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U.S. Code as of:
01/19/04
Section 79k. Simplification of holding company systems
(a) Examination by Commission with view to simplification
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 interests thereof and the properties owned or controlled
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, voting
power fairly and equitably distributed among the holders of
securities thereof, and the properties and business thereof
confined to those necessary or appropriate to the operations of an
integrated public-utility system.
(b) Limitations on operations of holding company systems
It shall be the duty of the Commission, as soon as practicable
after January 1, 1938:
(1) To require by order, after notice and opportunity for
hearing, that each registered holding company, and each
subsidiary company thereof, shall take such action as the
Commission shall find necessary to limit the operations of the
holding-company system of which such company is a part to a
single integrated public-utility system, and to such other
businesses as are reasonably incidental, or economically
necessary or appropriate to the operations of such integrated
public-utility system: Provided, however, That the Commission
shall permit a registered holding company to continue to control
one or more additional integrated public-utility systems, if,
after notice and opportunity for hearing, it finds that -
(A) Each of such additional systems cannot be operated as an
independent system without the loss of substantial economies
which can be secured by the retention of control by such
holding company of such system;
(B) All of such additional systems are located in one State,
or in adjoining States, or in a contiguous foreign country; and
(C) The continued combination of such systems under the
control of such holding company is not so large (considering
the state of the art and the area or region affected) as to
impair the advantages of localized management, efficient
operation, or the effectiveness of regulation.
The Commission may permit as reasonably incidental, or
economically necessary or appropriate to the operations of one or
more integrated public-utility systems the retention of an
interest in any business (other than the business of a
public-utility company as such) which the Commission shall find
necessary or appropriate in the public interest or for the
protection of investors or consumers and not detrimental to the
proper functioning of such system or systems.
(2) To require by order, after notice and opportunity for
hearing, that each registered holding company, and each
subsidiary company thereof, shall take such steps as the
Commission shall find necessary to ensure that the corporate
structure or continued existence of any company in the
holding-company system does not unduly or unnecessarily
complicate the structure, or unfairly or inequitably distribute
voting power among security holders, of such holding-company
system. In carrying out the provisions of this paragraph the
Commission shall require each registered holding company (and any
company in the same holding-company system with such holding
company) to take such action as the Commission shall find
necessary in order that such holding company shall cease to be a
holding company with respect to each of its subsidiary companies
which itself has a subsidiary company which is a holding company.
Except for the purpose of fairly and equitably distributing
voting power among the security holders of such company, nothing
in this paragraph shall authorize the Commission to require any
change in the corporate structure or existence of any company
which is not a holding company, or of any company whose principal
business is that of a public-utility company.
The Commission may by order revoke or modify any order previously
made under this subsection, if, after notice and opportunity for
hearing, it finds that the conditions upon which the order was
predicated do not exist. Any order made under this subsection shall
be subject to judicial review as provided in section 79x of this
title.
(c) Time for compliance with order limiting operations
Any order under subsection (b) of this section shall be complied
with within one year from the date of such order; but the
Commission shall, upon a showing (made before or after the entry of
such order) that the applicant has been or will be unable in the
exercise of due diligence to comply with such order within such
time, extend such time for an additional period not exceeding one
year if it finds such extension necessary or appropriate in the
public interest or for the protection of investors or consumers.
(d) Court enforcement of order for simplification; appointment of
trustee; disposition of assets; reorganization plan
The Commission may apply to a court, in accordance with the
provisions of subsection (f) (!1) of section 79r of this title, to
enforce compliance with any order issued under subsection (b) of
this section. In any such proceeding, the court as a court of
equity may, to such extent as it deems necessary for purposes of
enforcement of such order, take exclusive jurisdiction and
possession of the company or companies and the assets thereof,
wherever located; and the court shall have jurisdiction, in any
such proceeding, to appoint a trustee, and the court may constitute
and appoint the Commission as sole trustee, to hold or administer
under the direction of the court the assets so possessed. In any
proceeding for the enforcement of an order of the Commission issued
under subsection (b) of this section, the trustee 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 fair and
equitable reorganization plan which shall have been approved by the
Commission after opportunity for hearing. Such reorganization plan
may be proposed in the first instance by the Commission, or,
subject to such rules and regulations as the Commission may deem
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.
(e) Submission by company of plan for simplification; court
enforcement of order of approval; appointment of trustee
In accordance with such rules and regulations or order as the
Commission may deem necessary or appropriate in the public interest
or for the protection of investors or consumers, any registered
holding company or any subsidiary company of a registered holding
company may, at any time after January 1, 1936, submit a plan to
the Commission for the divestment of control, securities, or other
assets, or for other action by such company or any subsidiary
company thereof for the purpose of enabling such company or any
subsidiary company thereof to comply with the provisions of
subsection (b) of this section. If, after notice and opportunity
for hearing, the Commission shall find such plan, as submitted or
as modified, necessary to effectuate the provisions of subsection
(b) of this section and fair and equitable to the persons affected
by such plan, the Commission shall make an order approving such
plan; and the Commission, at the request of the company, may apply
to a court, in accordance with the provisions of subsection (f)
(!1) of section 79r of this title, to enforce and carry out the
terms and provisions of such plan. If, upon any such application,
the court, after notice and opportunity for hearing, shall approve
such plan as fair and equitable and as appropriate to effectuate
the provisions of this section, the court as a court of equity may,
to such extent as it deems necessary for the purpose of carrying
out the terms and provisions of such plan, take exclusive
jurisdiction and possession of the company or companies and the
assets thereof, wherever located; and the court shall have
jurisdiction to appoint a trustee, and the court may constitute and
appoint the Commission as sole trustee, to hold or administer,
under the direction of the court and in accordance with the plan
theretofore approved by the court and the Commission, the assets so
possessed.
(f) Commission as trustee; submission of reorganization plan by
Commission or interested party
In any proceeding in a court of the United States, whether under
this section or otherwise, in which a receiver or trustee is
appointed for any registered holding company, or any subsidiary
company thereof, the court may constitute and appoint the
Commission as sole trustee or receiver, subject to the directions
and orders of the court, whether or not a trustee or receiver shall
theretofore have been appointed, and in any such proceeding the
court shall not appoint any person other than the Commission as
trustee or receiver without notifying the Commission and giving it
an opportunity to be heard before making any such appointment. In
no proceeding under this section or otherwise shall the Commission
be appointed as trustee or receiver without its express consent. In
any such proceeding a reorganization plan for a registered holding
company or any subsidiary company thereof shall not become
effective unless such plan shall have been approved by the
Commission after opportunity for hearing prior to its submission to
the court. Notwithstanding any other provision of law, any such
reorganization plan may be proposed in the first instance by the
Commission or, subject to such rules and regulations as the
Commission may deem 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. The Commission may, by such
rules and regulations or order as it may deem necessary or
appropriate in the public interest or for the protection of
investors or consumers, require that any or all fees, expenses, and
remuneration, to whomsoever paid, in connection with any
reorganization, dissolution, liquidation, case under title 11, or
receivership of a registered holding company or subsidiary company
thereof, in any such proceeding, shall be subject to approval by
the Commission.
(g) Solicitation of proxies, powers of attorney, etc., in respect
of reorganization plan
It shall be unlawful for any person to solicit or permit the use
of his or its name to solicit, by use of the mails or any means or
instrumentality of interstate commerce, or otherwise, any proxy,
consent, authorization, power of attorney, deposit, or dissent in
respect of any reorganization plan of a registered holding company
or any subsidiary company thereof under this section, or otherwise,
or in respect of any plan under this section for the divestment of
control, securities, or other assets, or for the dissolution of any
registered holding company or any subsidiary company thereof,
unless -
(1) the plan has been proposed by the Commission, or the plan
and such information regarding it and its sponsors as the
Commission may deem necessary or appropriate in the public
interest or for the protection of investors or consumers has been
submitted to the Commission by a person having a bona fide
interest (as defined by the rules and regulations of the
Commission) in such reorganization;
(2) each such solicitation is accompanied or preceded by a copy
of a report on the plan which shall be made by the Commission
after an opportunity for a hearing on the plan and other plans
submitted to it, or by an abstract of such report made or
approved by the Commission; and
(3) each such solicitation is made not in contravention of such
rules and regulations or orders as the Commission may deem
necessary or appropriate in the public interest or for the
protection of investors or consumers.
Nothing in this subsection or the rules and regulations thereunder
shall prevent any person from appearing before the Commission or
any court through an attorney or proxy.
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