§824c Issuance of Securities; Assumption of Liabilities

Summary

Public utilities must get the Commission’s written permission before selling stocks or bonds, or before taking on someone else’s debt or guaranteeing another person’s security. The Commission will allow it only if the action has a lawful purpose, fits the company’s business, helps the utility provide service, won’t weaken its ability to serve customers, and is reasonably needed. The Commission can approve an application with conditions, change its orders later after a hearing, and the utility must follow those orders exactly. The Commission cannot let a company count a franchise, permit, or contract as capital for more than the money actually paid (not counting taxes or yearly fees). Short notes or drafts that mature in one year or less are exempt from permission if all such short debt is no more than 5 percent of the par (or fair market) value of the utility’s other securities. The utility must file a notification with the Commission within ten days after issuing such short debt. Utilities whose securities are regulated by a State commission are not covered. Nothing here makes the United States responsible for these securities. If the Commission approves the issues, the utility may file duplicate reports with the Securities and Exchange Commission instead of the reports called for in sections 77g, 78l, and 78m of title 15. The rules took effect six months after August 26, 1935.