§824c Issuance of Securities; Assumption of Liabilities

Summary

Public utilities must get the Commission’s permission before they sell stocks or bonds, or promise to pay for someone else’s investments. The Commission will allow it only if the deal has a legal purpose, fits the utility’s business, is consistent with the public interest, is needed or proper for the utility to provide its service, and will not prevent the utility from doing its job. The Commission can approve all or part of an application, add conditions, and later change those decisions. Utilities may not use any securities or the money from them for purposes not named in the Commission’s order or for more than the amount the order allows. The Commission will not let a utility count the value of becoming a corporation, or of a franchise, permit, or merger/lease contract, as capital for more than the actual money paid for it (not counting taxes or yearly fees). These rules took effect six months after August 26, 1935. Short-term notes or drafts due in one year or less are exempt if all such short paper totals no more than 5% of the par value of the utility’s other outstanding securities (no-par securities use fair market value on the issue date). The utility must file a notification with the Commission within 10 days. The rules do not cover utilities whose securities are regulated by a state commission. Nothing here makes the United States guarantee any securities. A utility approved by the Commission may send duplicate reports to the Securities and Exchange Commission instead of the reports named in sections 77g, 78l, and 78m of title 15.