. In contrast, if such clauses are included in contractual agreements of the target company, they generally must be disclosed by the seller as part of an M&A transaction only if either the respective contractual  agreement (i) is objectively material to the business activities of the target company (e.g. exclusive supply agreement, license etc.) or (ii) the buyer has expressly indicated the materiality of the continuation of this specific business relationship without change.

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A Guide to Understanding Anti-Assignment Clauses

Introduction

With the increasing trend of globalization in the business world, Israeli companies and investors are commonly entering into agreements with U.S.-based entities. One of the most frequently found clauses in U.S. commercial agreements is an anti-assignment provision that prevents either or both of the parties from assigning the agreement to a third party prior to receiving the consent of the non-assigning party. Many transactions will also require the due diligence review of a large number of U.S. commercial agreements that the target has entered into. The following post will provide an overview and general guidance on the proper analysis of anti-assignment clauses.

Silent Provision and Change of Control Provision

In the event that an agreement does not contain an anti-assignment provision, a contract is generally assignable without the consent of the non-assigning party. See  Peterson v. District of Columbia Lottery and Charitable Games Control Board , 673 A.2d 664 (D.C. 1996) (“The right to assign is presumed, based upon principles of unhampered transferability of property rights and of business convenience.”) Exceptions include where the assignment affects the duties of the other party to the contract, where the contract is considered to be a personal contract and when the assignment violates public policy (i.e. tort liability).

On the other hand, many contracts contain provisions that not only prevent the assignment of the contract, but also state that a change of control of the target is deemed an assignment or the contract contains a separate clause requiring consent in the event of a change of control. This type of provision will often be triggered in transactions in which a buyer is acquiring the target company. A careful review of change of control clauses is thus especially imperative and often very fact specific to the deal at hand.

Deal Structures

One of the commonly used anti-assignment provisions reads as follows: “No party may assign any of its rights under this Agreement, by operation of law or otherwise, to a third party without the prior written consent of the non-assigning party.” In the situation where the target has entered into agreements that contain this clause, whether or not an assignment is considered to have taken place in the event of the acquisition of the target will largely depend on the specific deal structure of the transaction.

The commonly used deal structures are an asset acquisition, a stock acquisition and a merger.

• Asset Acquisition : In an asset acquisition the buyer only acquires those assets and liabilities of a target that are specifically listed in the Asset Purchase Agreement. Any agreement that has an anti-assignment clause will be triggered in the event of an asset acquisition. Indeed, one of the disadvantages of structuring a corporate acquisition as an asset acquisition is that contracts that will be transferred must be assigned
• Stock Acquisition : In a stock acquisition, a buyer acquires a target’s stock directly from the selling shareholders. After the closing of the Stock Purchase Agreement, the target will continue as it existed prior to the acquisition with respect to its ownership of asset and liabilities. Thus, in essence, the anti-assignment clause was never triggered in the first place. See  Baxter Pharm. v. ESI Lederle , 1999 WL 160148 (Del. Ch. 1999).
• A direct merger occurs when the target merges with and into the buyer, and the buyer continues as the surviving entity. In a similar fashion to an asset acquisition, this type of merger will trigger the anti-assignment clause
• A forward triangular merger occurs when the target merges with and into the buyer’s merger subsidiary, with the merger subsidiary surviving the merger. This type of merger will trigger the anti-assignment clause. See  Tenneco Automotive Inc. v. El Paso Corporation , 2002 WL 45930 (Del. Ch. 2002) and  Star Cellular Telephone Company, Inc. v. Baton Rouge CGSA, Inc., 19 Del.  J.  Corp. L. 875  (Del. Ch. 1993).
• A reverse triangular merger occurs when the buyer’s subsidiary merges with and into the target, with the target surviving as a wholly owned subsidiary of the buyer. In effect, the target continues to exist after the closing. The Delaware Chancery Court in  Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH,  2013 WL 655021 (Del. Ch. Feb. 22, 2013) held that the acquisition of a target in a reverse triangular merger did not violate an existing agreement of the target that prohibited assignments by operation of law. The court noted that generally, mergers do not result in an assignment by operation of law of assets that began as property of the surviving entity and continued to be such after the merger. Thus there is a significant difference between a reverse triangular merger and both a direct merger and forward triangular merger, as in those cases the target was not the surviving company of the merger. Note, however, that the matter is not uniformly resolved. In  SQL Solutions, Inc. v. Oracle Corp.  (N.D. Cal. 1991), a United States District Court in the Northern District of California applied California law and federal IP principles to hold that a reverse triangular merger constitutes an assignment by operation of law.

Additional Considerations

Damages and Termination : Some courts have held that a contractual provision prohibiting assignment operates only to limit the parties’ right to assign the contract (for which the remedy would be damages for breach of a covenant not to assign) but the provision does not limit the power to actually assign the contract (which would invalidate the assignment), unless the contract explicitly states that a non-conforming assignment shall be “void” or “invalid.” See, e.g.,  Bel-Ray Co v. Chemrite (Pty.) Ltd ., 181 F. 3d 435 (3d Cir. 1999).  It is also imperative to review the termination section of an agreement, as certain agreements contain a provision by which the non-assigning party has the right to terminate the agreement in the event of an assignment.

As described above, any review of U.S. commercial agreements is highly dependent on the structure of the deal and at times, the specific jurisdiction governing the agreement. With offices across the United States, and specifically in Delaware, New York, and California, all states with highly sophisticated and oft-invoked commercial laws, Greenberg Traurig is uniquely situated in a position to offer high value legal services to Israeli clients.

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Anti-Assignment and Change of Control Contract Provisions in the Sale of a Business

Asset Sales and Equity Sales

Although deal lawyers generally describe their practice as involving “mergers and acquisitions,” the sale of a small or medium-sized business is usually structured as either an equity sale or an asset sale. In an equity sale, the buyer buys the equity from the owner(s) of the target company — stock in the case of a corporation and membership interests in the case of a limited liability company. The business is transferred to the new owners, corporate or limited liability company entity and all, and the target becomes a wholly-owned subsidiary of the buyer. There is no change in the status of the target entity itself, and its contracts, assets, and liabilities remain with the entity.

In an asset sale, specified assets are transferred from the target company to the buyer, while the corporate or limited liability company entity remains in place and continues to be owned by its equity holders. The assets transferred might be all or substantially all of the target’s assets, or they might be more limited in scope. Similarly, some or all of the target’s liabilities might be transferred to the buyer or retained by the target company, although most of the liabilities often stay with the target. The contracts of the target company are transferred to the buyer by assigning the contracts to the buyer.

It is common for commercial contracts, leases, and other agreements to include anti-assignment provisions. In addition, bank credit agreements, distribution agreements, and other agreements often contain change of control provisions. It is important for the buyer and seller to review the target’s material contracts early in the transaction process to determine whether such provisions exist.

Anti-assignment Provisions

In an asset sale the target’s contracts are transferred to the buyer by means of assigning the contracts to the buyer. The default rule is generally that a party to a contract has the right to assign the agreement to a third party (although the assigning party remains liable to the counter-party under the agreement). However, contracting parties often want to have the right to control who they do business with, so they include a clause in their contracts that prohibits the counter-party from assigning its rights or delegating its responsibilities under the agreement absent prior written consent.

These provisions pose a problem in the context of an asset sale. Because the target doesn’t have the right to assign a contract containing an anti-assignment clause absent its counter-party’s agreement to permit the assignment, the target is dependent on the counter-party’s willingness to agree to the assignment. The failure to obtain consent to assign a material agreement could jeopardize the transaction as the buyer is likely to refuse to close if it won’t receive the benefit of a contract that is important to the business.

The process of obtaining consents can be time-consuming and should be started at the earliest practical moment. It’s not unusual for a counter-party to extract some value in exchange for agreeing to the assignment. Sometimes the counter-party is somewhat opportunistic and sees an opportunity for a windfall. In other cases, the need for the target to obtain consent for assignment is an opportunity for relief from a disadvantageous agreement. In such cases where the contract is advantageous to the target (e.g., if the target is able to purchase products from a supplier at prices below market under a long-term supply agreement because it locked in low prices and the market prices have subsequently risen), the counter-party will often be unwilling to consent to the assignment of the agreement absent concessions.

The need for obtaining consents from counter-parties is often obviated in the context of an equity sale, because equity sales don’t require the assignment of contracts to the buyer. In an equity sale the target’s assets, including its contracts, are not transferred to the buyer; rather, the entire corporate or limited liability company shell is transferred to the buyer with its assets and liabilities remaining intact. Sometimes the only way to accomplish a transaction is to structure it as an equity sale if it’s not possible to obtain agreement to assign a crucial contract.

Change of Control Provisions

The target’s material contracts should be reviewed early in the process even when the transaction is structured as an equity sale, because change of control provisions, which have the same effect as anti-assignment provisions, are triggered by an equity sale. Such provisions are common in contracts where the counter-party requires a great deal of control over who its does business with. Change of control provisions are common in credit agreements, where the borrower’s financial wherewithal is crucial to the lender; commercial leases, where the tenant’s financial stability is an important aspect of its ability to pay rent over the course of the lease; and distribution agreements, where a manufacturer is dependent upon the skills of current ownership and management to distribute its products in a particular territory.

Material contracts that contain change of control provisions require the parties to deal with the counter-party to the contract because the provisions will be implicated in both asset sales and equity sales.

Due Diligence Implications of Anti-assignment and Change of Control Provisions

Sellers should review their important contracts for anti-assignment and change of control provisions before taking their company to market. If an important contract contains such a provision and the counter-party is not willing to agree to the transaction on reasonable terms, the deal will look much different — and less attractive — to the buyer. It’s good to know early in the process that there’s a problem so the seller can plan accordingly, and so it can devise a strategy for overcoming the challenge.

Buyers should review the target’s material contracts to identify anti-assignment and change of control provisions as part of its due diligence efforts. It would be imprudent to hand over the purchase consideration when the buyer would not have the benefit of one or more crucial contracts.

Whether a transaction is structured as an asset sale or an equity sale, the buyer and seller should pay close attention to anti-assignment and change of control restrictions in the target company’s important contracts. Failure to do so could delay or endanger the closing of the transaction or even leave the buyer with less of the business than expected. That’s a recipe for trouble.

2 Responses

Just curious where one draws the line between an anti-assignment clause and a no change of control provision. For example, does a clause that reads “…this Agreement or the services hereunder is not transferable, by assignment, sublicense, or ANY OTHER METHOD to any other person or entity…” (CAPS added by me).

sorry, failed to finish my thought: can such a clause be reasonably construed as prohibiting a change of control, or have the courts said no, one must be explicit about prohibiting changes in control? Thanks!

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Anti-Assignment Provisions and Assignments by ‘Operation of Law’: What Do I Have to Do? What Should I Do?

Introduction.

One of the key roles of legal due diligence in mergers and acquisitions (M&A) is to assist in the efficient and successful completion of any proposed M&A transaction. Due diligence is not merely a procedural formality but can serve as a proactive shield against unforeseen challenges and risks. One essential aspect of the legal due diligence process is reviewing third-party contracts to which the target entity is party, in order to better understand the scope of its commercial relationships and to anticipate any issues that may arise via the underlying contractual relationships as a result of completing the proposed M&A transaction.

A frequent reality in many M&A transactions is the requirement to obtain consents from third parties upon the “change of control” of the target entity and/or the transfer or assignment of a third-party contract to which the target is party. Notwithstanding the wording of such contracts, in many instances, the business team from the purchaser will often ask the question: “When is consent actually required?” While anti-assignment and change of control provisions are fairly ubiquitous in commercial contracts, the same cannot be said for when the requirement to obtain consent is actually triggered. The specifics of the proposed transaction’s structure will often dictate the purchaser’s next steps when deciding whether the sometimes-cumbersome process of obtaining consents with one or multiple third parties is actually needed.

This article examines what anti-assignment provisions are and how to approach them, depending on the situation at hand, including in the context of transactions where a change of control event may be triggered. This article also discusses how to interpret whether consent is required when faced with an anti-assignment provision which states that an assignment, including an assignment by operation of law , which requires consent from the non-assigning party.

Understanding Anti-Assignment Provisions

Generally, an anti-assignment provision prohibits the transfer or assignment of some or all of the assigning party’s rights and obligations under the contract in question to another person without the non-assigning party’s prior written consent. By way of example, a standard anti-assignment provision in a contract may read as follows:

Company ABC shall not assign or transfer this agreement, in whole or in part, without the prior written consent of Company XYZ.

In this case, Company ABC requires Company XYZ’s prior written consent to assign the contract. Seems simple enough. However, not all anti-assignment provisions are cut from the same cloth. For example, some anti-assignment provisions expand on the prohibition against general contractual assignment by including a prohibition against assignment by operation of law or otherwise . As is discussed in greater detail below, the nuanced meaning of this phrase can capture transactions that typically would not trigger a general anti-assignment provision and can also trigger the requirement to get consent from the non-assigning party for practical business reasons.

To explore this further, it is helpful to consider anti-assignment provisions in the two main structures of M&A transactions: (i) asset purchases and (ii) share purchases.

Context of M&A Transactions: Asset Purchases and Share Purchases

There are key differences between what triggers an anti-assignment provision in an asset purchase transaction versus a share purchase transaction.

i) Asset Purchases

An anti-assignment provision in a contract that forms part of the “purchased assets” in an asset deal will normally be triggered in an asset purchase transaction pursuant to which the purchaser acquires some or all of the assets of the target entity, including some or all of its contracts. Because the target entity is no longer the contracting party once the transaction ultimately closes (since it is assigning its rights and obligations under the contract to the purchaser), consent from the non-assigning party will be required to avoid any potential liability, recourse or termination of said contract as a result of the completion of the transaction.

ii) Share Purchases

Provisions which prohibit the assignment or transfer of a contract without the prior approval of the non-assigning party will not normally, under Canadian law, be captured in a share purchase transaction pursuant to which the purchaser acquires a portion or all of the shares of the target entity. In other words, no new entity is becoming party to that same contract. General anti-assignment provisions are not typically triggered by a share purchase because the contracts are not assigned or transferred to another entity and instead there is usually a “change of control” of the target entity. In such cases, the target entity remains the contracting party under the contract and the consent analysis will be premised on whether the contract requires consent of the third party for a “direct” or “indirect” change of control of the target entity and not the assignment of the contract.

Importantly, some anti-assignment provisions include prohibitions against change of control without prior written consent. For example, the provision might state the following:

Company ABC shall not assign or transfer this agreement, in whole or in part, without the prior written approval of Company XYZ. For the purposes of this agreement, any change of control of Company ABC resulting from an amalgamation, corporate reorganization, arrangement, business sale or asset shall be deemed an assignment or transfer.

In that case, a change of control as a result of a share purchase will be deemed an assignment or transfer, and prior written consent will be required.

A step in many share purchase transactions where the target is a Canadian corporation that often occurs on or soon after closing is the amalgamation of the purchasing entity and the target entity. So, what about anti-assignment provisions containing by operation of law language – do amalgamations trigger an assignment by operation of law? The short answer: It depends on the jurisdiction in which the anti-assignment provision is being scrutinized (typically, the governing law of the contract in question).

Assignments by Operation of Law

In Canada, the assignment of a contract as part of an asset sale, or the change of control of a party to a contract pursuant to a share sale – situations not normally effected via legal statute or court-ordered proceeding in M&A transactions – will not in and of itself effect an assignment of that contract by operation of law . [1]

Still, one must consider the implications of amalgamations, especially in the context of a proposed transaction when interpreting whether consent is required when an anti-assignment provision contains by operation of law language. Under Canadian law, where nuances often blur the lines within the jurisprudence, an amalgamation will not normally effect the assignment of a contract by operation of law . The same does not necessarily hold true for a Canadian amalgamation scrutinized under U.S. legal doctrines or interpreted by U.S. courts. [2]

Difference Between Mergers and Amalgamations

As noted above, after the closing of a share purchase transaction, the purchasing entity will often amalgamate with the target entity ( click here to read more about amalgamations generally). When two companies “merge” in the U.S., we understand that one corporation survives the merger and one ceases to exist which is why, under U.S. law, a merger can result in an assignment by operation of law . While the “merger” concept is commonly used in the U.S., Canadian corporations combine through a process called “amalgamation,” a situation where two corporations amalgamate and combine with neither corporation ceasing to exist. For all of our Canadian lawyer readers, you will remember the Supreme Court of Canada’s description of an amalgamation as “a river formed by the confluence of two streams, or the creation of a single rope through the intertwining of strands.” [3] Generally, each entity survives and shares the pre-existing rights and liabilities of the other, including contractual relationships, as one corporation. [4]

MTA Canada Royalty Corp. v. Compania Minera Pangea, S.A. de C.V.

As a practical note and for the reasons below, particularly in cross-border M&A transactions, it would be wise to consider seeking consent where a contract prohibits assignment by operation of law without the prior consent of the other contracting party when your proposed transaction contemplates an amalgamation.

In MTA Canada Royalty Corp. v. Compania Minera Pangea, S.A. de C.V. (a Superior Court of Delaware decision), the court interpreted a Canadian (British Columbia) amalgamation as an assignment by operation of law , irrespective of the fact that the amalgamation was effected via Canadian governing legislation. In essence, the Delaware court applied U.S. merger jurisprudence to a contract involving a Canadian amalgamation because the contract in question was governed by Delaware law. This is despite the fact that, generally, an amalgamation effected under Canadian common law jurisdictions would not constitute an assignment by operation of law if considered by a Canadian court. As previously mentioned, under Canadian law, unlike in Delaware, neither of the amalgamating entities cease to exist and, technically, there is no “surviving” entity as there would be with a U.S.-style merger. That being said, we bring this to your attention to show that it is possible that a U.S. court (if the applicable third-party contract is governed by U.S. law or other foreign laws) or other U.S. counterparties could interpret a Canadian amalgamation to effect an assignment by operation of law . In this case, as prior consent was not obtained as required by the anti-assignment provision of the contract in question, the Delaware court held that the parties to that agreement were bound by the anti-assignment provision’s express prohibition against all assignments without the other side’s consent. [5]

To avoid the same circumstances that resulted from the decision in MTA Canada Royalty Corp. , seeking consent where an anti-assignment provision includes a prohibition against assignment by operation of law without prior consent can be a practical and strategic option when considering transactions involving amalgamations. It is generally further recommended to do so in order to avoid any confusion for all contracting parties post-closing.

Practical Considerations

The consequences of violating anti-assignment provisions can vary. In some cases, the party attempting to complete the assignment is simply required to continue its obligations under the contract but, in others, assignment without prior consent constitutes default under the contract resulting in significant liability for the defaulting party, including potential termination of the contract. This is especially noteworthy for contracts with third parties that are essential to the target entity’s revenue and general business functions, as the purchaser would run the risk of losing key contractual relationships that contributed to the success of the target business. As such, identifying assignment provisions and considering whether they are triggered by a change of control and require consent is an important element when reviewing the contracts of a target entity and completing legal due diligence as part of an M&A transaction.

There can be a strategic and/or legal imperative to seek consent in many situations when confronted with contractual clauses that prohibit an assignment, either by operation of law or through other means, absent the explicit approval of the non-assigning party. However, the structure of the proposed transaction will often dictate whether consent is even required in the first place. Without considering this nuanced area of M&A transactions, purchasers not only potentially expose themselves to liability but also risk losing key contractual relationships that significantly drive the value of the transaction.

The  Capital Markets Group  at Aird & Berlis will continue to monitor developments in cross-border and domestic Canadian M&A transactions, including developments related to anti-assignment provisions and commercial contracts generally. Please contact a member of the group if you have questions or require assistance with any matter related to anti-assignment provisions and commercial contracts generally, or any of your cross-border or domestic M&A needs.

[1] An assignment by operation of law can be interpreted as an involuntary assignment required by legal statute or certain court-ordered proceedings. For instance, an assignment of a contract by operation of law may occur in, among other situations: (i) testamentary dispositions; (ii) court-ordered asset transfers in bankruptcy proceedings; or (iii) court-ordered asset transfers in divorce proceedings.

[2] MTA Canada Royalty Corp. v. Compania Minera Pangea, S.A. de C.V ., C. A. No. N19C-11-228 AML, 2020 WL 5554161 (Del. Super. Sept. 16, 2020) [ MTA Canada Royalty Corp. ].

[3] R. v. Black & Decker Manufacturing Co. , [1975] 1 S.C.R. 411.

[4] Certain Canadian jurisdictions, such as the Business Corporations Act (British Columbia), explicitly state that an amalgamation does not constitute an assignment by operation of law (subsection 282(2)).

[5] MTA Canada Royalty Corp .

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HLC Archive 2024

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Substantive Change: Control, Structure or Organization

Institutions contemplating a Change of Control, Structure or Organization should contact HLC as early in the process as possible. Candid and timely communication between HLC and an institution helps facilitate the review process. Review the Change of Control, Structure or Organization process and related policies in detail.

Change of Control, Structure or Organization Process  

Related Policies

Change of Control, Structure or Organization (INST.G.20.010)

Processes for Seeking Approval of Change of Control, Structure or Organization (INST.G.20.020)

Monitoring Related to Change of Control, Structure or Organization (INST.G.20.030)

Accredited Change of Control Status (INST.G.20.040)

HLC policies on Change of Control, Structure or Organization define HLC’s oversight regarding proposals that change, or have the potential to change, the governance of an institution or its fundamental structure or organization. This includes, but extends beyond, change of ownership transactions (such as merger or sale). As a result, per HLC’s Glossary, the term “Change of Control” more broadly refers to any proposed change to which these policies apply.

Approval of Change of Control

The policy also stipulates that the only decision-making body that can take action to approve an application for Change of Control, Structure, or Organization is the Board of Trustees. Peer reviewers, with the support of HLC staff, work together to provide the Board of Trustees a report analyzing the evidence available and evaluating whether the application submitted by an institution satisfies the Key Factors articulated in policy for approval.

These changes include, but are not limited to, eight major types of Change of Control. Additional scenarios may also trigger a Change of Control review:

• If an institution forms a relationship with an entity that has no corporate or financial relationship with the institution to perform certain services;
• If an institution works with other related accredited institutions to pool or consolidate services into another related entity that may be another corporation or may be a division of one of the institutions;
• If an institution has a parent or affiliated corporation that provides various services to the institution, or if an institution intends to purchase or merge with another accredited institution that has an existing relationship with a parent or affiliated corporation, and the relationship with the parent or affiliated entity is to be maintained after the purchase through a shared services relationship with the former parent or affiliated corporation; or
• If an institution forms a new related or separate corporation into which the institution transfers some of its existing operations and/or services and this new corporation would then provide services to the accredited institution; or if an institution may transfer assets related to academics and student services into the new related or separate corporation, and the institution is expected to become the services corporation (which may also be authorized to sell its services to other institutions with which it had no previous relationship).

Related Guidance

Notification of change of control.

Finally, as with any category of substantive change, there are certain circumstances in which only notification to HLC is required. Institutions contemplating a Change of Control should consult with their staff liaison as soon as possible to confirm whether notification or approval is appropriate under HLC policy. When notification is appropriate, it should be made in advance of consummating any such Change of Control.

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