§ 79g. — Declarations by registered companies in respect to security transactions.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC79g]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2C--PUBLIC UTILITY HOLDING COMPANIES
Sec. 79g. Declarations by registered companies in respect to
security transactions
(a) Contents
A registered holding company or subsidiary company thereof may file
a declaration with the Commission, regarding any of the acts enumerated
in subsection (a) of section 79f of this title, in such form as the
Commission may by rules and regulations prescribe as necessary or
appropriate in the public interest or for the protection of investors or
consumers. Such declaration shall include--
(1) such of the information and documents which are required to
be filed in order to register a security under section 77g of this
title, as the Commission may by rules and regulations or order
prescribe as necessary or appropriate in the public interest or for
the protection of investors or consumers; and
(2) such additional information, in such form and detail, and
such documents regarding the declarant or any associate company
thereof, the particular security and compliance with such State laws
as may apply to the act in question as the Commission may by rules
and regulations or order prescribe as necessary or appropriate in
the public interest or for the protection of investors or consumers.
(b) Effective date of declaration; order of Commission
A declaration filed under this section shall become effective within
such reasonable period of time after the filing thereof as the
Commission shall fix by rules and regulations or order, unless the
Commission prior to the expiration of such period shall have issued an
order to the declarant to show cause why such declaration should become
effective. Within a reasonable time after an opportunity for hearing
upon an order to show cause under this subsection, unless the declarant
shall withdraw its declaration, the Commission shall enter an order
either permitting such declaration to become effective as filed or
amended, or refusing to permit such declaration to become effective.
Amendments to a declaration may be made upon such terms and conditions
as the Commission may prescribe.
(c) Conditions precedent to permitting declaration to become effective
The Commission shall not permit a declaration regarding the issue or
sale of a security to become effective unless it finds that--
(1) such security is (A) a common stock having a par value and
being without preference as to dividends or distribution over, and
having at least equal voting rights with, any outstanding security
of the declarant; (B) a bond (i) secured by a first lien on physical
property of the declarant, or (ii) secured by an obligation of a
subsidiary company of the declarant secured by a first lien on
physical property of such subsidiary company, or (iii) secured by
any other assets of the type and character which the Commission by
rules and regulations or order may prescribe as appropriate in the
public interest or for the protection of investors; (C) a guaranty
of, or assumption of liability on, a security of another company; or
(D) a receiver's or trustee's certificate duly authorized by the
appropriate court or courts; or
(2) such security is to be issued or sold solely (A) for the
purpose of refunding, extending, exchanging, or discharging an
outstanding security of the declarant and/or a predecessor company
thereof or for the purpose of effecting a merger, consolidation, or
other reorganization; (B) for the purpose of financing the business
of the declarant as a public-utility company; (C) for the purpose of
financing the business of the declarant, when the declarant is
neither a holding company nor a public-utility company; and/or (D)
for necessary and urgent corporate purposes of the declarant where
the requirements of the provisions of paragraph (1) of this
subsection would impose an unreasonable financial burden upon the
declarant and are not necessary or appropriate in the public
interest or for the protection of investors or consumers; or
(3) such security is one the issuance of which was authorized by
the company prior to January 1, 1935, and which the Commission by
rules and regulations or order authorizes as necessary or
appropriate in the public interest or for the protection of
investors or consumers.
(d) Conditions having permission of effectiveness
If the requirements of subsections (c) and (g) of this section are
satisfied, the Commission shall permit a declaration regarding the issue
or sale of a security to become effective unless the Commission finds
that--
(1) the security is not reasonably adapted to the security
structure of the declarant and other companies in the same holding-
company system;
(2) the security is not reasonably adapted to the earning power
of the declarant;
(3) financing by the issue and sale of the particular security
is not necessary or appropriate to the economical and efficient
operation of a business in which the applicant lawfully is engaged
or has an interest;
(4) the fees, commissions, or other remuneration, to whomsoever
paid, directly or indirectly, in connection with the issue, sale, or
distribution of the security are not reasonable;
(5) in the case of a security that is a guaranty of, or
assumption of liability on, a security of another company, the
circumstances are such as to constitute the making of such guaranty
or the assumption of such liability an improper risk for the
declarant; or
(6) the terms and conditions of the issue or sale of the
security are detrimental to the public interest or the interest of
investors or consumers.
(e) Declaration regarding alterations, priorities, voting power, and
other rights of security holders
If the requirements of subsection (g) of this section are satisfied,
the Commission shall permit a declaration to become effective regarding
the exercise of a privilege or right to alter the priorities,
preferences, voting power, or other rights of the holders of an
outstanding security unless the Commission finds that such exercise of
such privilege or right will result in an unfair or inequitable
distribution of voting power among holders of the securities of the
declarant or is otherwise detrimental to the public interest or the
interest of investors or consumers.
(f) Order permitting declaration to become effective
Any order permitting a declaration to become effective may contain
such terms and conditions as the Commission finds necessary to assure
compliance with the conditions specified in this section.
(g) Compliance with State laws as condition to permission of
effectiveness
If a State commission or State securities commission, having
jurisdiction over any of the acts enumerated in subsection (a) of
section 79f of this title, shall inform the Commission, upon request by
the Commission for an opinion or otherwise, that State laws applicable
to the act in question have not been complied with, the Commission shall
not permit a declaration regarding the act in question to become
effective until and unless the Commission is satisfied that such
compliance has been effected.
(Aug. 26, 1935, ch. 687, title I, Sec. 7, 49 Stat. 815.)
Transfer of Functions
For transfer of functions of Securities and Exchange Commission,
with certain exceptions, to Chairman of such Commission, see Reorg. Plan
No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat.
1265, set out under section 78d of this title.
Section Referred to in Other Sections
This section is referred to in section 79f of this title.
