Rev. Ruling 58-562

Officer or Director of More Than One Company

Advice has been requested whether a person who is an officer or director for a parent corporation, which is engaged in business as a distiller, would be required to file an interlocking directorate application under section 8 of the Federal Alcohol Administration Act if he took a position as an officer or director of a subsidiary corporation which is engaged in a totally unrelated business.

Section 8(a) of the Federal Alcohol Administration Act provides, in part, as follows:

Except as provided in subsection (b), it shall be unlawful for any individual to take office, after the date of the enactment of this Act, as an officer or director of any company, if his doing so would make him an officer or director of more than one company engaged in business as a distiller, rectifier, or blender of distilled spirits, or of any such company and of a company which is affiliate of a company engaged in business as a distiller, rectifier, or blender of distilled spirits, or of more than one company which is an affiliate of any company engaged in business as a distiller, rectifier, or blender of distilled spirits, or of more than one company which is an affiliate of any company engaged in business as a distiller, rectifier, or blender of distilled spirits, unless, prior to taking such office, application made by such individual * * * has been granted and after due showing has been made to him and that services by such individual as officer or director of all the foregoing companies of which he is an officer or director together with service in the company with respect to which application is made will not substantially restrain or prevent competition in interstate or foreign commerce in distilled spirits * * *

Section 8 of the Act does not contemplate the filing of an application on the part of officers and directors unless their taking office would result in a connection between two corporations (or groups of corporations) which are engaged in business as a distiller, rectifier or blender of distilled spirits. Viewed in the light of the evident purpose of the statute to control interlocking directorates in the distilling, rectifying, and distilled spirits blending business, individuals taking office in subsidiary corporations not engaged in these enterprises, even though presently holding office in a company, or subsidiary company, engaged in the business of distilling, rectifying, or blending distilled spirits, could have no effect on the monopolistic trend against which the statutory provisions is aimed. Accordingly, it is held that where an individual holds office in a parent corporation engaged in business as a distiller, rectifier, or blender, and seeks to take office in a subsidiary corporation which is engaged in a totally unrelated business, no interlocking directorate application need be filed under section 8 of the Federal Alcohol Administration Act. For the same reason, where an individual holds office in a non-liquor subsidiary corporation and seeks to take office in a parent corporation (or another subsidiary) engaged in business as a distiller, rectifier, or blender no interlocking directorate application need be filed under section 8 of the Federal Alcohol Administration Act.

27 U.S.C. 208