after an opportunity for hearing upon an order to show cause under this subsection, unless the declarant shall withdraw its declaration or consent to the Commission's deferring action thereon for a stated longer period, the Commission shall enter an order either permitting such declaration to become effective as filed or amended by the declarant or as directed to be amended by the Commission, or refusing to permit such declaration to become effective. The filing with the Commission of a declaration shall be deemed to have taken place upon receipt thereof. Amendments to a declaration may be made upon such terms and conditions as the Commission may prescribe.

(c) The Commission shall not permit a declaration regarding the issue or sale of a security to become effective unless such security is (1) 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; (2) a bond secured by a first lien on physical property of the declarant or by an obligation of a subsidiary public-utility company of the declarant secured by a first lien on physical property of such public-utility company; or (3) a receiver's or trustee's certificate duly authorized by the appropriate court or courts.

(d) The Commission shall permit a declaration regarding the issue or sale of a security to become effective unless in the judgment of the Commission (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 does not bear a proper relation to the sums prudently invested in the property of the declarant and its subsidiary public-utility companies; (3) financing by means of the declarant or by the issue of the particular security is not necessary or appropriate to the operations of a geographically and economically integrated public-utility system; (4) the fees or commissions that may be paid, directly or indirectly, in connection with the issue, sale, or distribution of the security are excessive; or (5) the terms and conditions of the issue or sale of such security are contrary to the public interest or detrimental to the interest of investors or consumers.

(e) Notwithstanding the provisions of subsections (c) and (d) of this section, the Commission, upon such terms and conditions as it may deem necessary or appropriate in the public interest or for the protection of investors or consumers, shall have power to permit a declaration to become effective regarding the issue or sale of a security the proceeds of which are to be used solely (1) for the purpose of refunding an outstanding obligation of the declarant evidenced by a security, and/or (2) for the purpose of financing the business of the declarant and/or a subsidiary company or companies thereof carried on as a public-utility company or companies exclusively in the State in which the declarant and/or such company or companies are organized, provided that such issue or sale have been expressly authorized by the State Commission of such State.

(f) The Commission shall permit a declaration to become effective regarding the guaranty of, or assumption of, liability on a security by a registered holding company or subsidiary company thereof, unless, in the judgment of the Commission, such guaranty or assumption of liability by the declarant is not necessary or proper for the economical and efficient conduct of the business of the declarant and its associate companies as a geographically and economically integrated public-utility system, or is not in the public interest or for the protection of investors or consumers, or the financial condition of the company as to whose security liability is to be assumed or a guaranty executed is such as to constitute such guaranty or assumption of liability an undue risk for the declarant.

(g) 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 a security unless in the judgment of the Commission such exercise of such privilege is contrary to the public interest or unfair to investors or consumers.

(h) The Commission may permit a declaration to become effective subject to such terms and conditions as the Commission may deem necessary or appropriate in the public interest or for the protection of investors or consumers. Such terms and conditions, among other things, may require the elimination of such business practices as the Commission may deem contrary to the public interest or detrimental to the interest of investors or consumers; may require the granting of a preemptive right to security holders, irrespective of a previous

waiver of such right; may prohibit the giving of options or prescribe the limits within which they may be given; and may condition the issue or sale of a security upon such requirements as to competitive bidding as the Commission may deem necessary or appropriate in the public interest or for the protection of investors or consumers.

(i) The Commission shall not permit a declaration to become effective regarding any security which is subject, under the laws of any State, to the jurisdiction of a State commission or a State securities commission unless the applicable State laws shall have been complied with,

(j) On and after April 1, 1936, the Commission shall not permit to become effective a declaration by any holding company (other than a company exempted from registration by the Commission under subsection (c) of section (4) which has been a holding company for more than six months unless such company is registered under section 5 and has been so registered during the six months immediately preceding the filing of such declaration.

RESTRICTION ON BUSINESS OF HOLDING COMPANIES

SEC. 8. (a) After January 1, 1937, it shall be unlawful for any registered holding company to have any interest, directly or indirectly, through the ownership or control of securities by such holding company or by any of its subsidiary companies, or otherwise, in any business other than (1) the business of the production, generation, transportation, transmission, or distribution of gas and/or electric energy; (2) any other business carried on by a public utility company exclusively in a State or States where the carrying on of such business by such company is expressly authorized by the State Commission; and (3) such other business reasonably incidental to the foregoing as the Commission by rule, regulation, or order may permit as necessary or appropriate in the public interest or for the protection of investors or consumers and not in contravention of the povisions of this Act.

(b) After January 1, 1937, it shall be unlawful for any registered holding company which, or any subsidiary company of which, is an electric-utility company to own or operate, or to have any interest, directly or indirectly, through the ownership or control of securities by such holding company or any of its subsidiary companies, or otherwise, in any company which owns or operates, capital assets for the transportation of natural gas in interstate commerce, or for the production of natural gas.

(c) After January 1, 1937, it shall be unlawful for any registered holding company which, or any subsidiary company of which, is a public-utility company organized or doing business in the United States to have any interest, directly or indirectly, through the ownership or control of securities by such holding company or by any of its subsidiary companies, or otherwise, in any publicutility company which is organized or doing business outside of the United States: Provided, however, That the Commission may conditionally or unconditionally exempt any such registered holding company from the provisions of this subsection, upon such terms and conditions as it may deem necessary or appropriate in the public interest or for the protection of investors or consumers, in respect of a public-utility company or companies organized or doing business outside of the United States in which such holding company has an interest if it finds that the operations of such public-utility company or companies are economically and geographically integrated with the holding-company system of such registered holding company. The Commission may, after notice and opportunity for hearing, withdraw any such exemption whenever in its judgment the circumstances warrant such withdrawal.

(d) After January 1, 1937, it shall be unlawful for any registered holding Company to have any interest, directly or indirectly, through the ownership or control of securities by such holding company or by any of its subsidiary companies, or otherwise, in an electric-utility company and a gas-utility company serving substantially the same territory whenever the applicable State law prevents, or requires approval or authorization of, the ownership or operation of the capital assets of such electric- and gas-utility companies by a single company, unless the State commission of such State shall expressly approve such holding company's having such interest.

(e) If it shall be the opinion of the Commission that compliance by a registered holding company with any provision of this section within the time therein fixed would cause unnecessary injury to investors or consumers, the Commission, upon such terms and conditions as it may deem necessary or appropriate

in the public interest or for the protection of investors or consumers, may postpone compliance with such provision for a period not extending beyond January 1, 1939.

ACQUISITION OF SECURITIES AND CAPITAL ASSETS

SEC. 9. (a) Except as provided in subsection (c) of this section, it shall be unlawful for any registered holding company or subsidiary company thereof, by use of the mails or any means or instrumentality of interstate commerce, or otherwise, to acquire, directly or indirectly, any securities or capital assets, of another company unless such acquisition has been approved by the Commission under section 10.

(b) Subsection (a) of this section shall not apply to (1) the acquisition by a public-utility company of capital assets the acquisition of which has been expressly authorized by a State commission, or (2) the acquisition by a publicutility company of securities of a subsidiary public-utility company thereof: Provided, That both such public-utility companies and all other companies in the same holding company system are incorporated in the same State and are doing business exclusively in such State and that the acquisition of such securities has been expressly authorized by the State commission of such State. (c) A registered holding company or a subsidiary company thereof may invest its funds in (1) securities of, or securities the principal or interest of which is guaranteed by the United States, a State, a municipality, or other political subdivision of a State, or any department or independent establishment of any of the foregoing, or agency or corporation which is wholly owned, directly or indirectly, thereby; and (2) such other readily marketable securities, within the limitation of such amounts, as the Commission may by rules and regulations permit as appropriate for investment of current funds.

APPROVAL OF ACQUISTION OF SECURITIES AND CAPITAL ASSETS

SEC. 10. (a) A registered holding company or a subsidiary company thereof may apply for the approval of the acquisition of securities or capital assets, and a person which will by the acquisition of securities become a holding company may apply for approval of such acquisition, upon the terms and conditions hereinafter provided in this section, by filing an application 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 and consumers. Such application shall include

(1) In the case of the acquisition of securities, such information and copies of such documents as the Commission may by rules and regulations require as necessary or appropriate in the public interest or for the protection of investors or consumers in respect of

(A) The security to be acquired, the consideration to be paid therefor, and compliance with the applicable State laws in respect of the issue, sale, or acquisition thereof;

(B) The outstanding securities of the company whose security is to be acquired, the terms, position, rights, and privileges of each class and the options in respect of any such securities;

(C) The names of all security holders of record (or otherwise known to the applicant) owning, holding, or controlling 1 per centum or more of any class of security of such company, the officers and directors of such company, and their remuneration, security holdings in, material contracts with, and borrowings from such company and the officers or directorships held, and securities owned, held, or controlled, by them in other companies;

(D) The bonus, profit-sharing, and voting-trust agreements, underwriting arrangements, trust indentures, mortgages, and similar documents, by whatever name known, of or relating to such company;

(E) The material contracts, not made in the ordinary course of business, and the service, sales, and construction contracts of such company;

(F) The securities owned, held, or controlled, directly or indirectly, by such company;

(G) Balance sheets and profit and loss statements of such company for not more than the five preceding fiscal years, certified if required by the rules and regulations of the Commission by an independent public accountant; and

(H) Any further information regarding such company or its relations with the applicant company or any associate company thereof. (2) In the case of the acquisition of capital assets, such information concerning such assets, the value thereof, and consideration to be paid therefor, the owner or owners thereof and their relation to, agreements with, and interest in the securities of, the applicant company or any associate company thereof as the Commission may by rules and regulations require as necessary or appropriate in the public interest or for the protection of investors or consumers; and

(3) If the applicant be not a registered holding company, such of the information and documents required for registration under section 5 as the Commission may by rules and regulations require as necessary or appropriate in the public interest or for the protection of investors or consumers.

(b) The Commission shall approve the acquisition of securities or capital assets unless in the judgment of the Commission (1) such acquisition will tend to create monopoly or restraint of trade in the exercise of control of public-utility companies; (2) the consideration, including all fees, commissions, and other remuneration to whomsoever paid, to be given in connection with such acquisition is not reasonable or does not bear a proper relation to the sums prudently invested in the property of the applicant and its subsidiary public-utility companies; or (3) such acquisition will complicate the capital structure of the holding-company system of the applicant, will be detrimental to the interest of consumers or will unfairly affect investors. The Commission may condition its approval of the acquisition of securities of another company upon a fair offer to purchase the securities of other security holders of such company.

(c) Within thirty days after the filing of an application under this section, the Commission shall enter an order either granting or, after notice and opportunity for hearing, denying approval of the acquisition unless the applicant shall withdraw its application or consent to the Commission's deferring action thereon for a stated longer period. The filing with the Commission of an application shall be deemed to have taken place upon receipt thereof. Amendments to an application may be made upon such terms and conditions as the Commission may prescribe.

(d) Any order granting authority to acquire securities or capital assets under this section may prescribe such terms and conditions in respect of the acquisition of such securities or capital assets, including the price to be paid therefor, as the Commission may deem necessary or appropriate in the public interest or for the protection of investors or consumers or to give effect to the provisions of this Act.

(e) Notwithstanding the provisions of this section, the Commission shall not approve (1) the acquisition of securities or capital assets except (A) securities of a company engaged solely in. or capital assets for the conduct of, a business or businesses in which it is lawful for a registered holding company to engage or have an interest under the provisions of section 8, and (B) securities or capital assets in respect of the acquisition of which there shall have been obtained from the Federal Power Commission a certificate that such acquisition will serve the public interest by advancing economy and efficiency in the operations of a geographically and economically integrated public-utility system; or (2) the acquisition of any securities or capital assets the acquisition, issue, or sale of which is subject, under the laws of any State, to the jurisdiction of a State commission or State securities commission unless the applicable State laws have been complied with.

SIMPLIFICATION OF HOLDING-COMPANY STRUCTURES; REORGANIZATIONS

SEC. 11. (a) It shall be the duty of the Commission to examine the corporate structure of every registered holding company and subsidiary company thereof, the relationships among the companies in the holding-company system of every such company and the character of the properties owned thereby to determine the extent to which the corporate structure of such holding-company system and the companies therein may be simplified, unnecessary complexities therein eliminated, and the properties thereof confined to those essentially relates in operation and substantially contiguous in location.

(b) It shall be the duty of the Commission, after notice and opportunity for hearing

(1) To require every registered holding company and every subsidiary company thereof to dispose of any security of capital assets held in violation of any provision of this Act or any rule or regulation thereunder;

(2) Immediately after January 1, 1938, to require every registered holding company and every subsidiary company thereof to dispose of any securities or capital assets whenever it appears to the Commission that the continued ownership or control thereof by any such company is not necessary or appropriate to the operations of a geographically and economically integrated public-utility system;

(3) Immediately after January 1, 1938, to require every registered holding company and every subsidiary company of a registered holding company to be reorganized or dissolved whenever it appears to the Commission that the corporate structure or continued existence of any such company unduly or unnecessarily complicates the structure of the public-utility system of which it is a part or is detrimental to the subsidiary companies thereof or to investors or consumers: Provided, however, That if the Commission is of the opinion in any case that action by it under paragraph (2) or (3) of this subsection could cause unnecessary injury to investors or consumers, the Commission, upon such terms and conditions as it may deem necessary or appropriate in the public interest or for the protection of investors or consumers, may defer action in such case for a period not extending beyond January 1, 1940; and

(4) Immediately after January 1, 1940, to require every registered holding company to dispose of securities or to be reorganized or dissolved insofar as may be necessary to make every such company cease to be a holding company: Provided, however, That the Commission, upon such terms and conditions as it may deem necessary or appropriate in the public interest or for the protection of investors or consumers, may permit a registered holding company to continue to be a holding company (A) if such registered holding company shall have obtained from the Federal Power Commission a certificate that the continuance of the holding company relation is necessary for the operation of a geographically and economically integrated public-utility system serving an economic district extending into two or more contiguous States or into a contiguous foreign country and the merger or consolidation of such registered holding company with its subsidiary company or companies is impossible under the applicable State or foreign law, or (B) if neither such registered holding company nor any such subsidiary company thereof is a public-utility company organized or doing business within the United States.

(c) The Commission may apply to a court, in accordance with the provisions of subsection (f) of section 18, to enforce compliance with any order under this section. Upon any such application, the court shall take possession and exclusive jurisdiction for the purposes of this Act of such assets of the company, wherever located, as may be held in contravention of such order, or, in the case of any order for reorganization or dissolution, possession, and exclusive jurisdiction for the purposes of this Act of the company and all of its assets, wherever located; and the court shall have jurisdiction, and it shall be the duty of the court, to constitute and appoint the Commission as sole trustee to administer the assets so possessed and the proceeds thereof as a trust estate for the benefit of the persons interested therein as their interests may appear. In any proceedings for the enforcement of an order of the Commission under this section, the Commission with the approval of the court shall have power to dispose of any or all of such assets and, subject to such terms and conditions as the court may prescribe, may make such disposition in accordance with a reorganization plan which shall have been approved by the Commission after opportunity for hearing. Such reorganization plan may be prepared in the first instance by the Commission, or, subject to such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors, by any person having a bona fide interest (as defined by the rules and regulations of the Commission) in the reorganization.

(d) If, in the judgment of the Commission, any registered holding company or any subsidiary company thereof is insolvent or unable to pay its debts as they mature, the Commission shall have power to institute proceedings for the reorganization of such company under section 77B of the Act of July 1, 1898, entitled "An Act to establish a uniform system of bankruptcy throughout the United States", as amended. In any such proceedings or in any other proceedings in a court of the United States, whether under said section 77B or otherwise, by whomsoever instituted, for the reorganization or liquidation of