17 Cfr 250

Securities and Exchange Commission

Pt. 250

PART 250—GENERAL RULES AND
REGULATIONS, PUBLIC UTILITY
HOLDING COMPANY ACT OF
1935
REGISTRATION AND GENERAL EXEMPTIONS
Sec.
250.1 Registration.
250.2 Exemption of holding companies
which are intrastate or predominantly
operating companies.
250.3 Exemption of certain banks.
250.4 Exemption of certain brokers, dealers
and underwriters.
250.5 Exemption of certain foreign holding
companies.
250.6 Termination of exemptions.
250.7 Companies deemed not to be electric
or gas utility companies.
250.8 Exemption of subsidiaries subject to
jurisdiction of Interstate Commerce
Commission.
250.10 Effect of certain exemptions.
250.11 Certain acquisitions by affiliates exempted from section 9(a)(2).
250.12 Exemption of certain public utility
companies from the definition of subsidiary companies of holding companies.
250.14 Exemption of acquisitions of securities of power supply companies from section 9(a)(2) of the Act.
250.15 Exemption of holding company and
subsidiary companies under section
3(a)(2) of the Act.
250.16 Exemption of non-utility subsidiaries
and affiliates.
FORMS, PROCEDURE AND ACCOUNTS

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250.20 Prescribed forms and amendments.
250.21 Filing of documents.
250.22 Applications and declarations.
250.23 Procedure applicable to certain applications and declarations.
250.24 Terms and conditions applicable to
declarations and orders granting applications.
250.25 Answers.
250.26 Financial statement and recordkeeping requirements for registered
holding companies and subsidiaries.
250.27 Classification of accounts prescribed
for utility companies not already subject
thereto.
250.28 Inconsistent financial statements.
250.29 Filing of reports to State Commissions.

250.42 Acquisition, retirement and redemption of securities by the issuer thereof.
250.43 Sales to affiliates.
250.44 Sales of securities and assets.
250.45 Loans, extensions of credit, donations
and capital contributions to associate
companies.
250.46 Dividend declarations and payments
on certain indebtedness.
250.47 Exemption of public utility subsidiaries as to certain securities issued to
the Rural Electrification Administration.
250.48 Certain exemptions in connection
with appliance sales and loans to officers
or employees.
250.49 Certain exemptions granted to nonutility subsidiaries.
250.50 [Reserved]
250.51 Acquisitions pursuant to preliminary
agreements and invitation for tenders.
250.52 Exemption of issue and sale of certain
securities.
250.53 Certain registered holding company
financings in connection with the acquisition of one or more exempt wholesale
generators.
250.54 Effect of exempt wholesale generators
on other transactions.
250.57 Notices and reports to be filed under
section 33.
250.58 Exemption of investments in certain
nonutility companies.
SOLICITATIONS AND REORGANIZATIONS
250.60 Meaning of word ‘‘authorization’’.
250.61 Solicitations other than in connection with a reorganization or transaction
which is the subject of an application or
declaration.
250.62 Solicitations in connection with a reorganization or transaction which is the
subject of an application or declaration.
250.63 Approval of reorganization fees.
250.64 Scope of applications for approval of
reorganization plans.
250.65 Expenditures in connection with solicitation of proxies.
OFFICERS, DIRECTORS AND REPRESENTATIVES
OF REGISTERED HOLDING COMPANIES AND
THEIR SUBSIDIARIES
250.70 Exemptions from section 17(c) of the
Act.
250.71 Statements to be filed pursuant to
section 12(i).
250.72 Filing of statements pursuant to section 17(a).

REGULATION AND EXEMPTION OF VARIOUS
FINANCIAL TRANSACTIONS

SERVICE, SALES AND CONSTRUCTION
CONTRACTS

250.40 Exemption of certain acquisitions
from nonaffiliates.
250.41 Exemption of public utility subsidiaries with respect to limited acquisition
of utility assets.

250.80 Definitions of terms used in rules
under section 13.
250.81 Exempted transactions.
250.82 Temporary exemption from section
13.

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§ 250.1

17 CFR Ch. II (4–1–11 Edition)

250.83 Exemption in the case of transactions
with foreign associates.
250.84 Prohibition of unauthorized transactions by registered holding companies.
250.85 Service, sales, and construction by
registered holding companies.
250.86 Prohibition of unauthorized transactions by subsidiaries.
250.87 Subsidiaries authorized to perform
services or construction or to sell goods.
250.88 Approval of mutual service companies; organization and conduct of business or subsidiary service companies.
250.89 Termination of contracts.
250.90 Transactions limited to cost.
250.91 Determination of cost.
250.92 Sales of goods produced by seller.
250.93 Accounts and records of mutual and
subsidiary service companies.
250.94 Annual reports by mutual and subsidiary service companies.
250.95 Reports required from affiliate service companies and companies principally
engaged in performing services.
MISCELLANEOUS RULES
250.100 Orders granting or withdrawing exemptions.
250.101 Standards and interpretations of
rules.
250.102 Effective date of rules.
250.103 References and definitions.
250.103A Liability for certain statements by
issuers.
250.104 Public disclosure of information and
objections thereto.
250.105 Disclosure detrimental to the national defense or foreign policy.
250.106–250.107 [Reserved]
250.110 Small entities for purposes of the
Regulatory Flexibility Act.
AUTHORITY: 15 U.S.C. 79c, 79f(b), 79i(c)(3),
79t, unless otherwise noted.
SOURCE: Rule U, 6 FR 2015, Apr. 19, 1941, unless otherwise noted.
NOTE: In §§ 250.1 to 250.105 the numbers to
the right of the decimal point correspond
with the respective rule numbers of Regulation U.

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ATTENTION ELECTRONIC FILERS
THIS REGULATION SHOULD BE READ IN
CONJUNCTION WITH REGULATION S-T
(PART 232 OF THIS CHAPTER), WHICH
GOVERNS THE PREPARATION AND SUBMISSION OF DOCUMENTS IN ELECTRONIC
FORMAT. MANY PROVISIONS RELATING
TO THE PREPARATION AND SUBMISSION
OF DOCUMENTS IN PAPER FORMAT CONTAINED IN THIS REGULATION ARE SUPERSEDED BY THE PROVISIONS OF REGULATION S-T FOR DOCUMENTS REQUIRED TO BE FILED IN ELECTRONIC
FORMAT.

REGISTRATION AND GENERAL
EXEMPTIONS
§ 250.1

Registration.

(a) Notification of registration. Notifications of registration pursuant to section 5(a) of the act (49 Stat. 812; 15
U.S.C. 79(e) shall be filed on Form U–
5A.
(b) Registration statement. Every registered holding company and person
registering as a company proposing to
become a holding company, shall file
with the Commission a registration
statement on Form U–5B within 90
days after becoming a registered holding company.
(c) Annual report. Every registered
holding company shall file, on or before
the first of May in the year following
that in which it filed its registration
statement, and in every succeeding
year, an annual report on Form U5S
(§ 259.5s of this chapter): Provided, however, That where any holding company
system includes more than one registered holding company, the annual
report shall be filed by the top registered holding company in such system and shall be signed on behalf of
each registered holding company in
such system by the authorized officer
of each such registered holding company.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 16 FR 2576, Mar. 21, 1951; 37 FR 1472, Jan.
29, 1972; 61 FR 49961, Sept. 24, 1996]

§ 250.2 Exemption of holding companies which are intrastate or predominantly operating companies.
(a) General provisions. Any holding
company, and every subsidiary company thereof as such, shall, upon the
filing of an exemption statement on
Form U–3A–2 and subject to the filing
of such exemption statement on or before March 1 of each year thereafter,
and subject to the provisions of Rule
U–6, be exempt from all the provisions
of the act and rules thereunder, except
section 9(a)(2) of the act, if:
(1) Such holding company, and every
subsidiary company thereof which is a
public utility company from which
such holding company derives, directly
or indirectly, any material part of its
income, are predominantly intrastate

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Securities and Exchange Commission

§ 250.4

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in character and carry on their business substantially in a single State in
which such holding company and every
such subsidiary company thereof are
organized; or
(2) Such holding company is predominantly a public utility company whose
operations as such do not extend beyond the State in which it is organized
and States contiguous thereto.
(b) Exception. Unless otherwise required by the Commission, a holding
company which is a subsidiary of a registered holding company need file only
the initial statement on Form U–3A–2.

within 30 days after the last day of
February of each year. No such statement is required, however, with respect
to any security holdings as to which
such form is inapplicable by its provisions.
(d) Definition of bank. The term
‘‘bank’’, as used in this section, means
any company primarily engaged in
business as a commercial bank or trust
company, or both, and subject to regulation or examination under the laws
of the United States or of any State, or
any receiver, conservator, or liquidating agent thereof in his capacity as
such.

[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 10 FR 15412, Dec. 29, 1945]

[16 FR 253, Jan. 10, 1951]

§ 250.3 Exemption of certain banks.
(a) General exemption. Subject to the
provisions of § 250.6 and to the requirements contained in paragraph (c) of
this section, any bank shall be exempt
from any obligation, duty, or liability
imposed by the act upon such bank as
a holding company solely by reason of
such bank owning, controlling, or holding with power to vote any securities
of any public-utility or holding company which the bank:
(1) Holds as collateral for a bona fide
debt; or
(2) Holds in the ordinary course of its
business as a fiduciary; or
(3) Has acquired solely for purposes of
liquidation in connection with a bona
fide debt previously contracted and has
owned beneficially for a period of not
more than two years.
(b) Exemptions from section 9(a)(2).
Subject to the requirements contained
in paragraph (c) of this section, any
bank shall be exempt from section
9(a)(2) of the act with respect to the acquisition of any securities by such
bank:
(1) As collateral for a bona fide debt;
or
(2) Solely for purposes of liquidation
in connection with a bona fide debt
previously contracted; or
(3) In the ordinary course of its business as fiduciary; or
(4) Which is not a voting security or
convertible into a voting security.
(c) Statements. Any bank claiming exemptions pursuant to the provisions of
this section shall file a statement on
Form U–3A3–1 (§ 259.403 of this chapter)

§ 250.4 Exemption of certain brokers,
dealers and underwriters.
(a) General exemption. Subject to the
provision of § 250.6, any broker, dealer
or underwriter, as defined in paragraph
(c) of this section, shall be exempt
from any obligation, duty, or liability
imposed by the act upon such person as
a holding company, solely by reason of
such person owning, controlling, or
holding with power to vote any securities of any public utility or holding
company which are:
(1) Not beneficially owned by such
persons and are subject to any voting
instructions which may be given by
customers or their assigns; or
(2) Acquired within 12 months in the
ordinary course of business as a broker,
dealer or underwriter with the bona
fide intention of effecting distribution
of the specific securities so acquired.
(b) Exemption from section 9(a)(2). Any
broker, dealer or underwriter, as defined in paragraph (c) of this section
shall be exempt from section 9(a)(2) of
the act (49 Stat. 817; 15 U.S.C. 79i) with
respect to the acquisition of any securities for the account of customers, or
in connection with any underwriting
entered into with the intention of effecting immediate distribution of such
securities.
(c) Definition of broker, dealer or underwriter. As used in this section, the
terms ‘‘broker’’ or ‘‘dealer’’ have the
meaning set forth in sections 3(a)(4)
and (a)(5) of the Securities Exchange
Act of 1934 (48 Stat. 882; 15 U.S.C. 78c),
and the term ‘‘underwriter’’ means any
underwriter as defined in section 2(11)

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§ 250.5

17 CFR Ch. II (4–1–11 Edition)

of the Securities Act of 1933 (48 Stat.
74, 905; 15 U.S.C. 77b) who is regularly
engaged in business as such and is not
a registered holding company.
§ 250.5 Exemption of certain foreign
holding companies.
Any holding company not organized
under the laws of any State of the
United States or the District of Columbia, and owning no utility assets located within any State of the United
States or the District of Columbia and
having no subsidiaries or affiliates
owning any assets so located, shall,
subject to the provisions of § 250.6, be
exempt from all the provisions of the
act and rules thereunder: Provided,
That such exemption shall not be applicable to any acquisition of utility
assets located within any State of the
United States or the District of Columbia or of any security of any company
owning such assets or having any subsidiary owning such assets, if, as a result of such acquisition of securities,
the acquiring company will become an
affiliate of the issuer, except an issuer
within any class specified in § 250.10(a).

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§ 250.6

Termination of exemptions.

If it appears to the Commission (on
the basis of statements claiming exemption or otherwise) that a substantial question of law or fact exists as to
whether any holding company claiming
exemption under § 250.2, § 250.3, § 250.4,
§ 250.5, or § 250.10 or any other section
now or hereafter in force pursuant to
section 3(a) of the Act exempting any
class of holding companies from the
registration requirements of the act, is
within the exemption afforded by any
such section, or if it appears that any
question exists as to whether the exemption of any such company may be
detrimental to the public interest or
the interest of investors or consumers,
the Commission may notify such holding company to that effect by registered mail. Thirty days after such notification, such exemption shall terminate, without prejudice to the right of
such holding company to file an application for an order granting such an
exemption pursuant to any applicable
section of the act, and without prejudice to any temporary exemption pro-

vided for by the act if such application
is filed in good faith.
[6 FR 5950, Nov. 25, 1941]

§ 250.7 Companies deemed not to be
electric or gas utility companies.
(a) Any company which is primarily
engaged in one or more businesses
other than the business of an electric
or gas utility company, shall not be
deemed an electric or gas utility company within the meaning of section
2(a)(3) or section 2(a)(4) of the Act if
the gross sales of electric energy, or of
natural or manufactured gas distributed at retail by means of the facilities
owned or operated by such company,
did not exceed an average annual
amount of $5,000,000 over the preceding
three calendar years. There may be excluded from the gross sales specified:
(1) Sales of electric energy or natural
or manufactured gas to tenants or employees of the operating company for
their own use and not for resale; and
(2) Sales of gas to industrial consumers or in enclosed portable containers.
(b)(1) Any company whose only connection with the generation, transmission, or distribution of electric energy is the ownership or operation of
facilities used for the production of
heat or steam from special nuclear material which heat or steam is used in
the generation of electric energy shall
not be deemed an electric utility company within the meaning of section
2(a)(3) of the Act, if such company is
organized not for profit and is engaged
primarily in research and development
activities.
(2) As a prerequisite to being entitled
to the status afforded by paragraph
(b)(1) of this section, any such company
shall file with this Commission a statement that such company falls within
the provisions of that subparagraph,
including as exhibits (i) copies of its
charter, by-laws and any licenses
issued by the Nuclear Regulatory Commission to such company; (ii) a list of
its members or stockholders indicating
their respective percentages of voting
power; and (iii) if such company was in
existence at the end of the preceding
calendar year, a balance sheet as at the
end of the preceding calendar year and
an income and surplus statement for

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Securities and Exchange Commission

§ 250.7

such year or a statement of receipts
and expenditures for such year and of
financial status at its end.
(3) As a prerequisite to retaining the
status afforded by paragraph (b)(1) of
this section, any such company shall
annually on or before May file a statement with this Commission that such
company continues to fall within the
provisions of that subparagraph, including as exhibits (i) any changes or
additions to its charter or by-laws or
list of members or stockholders or any
licenses issued by the Nuclear Regulatory Commission to such company
since the time of the last filing hereunder, and (ii) a balance sheet as at the
end of the preceding calendar year and
an income and surplus statement for
such year or a statement of receipts
and expenditures for such year and of
financial status at its end.
(4) If it appears to the Commission
(on the basis of the aforesaid statements or otherwise) that a substantial
question of law or fact exists as to
whether any company is entitled to the
status afforded by paragraph (b)(1) of
this section, the Commission may notify such company to that effect by
registered mail. Thirty days after such
notification the status afforded by
paragraph (b)(1) of this section shall no
longer be available to such company,
without prejudice to the right of such
company to file an application for an
order granting an exemption from the
application of section 2(a)(3) of the Act,
and without prejudice to any temporary exemption provided by that section if such an application is filed in
good faith. The Commission will grant
such an application if it finds that the
standards set forth in paragraph (b)(1)
of this section are satisfied.
(c) Any company, which (1) owns no
utility assets located within any State
of the United States, (2) has no subsidiary company owning any such assets so located, and (3) is engaged solely in business outside the United
States, shall not be deemed to be an
electric or gas utility company within
the meaning of section 2(a)(3) or (a)(4)
of the Act, if its gross sales of electric
energy or of natural or manufactured
gas distributed at retail, by means of
facilities owned or operated by such
company, did not exceed 1 percent of

its gross revenues during the previous
calendar year.
(d) A company shall not be deemed to
be an electric utility company or a gas
utility company which owns any of the
facilities specified in sections 2(a)(3)
and (4) [of the Act] Provided, That:
(1) Such company owns the facility
as a company, as a trustee, or as holder
of a beneficial interest under a trust,
or as a purchaser or assignee of any of
the foregoing; and
(i) Such facility is leased under a net
lease directly to a public utility company either as a sole lessee or joint lessee with one or more other public utility companies, and such facility is or is
to be employed by the lessee in its operations as a public utility company;
and
(ii) Such company is otherwise primarily engaged in one or more businesses other than the business of a public utility company, or is a company
all of whose equity interest is owned by
one or more companies so engaged, either directly or through subsidiary
companies; and
(iii) The terms of the lease have been
expressly authorized or approved by a
regulatory authority having jurisdiction over the rates and service of the
public utility company which leases
such facility; and
(iv) The lease of the facility extends
for an initial term of not less than 15
years, except for termination of the
lease upon events therein set forth, unless the owner shall state in the initial
certificate filed pursuant to paragraph
(d)(5) of this section that a shorter
term specified in the lease is not less
than two-thirds of the expected useful
life of the facility; and
(v) The rent reserved under the lease
shall not include any amount based, directly or indirectly, on revenues or income of the public utility company, or
any part thereof.
Paragraphs (d)(1)(iii) and (iv) of this
section shall not apply to a lease executed before, or within 30 days after,
the effective date of this section, if the
certificate required by paragraph (d)(5)
of this section is filed within 60 days
after such effective date.
(2) Paragraph (d)(1) of this section
shall cease to be applicable in the
event of termination of the lessee’s

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§ 250.8

17 CFR Ch. II (4–1–11 Edition)

right to possession or use of the facility during its term, unless within 90
days of the date of termination, and
subject to such prior or subsequent regulatory and other approvals as by law
may be required, such company, as defined in this section, negotiates a new
lease or an operating agreement at a
fixed rental.
(3) A public utility company shall not
cease to be such by reason of a lease,
directly or indirectly, of part or all of
its facilities to any associate company
or to any entity, whether or not a company, as defined in section 2(a)(2) of the
Act.
(4) Except to the extent provided in
paragraphs (d)(1) and (6) of this section,
this section shall not relieve any company from such other provisions of the
Act, and rules and regulations promulgated thereunder, as may be applicable.
(5) Any company specified in paragraph (d)(1) of this section shall file, or
join in the filing of, a certificate on a
form prescribed by the Commission, as
to each lease within 30 days of its execution. Upon any transfer of legal or
beneficial ownership, such new owner
shall file an appropriate amendment
within 30 days of such transfer. If the
lease is amended in a manner which
would alter any item of the certificate,
or if the facility ceases, for any reasons, to be subject to the lease, the
holder of legal title to the facility shall
file an appropriate amendment within
30 days of the event.
(6) A company shall not be deemed to
be an electric utility company by reason of ownership of any interest in nuclear fuel and facilities incident to its
use, if the operation and use thereof is
vested by lease or contract in one or
more public utility companies, unless
the consideration paid by a public utility company for the use of such fuel
and facilities, or of the heat or energy
produced thereby, includes an amount
based, directly or indirectly, on the
revenue or income of the public utility
company or any part thereof. Any such
company shall file, or join in the filing
of, the certificates specified in paragraph (d)(5) of this section. A certificate with respect to a lease or contract
executed prior to, or within 30 days
after, the effective date of this section

shall be filed within 60 days after such
effective date.
(7) The provisions of paragraphs (d)(1)
and (5) of this section, and the filing requirements of paragraph (d)(6) of this
section shall not apply if the facilities
therein specified are in possession of
and operated by one or more governmental bodies or instrumentalities
thereof specified in section 2(c) of the
Act.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 7 FR 3423, May 8, 1942; 21 FR 5438, July 20,
1956; 32 FR 13487, Sept. 27, 1967; 38 FR 16998,
June 28, 1973; 59 FR 21927, Apr. 28, 1994]

§ 250.8 Exemption of subsidiaries subject to jurisdiction of Interstate
Commerce Commission.
Any subsidiary company of a registered holding company, which subsidiary is subject to the jurisdiction of
the Interstate Commerce Commission
but is not an electric or gas utility
company or a holding company, shall
be exempt from all the provisions of
the act and rules thereunder, with respect to any transaction which is approved by the Interstate Commerce
Commission, except that the exemption from section 9(a) (49 Stat. 817; 15
U.S.C. 79i) provided by this rule shall
not be applicable to any acquisition of
securities of any electric or gas utility
company or holding company or to any
acquisition by which such subsidiary
will become a public utility or holding
company.
§ 250.10

Effect of certain exemptions.

(a) Parent holding companies exempt
where subsidiaries have obtained, or applied for, certain exemptions. Subject to
the provisions of § 250.6, any holding
company shall be exempt from any obligation, duty, or liability imposed on
it as a holding company solely by reason of such company having as a subsidiary any company which, insofar as
it is either a public utility or a holding
company, is:
(1) A company declared not to be a
public utility or holding company by
rule or order under section 2(a)(3),
2(a)(4), or 2(a)(7) of the Act (49 Stat.
804; 15 U.S.C. 79b), or is exempted without qualification by order pursuant to

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Securities and Exchange Commission

§ 250.11

section 3(b) from all obligations, duties, or liabilities imposed on it as a
subsidiary company; or
(2) A company exempted as a holding
company from sections 4 and 5(a) of the
Act (49 Stat. 812; 15 U.S.C. 79d, 79e) by
order under subparagraph (3), (4), or (5)
of section 3(a) (49 Stat. 810; 15 U.S.C.
79c), or by § 250.3, § 250.4, or § 250.5; or
(3) A company which is only indirectly a subsidiary of such holding
company through the interest of such
holding company in a subsidiary holding company of the class specified in
paragraph (a)(2) of this section; or
(4) A company as to which there is
pending an application for an order
specified in paragraph (a)(1), (2), or (3)
of this section. Provided, That such
holding company does not have cause
to believe that such application was
not filed in good faith.
(b) Subsidiary companies deemed to be
included in applications by parent companies under section 2(a)(8). Every application for exemption filed under section
2(a)(8) (49 Stat. 804; 15 U.S.C. 79b),
whether filed before or after the adoption of this section, shall, unless otherwise expressly stated therein, be
deemed to be filed on behalf of such applicant and of all subsidiary companies
of such applicant, and shall be deemed
to include as applicants all such subsidiary companies of such subsidiary
company filing such application: Provided, however, That the Commission
may in any case direct the filing of separate applications by any such companies or may order separate hearings or
enter separate or different orders with
respect to any such companies so
deemed to be included pursuant to this
section.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 6 FR 5950, Nov. 25, 1941]

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§ 250.11 Certain acquisitions by affiliates exempted from section 9(a)(2).
(a) Acquisitions by certain exempt holding companies. Any holding company
which is exempt from sections 4 and
5(a) of the Act (49 Stat. 812; 15 U.S.C.
79d, 79e) and which is not a subsidiary
of any registered holding company,
shall be exempt from section 9(a)(2) (49
Stat. 817; 15 U.S.C. 79i) of the Act with
respect to the acquisition of any secu-

rities issued by any subsidiary of such
exempt holding company.
(b) Acquisitions by certain exempt holding companies and persons not in registered holding company systems. Any
holding company specified in paragraph (a) of this section and any person
which is not a holding company or a
subsidiary of any registered holding
company, shall be exempt from section
9(a)(2) of the Act (49 Stat. 817; 15 U.S.C.
79i) with respect to the acquisition of
any of the following securities:
(1) Securities issued by certain exempt
public utility or holding companies. Securities issued by any public utility or
holding company, which is within the
classes specified in § 250.10(a) (1) and (2);
or
(2) Securities of foreign companies. Securities issued by any company which
does not own or operate, or have a subsidiary which owns or operates, any
utility assets located in the United
States: Provided, That the acquiring
company is not an affiliate under section 2(a)(11)(A) of the Act (49 Stat. 804;
15 U.S.C. 77b) of any company which
owns or operates, and has no subsidiary
which owns or operates, any utility assets located in the United States.
(c) Acquisitions by certain registered
holding companies. The exemptions provided by paragraph (b)(2) of this section
shall also apply to any registered holding company which has been exempted
from section 9(a)(1) of the Act (49 Stat.
817; 15 U.S.C. 79i) as to the acquisition
of the securities therein specified.
(d) Acquisitions by certain persons of
securities issued by affiliates. Any person
which is not a holding company or a
subsidiary of a registered holding company shall be exempt from section
9(a)(2) of the Act with respect to the
acquisition of any securities issued by
a public utility or holding company of
which such person is, prior to such acquisition, an affiliate under section
2(a)(11)(A) of the Act.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 18 FR 6589, Oct. 16, 1953]

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§ 250.12

17 CFR Ch. II (4–1–11 Edition)

§ 250.12 Exemption of certain public
utility companies from the definition of subsidiary companies of
holding companies.
(a) Exemption. If voting securities of a
public utility company are owned, controlled or held with power to vote by
the trustee or trustees of an inter-vivos
or testamentary trust created by an instrument executed prior to January 1,
1935, and if such trust was established
for charitable, religious, educational or
other nonbusiness purposes, or for the
benefit of an individual or individuals,
or for more than one of such purposes,
and if the beneficial interest or interests in such trust are not represented
by transferable certificates, and if such
public utility company is not itself a
holding company, then such public
utility company and any subsidiary
companies thereof shall not be deemed
to be subsidiary companies of such
trustees or trust within the meaning of
the act or any rule or regulation thereunder, and such public utility company
and any subsidiary companies thereof
and such trustees and trust shall be exempt from any provisions of the act
other than section 9(a)(2) thereof, from
any rules and regulations thereunder
and from any obligations, duties and liabilities thereunder to which they
might otherwise be subject by reason
of the ownership, control or holding
with power to vote of such securities
by such trustees.

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[12 FR 5868, Sept. 2, 1947]

§ 250.14 Exemption of acquisitions of
securities of power supply companies from section 9(a)(2) of the Act.
(a) An electric utility company which
is not an ‘‘affiliate’’ of any other company under clause (B) of section 2(a)(11)
shall be exempt from section 9(a)(2) of
the Act with respect to the acquisition
of any security of a power supply company, either directly or through a
wholly-owned company organized solely for that purpose, provided that:
(1) The acquisition of any securities
of the power supply company, including its voting securities, and any obligation by such electric utility company to provide funds to the power supply company pursuant to a capital
funds agreement or guarantee of its
debts, is authorized by a regulatory au-

thority having jurisdiction over the
rates and services of such electric utility company;
(2) All of the voting securities of the
power supply company are owned by
one or more electric utility companies
to which the power supply company
sells all of its electric energy, or as a
transmission company provides all its
transmission services to them or their
customers (exclusive of any electric energy or transmission services which it
sells to or provides to any person described in section 2(c) of the Act or to
any rural electric cooperative association); and
(3) The issue of securities by the
power supply company (other than any
security maturing not more than one
year after the date of issue) is subject
to express authorization by a regulatory authority having jurisdiction
over their issuance.
(b) If the voting securities of the
power supply company are acquired by
more than one electric utility company, the requirements of this rule
shall apply independently to each (except that paragraph (a)(1) shall not
apply to any person referred to in section 2(c) of the Act or to any rural electric cooperative association).
(c) Definitions. (1) The term electric
utility company, as used in this rule, includes any person referred to in section
2(c) of the Act.
(2) The term power supply company
means any company which owns and/or
operates facilities for the generation or
transmission of electric energy for sale
to one or more electric utility companies, together with such other facilities
as are incidental and functionally related thereto.
(3) The term voting security shall have
the same meaning as in section 2(a)(17)
of the Act, including any voting interest that serves the same defined purpose.
[46 FR 5869, Jan. 21, 1981]

§ 250.15 Exemption of holding company and subsidiary companies
under section 3(a)(2) of the Act.
(a) When an electric utility company
becomes a holding company with respect to one or more power supply companies in a transaction or tranactions
exempted under § 250.14, the electric

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Securities and Exchange Commission

§ 250.20

utility company, as such holding company, shall be exempt pursuant to section 3(a)(2) of the Act. If an electric
utility company otherwise qualifies for
an exemption pursuant to section
3(a)(2) of the Act, either by order or
pursuant to § 250.2(a)(2) of these rules,
that exemption shall not be affected by
an acquisition exempt under § 250.14.
(b) The exemption under paragraph
(a) of this section shall apply to an
electric utility company whose acquisition, though not subject to section
9(a)(2) of the Act, satisfies all the requirements provided by § 250.14 for an
exempt acquisition.
[46 FR 5870, Jan. 21, 1981]

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§ 250.16 Exemption of non-utility subsidiaries and affiliates.
(a) Any company, and each affiliate
thereof, shall be exempt from all obligations, duties or liabilities imposed
upon it by the Act, as a subsidiary
company or as an affiliate of a registered holding company or of a subsidiary company thereof, as such terms
are respectively defined in sections
2(a)(8)(A) and 2(a)(11) of the Act, if—
(1) Such company is not a public utility company as defined in section
2(a)(5) of the Act;
(2) Such company is or has been organized to engage primarily in the exploration, development, production, manufacture, storage, transportation or
supply of natural or synthetic gas;
(3) No more than 50% of its voting securities or other voting interests are
owned, directly or indirectly, by one or
more registered holding companies;
and
(4) The acquisition by the registered
holding company or subsidiary thereof
of its interest in such company has
been approved by the Commission pursuant to sections 9(a)(1) and 10 of the
Act and applicable rules thereunder
upon a timely application to the Commission.
(b) The exemption provided by this
rule shall continue in effect during the
pendency of such application. If an acquisition is made subject to Commission approval, the exemption provided
by this rule is not terminated if the
Commission does not grant its approval. In that event any such acquisi-

tion shall be disposed of in accordance
with the order of the Commission.
(c) If a registered holding company
directly or indirectly acquires any voting securities of such company, or any
other voting interest, pursuant to this
rule, the holding company shall include
as an exhibit to its annual report on
Form U5S a copy of the annual report
of such company. It may incorporate
by reference the annual report such
company is required to file pursuant to
other statutes administered by the
Commission.
NOTE: Exhibits filed under paragraph (c)
shall be submitted to the Commission in
paper only, whether or not the registrant is
otherwise required to file in electronic format. An electronic filer must submit paper
exhibits under cover of Form SE (§ 259.603).

(d) This rule does not affect the authority of any agency having jurisdiction over rates with respect to a company exempt under this rule, including
authority over affiliate transactions by
or with such company pursuant to the
laws administered by that agency.
[45 FR 79024, Nov. 28, 1980, as amended at 58
FR 15005, Mar. 18, 1993]

FORMS, PROCEDURE AND ACCOUNTS
§ 250.20 Prescribed forms and amendments.
(a) General provisions. (1) Any provision in the rules in this part requiring
the filing of any application, declaration, report or other document on a
specified form or upon the proper or appropriate form, means that such document shall comply with the requirements of such form and the instructions thereto, as most recently amended by the Commission.
(2) Any application or declaration unless otherwise stated therein shall be
deemed to constitute a request for appropriate Commission authorizations
(or exemption) of the proposed transaction or any part thereof, and the
Commission may consider the transaction or any part thereof under the
appropriate provisions of the act or
rules, whether or not such provisions of
the act or rules are specifically designated in the application or declaration.

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WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 250.21

17 CFR Ch. II (4–1–11 Edition)

(3) The Commission may for cause
shown, authorize a modification of particular requirements with respect to
the filing of information or regarding
reports or accounts, or the filing of information after the date otherwise required by these rules or by the appropriate form, or may require filing of
additional information; such authorization or requirement may be evidenced
in any appropriate manner.
(b) Amendments. Amendments to any
such document, other than amendments to applications or declarations
filed on Form U–1, shall comply with
the requirements of the original document and shall state the complete text
of each item amended. Amendments
shall be filed under cover of the form
amended, and shall be marked with the
suffix ‘‘/A’’ to designate the document
as an amendment, e.g., ‘‘U–7D/A.’’
(c) Form U–1 (§ 259.101 of this chapter).
Applications and amendments thereto
under section 6(b), 9(c)(3) and 10 of the
Act and declarations and amendments
thereto pursuant to sections 7, 12(b),
12(c), 12(d) or 12(f) of the Act or any
rule of the Commission thereunder,
shall be filed on Form U–1. Amendments shall be marked either ‘‘U–1/A’’
to designate the document as a pre-effective amendment or ‘‘POS AMC’’ to
designate the document as a post-effective amendment.
(d) Certificates of notification. Form U–
6B–2 is prescribed for any certificate of
notification pursuant to the last sentence of section 6(b) of the Act. Such
certificate shall be filed within 10 days
after the issuance or sale of any securities exempted from the provisions of
section 6(a) by or under the authority
of section 6(b) (49 Stat. 814; 15 U.S.C.
79f), which is neither the subject of a
declaration or application on Form U–
1 nor included within the exemption
provided by § 250.48.
(e) Matters as to which no form is prescribed. As to any proposed transactions, and any request for an order,
for which no form of application is prescribed, applicant shall state the facts
relied upon as the basis for any action
which the Commission is asked to
take, and shall furnish by amendment
such other information as the Commission may require.

(f) Electronic filings. (1) Electronic filers are subject to Regulation S-T (Part
232 of this chapter) and the EDGAR
Filer Manual. Any rule or instruction
therein shall be controlling unless otherwise specifically provided in rules or
instructions pertaining to the submission of a specific form.
(2) The terms ‘‘EDGAR,’’ ‘‘EDGAR
Filer Manual,’’ ‘‘electronic filer,’’
‘‘electronic filing,’’ ‘‘electronic format,’’ ‘‘electronic submission,’’ ‘‘paper
format,’’ and ‘‘signature’’ shall have
the meanings assigned to such terms in
Regulation S-T—General Rules for
Electronic Filings (§§ 232.10 and 237.302
of this chapter).
[6 FR 2015, Apr. 19, 1941, as amended at 19 FR
5211, Aug. 18, 1954; 58 FR 15005, Mar. 18, 1993]

§ 250.21

Filing of documents.

(a) General provision. All documents
required to be filed with the Commission shall be delivered through the
mails or otherwise to the Securities
and Exchange Commission, Washington, DC 20549. Except as otherwise
provided by the rules, such documents
shall be deemed to have been filed with
the Commission on the date when they
are actually received by it.
(b) Electronic filings. (1) All documents required to be filed with the
Commission under the Act or the rules
and regulations thereunder must be
filed at the principal office in Washington, DC via EDGAR by delivery to
the Commission by direct transmission, via dial-up modem or Internet.
(2) The date of filing of documents
shall be determined in the manner set
forth in rule 13 of Regulation S-T
(§ 232.13 of this chapter).
[6 FR 2015, Apr. 19, 1941, as amended at 58 FR
15005, Mar. 18, 1993; 65 FR 24801, Apr. 27, 2000;
68 FR 25800, May 13, 2003]

§ 250.22

Applications and declarations.

(a) Joinder. As far as practicable combined or joint applications or declarations shall be filed with respect to the
same or related transactions or where
related questions of law or fact are involved, and the Commission will dispose of the matter simultaneously or
otherwise as may be appropriate.

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WReier-Aviles on DSKGBLS3C1PROD with CFR

Securities and Exchange Commission

§ 250.23

(b) Incorporation by reference. (1) If
any information required to be filed in
any application or declaration is contained in any document previously or
concurrently filed with the Commission pursuant to any Act administered
by it, the application or declaration
may, subject to the limitations of
§ 228.10(f) and § 229.10(d) of this chapter,
incorporate such information by exact
and specific reference to the filing in
which it was physically filed. The Commission may refuse to permit incorporation by reference in any instance
where, in its opinion, such incorporation is confusing, misleading or inadequate.
(2) Electronic filings. Any application
or declaration filed in electronic format may incorporate by reference any
information contained in any document previously or concurrently filed
with the Commission under any Act
administered by it, provided that, if
amended, the document or amendment
has been filed in accordance with the
requirements of rule 102 of Regulation
S-T (§ 232.102 of this chapter). Such information shall be incorporated by specific reference to the electronic filing
in which it was filed, including the filer’s name, the file number, the form
type and the date filed.
(c) Verification. All applications and
declarations shall be appropriately
verified by an authorized officer of the
applicant of declarant having knowledge of the facts, except as otherwise
specifically provided in the applicable
form.
(d) Formal specifications. All applications, declarations, certificates and
statements, and any amendments
thereto, shall be filed in triplicate. One
copy shall be signed but the other two
copies may have facsimile or typed signatures. Applications and declarations,
amendments thereto, and where practicable, all papers filed as a part thereof shall be on good quality, unglazed,
white paper, no larger than 81⁄2×11
inches in size. To the extent that the
reduction of larger documents would
render them illegible, such documents
may be filed on paper larger than 81⁄2×11
inches in size. All documents filed shall
be bound on the left side in such manner as to leave the reading matter legible, and shall be printed, lithographed,

mimeographed, typewritten, or prepared by any process which, in the
opinion of the Commission, produces
copies suitable for permanent records
and microfilming. Irrespective of the
process used, all copies of such material shall be clear, easily readable and
suitable for repeated photocopying.
Debits and credits in financial statements shall be clearly distinguishable
as such on photocopies.
(e) The manually signed original (or
in the case of duplicate originals, one
duplicate original) of all registrations,
applications, statements, reports, or
other documents filed under the Public
Utility Holding Company Act of 1935,
as amended, shall be numbered sequentially (in addition to any internal numbering which otherwise may be
present) by handwritten, typed, printed, or other legible form of notation
from the facing page of the document
through the last page of that document
and any exhibits or attachments thereto. Further the total number of pages
contained in a numbered original shall
be set forth on the first page of the
document.
(f) Proposed notice. A proposed notice
of the proceeding initiated by the filing
of an application or a declaration shall
accompany each application or declaration as an exhibit thereto and, if
necessary, shall be modified to reflect
any amendments to such application or
declaration.
(Sec. 19, 48 Stat. 85, as amended, secs. 13, 15,
23, 48 Stat. 894, 895, 901, as amended, sec. 15,
49 Stat. 828, secs. 305, 307, 314, 319, 53 Stat.
1154, 1156, 1167, 1173, as amended, secs. 38, 39,
54 Stat. 841; 15 U.S.C. 77s, 78m, 78o, 78w, 79o,
77eee, 77ggg, 77nnn, 77sss, 80a–37, 80a–38; 15
U.S.C. 79c and 79t (49 Stat. 810, 833); 15 U.S.C.
80w–37, 30c–39 (54 Stat. 841, 342); 15 U.S.C. 80b–
3, 80b–4, 80b–11 (54 Stat. 850, 852, 855))
[19 FR 5211, Aug. 18, 1954, as amended at 29
FR 2421, Feb. 13, 1964; 44 FR 4666, Jan. 23,
1979; 47 FR 58238, Dec. 30, 1982; 50 FR 50611,
Dec. 11, 1985; 58 FR 15005, Mar. 18, 1993; 60 FR
32825, June 23, 1995]

§ 250.23 Procedure applicable to certain applications and declarations.
(a) Scope of rule. The provisions of
this section apply to applications
under sections 6(b), 9(c)(3) and 10 of the
Act (49 Stat. 814, 49 Stat. 817, 49 Stat.
818; 15 U.S.C. 79f, 79i, 79j) or § 250.50 and
declarations pursuant to sections 7,

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§ 250.24

17 CFR Ch. II (4–1–11 Edition)

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12(b), 12(c), 12(d), and 12(f) of the Act (49
Stat. 815, 49 Stat. 823; 15 U.S.C. 79g, 79l)
and any rule of the Commission thereunder, to declarations under § 250.65,
and to declarations regarding proposed
accounting entries subject to instruction 8C of the Uniform System of Accounts for Public Utility Holding Companies.
(b) Designation of filings as applications or declarations. Any filing as to
any matter specified in paragraph (a)
of this section shall be designated an
application, if filed pursuant to section
6(b), 9(c)(3) or 10 of the Act (49 Stat.
814, 817, 818; 15 U.S.C. 79f, 79i, 79j) or
§ 250.50, and shall be designated a declaration with respect to any other matter specified in paragraph (a) of this
section.
(c) Effective date. A declaration or application, which complies with the applicable requirements of the Act and
the rules and regulations thereunder,
will become effective or be granted respectively by an order to issue upon
the expiration of the period prescribed
in the notice of filing.
(d) Effect of order for hearing. If the
Commission deems that a hearing is
appropriate in the public interest or
the interest of investors or consumers,
it will issue an order for hearing thereon, and in that event a declaration or
application shall not become effective
or be granted except pursuant to further order of the Commission.
(e) Notice of filing. The Commission
will publish in the FEDERAL REGISTER
notice of the filing of a declaration or
application, stating the earliest date
upon which such declaration or application, as filed or as amended, may be
permitted to become effective or be
granted. Any interested person may,
not later than fifteen days after the
publication of such notice or such
other date as may be fixed therein, request the Commission in writing that a
hearing be held, stating his reasons
therefor and the nature of his interest.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 6 FR 5950, Nov. 25, 1941; 28 FR 5664, June
11, 1963; 41 FR 26854, June 30, 1976]

§ 250.24 Terms and conditions applicable to declarations and orders
granting applications.
(a) Certificate required from declarant
or applicant. Within 10 days after the
consummation of any transaction regarding which a declaration has become effective or an application has
been granted, the declarant or applicant shall certify to the Commission
that such transaction has been carried
out in accordance with the terms and
conditions of and for the purposes represented by the declaration or application, and of any order of the Commission with respect thereto, and except
to the extent that the declaration or
application specifies that certain steps
or transactions therein proposed may
be carried out at a later time than the
others, the applicant or declarant shall
be required to carry out as a single
transaction all the steps therein proposed. The foregoing requirement is
imposed on each applicant and declarant unless otherwise expressly ordered
by the Commission.
(b) Conditions and restrictions proposed
in an application or declaration. Every
order granting an application or making effective a declaration shall, unless
otherwise therein expressly stated, impose upon the applicant or declarant
the obligation to comply with any restriction or condition which the application or declaration proposes shall be
imposed by the Commission in connection therewith.
(c) Conditions to effectiveness. Every
order granting an application or making effective a declaration shall, unless
otherwise expressly ordered, be subject
to the following conditions:
(1) Compliance with declaration or application. That the transaction proposed shall be carried out in accordance with the terms and conditions of,
and for the purposes stated in the declaration or application, and within 60
days after such declaration is effective
or application granted, or such earlier
or later date as may be designed in
such declaration or application.
(2) State commission action. That if the
transaction is proposed to be carried
out in whole or in part pursuant to the
express authorization of any State
commission, such transaction shall be

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Securities and Exchange Commission

§ 250.26

carried out in accordance with such authorization, and if the same be modified, revoked or otherwise terminated,
the effectiveness of the declaration or
order granting the application shall be,
without further order or the taking of
any action by the Commission, revoked
and terminated.
(3) Reservation of jurisdiction. That the
Commission reserves jurisdiction:
(i) To pass upon the terms and conditions of any document which the declaration or application states is to be
submitted to the Commission after the
effective date of such declaration or
application, and to pass upon any
modification of the terms and conditions of any document previously submitted to the Commission. Any such
document or modification shall, unless
otherwise directed by the Commission,
be submitted to the Commission, by
amendment to the declaration or application, prior to the execution or use
thereof.
(ii) To pass upon any matter which
the declaration of application proposes
shall be subject to future consideration
by the Commission. No action shall be
taken with respect to any such matter
except upon order of the Commission.
(iii) To entertain, at the request of
declarant or applicant, such further
proceedings and take such further action as may be appropriate regarding
any step which may be taken to consummate the proposed transaction.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 6 FR 5950, Nov. 25, 1941]

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§ 250.25

Answers.

In any proceeding instituted by the
Commission, the Commission may direct that any party respondent shall
file an answer to the allegations contained in the order of the Commission
initiating such proceeding, or in any
statement of facts filed in such proceeding. Unless otherwise directed by
the Commission, such answer shall
conform to the requirements for answers to pleadings specified in the Federal Rules of Civil Procedure. The
Commission recognizes the right of any
person directed to file any such answer
to set forth therein appropriate reservations of constitutional or other
legal rights.

§ 250.26 Financial statement and recordkeeping requirements for registered holding companies and subsidiaries.
(a) Every registered holding company
and every subsidiary company thereof:
(1) Shall conform to the requirements
of Regulation S-X as to form and content of financial statements; and
(2) Shall make and keep current accounts, books and other records of all
of its transactions in sufficient detail
to permit examination, audit and
verification of the financial statements, schedules and reports it is required to file with the Commission or
which it issues to stockholders. Such
accounts, books and other records shall
be maintained in appropriate form and
in sufficient detail to provide all of the
information with respect to the business of the company specified by such
Commission filing requirements as are
in effect when the transactions recorded occur.
(b) Every registered holding company
shall identify in its Form U5S the
chart of accounts used by it and by
each subsidiary company.
(1) The initial identification shall be
made in the Form U5S, or a supplement thereto, filed in the year in which
the use of such accounts is to begin, or
in the year 1975 for charts of accounts
already in use or proposed to be used in
that year. Subsequent Forms U5S need
merely state that no change in the accounts used has occurred, if that is the
fact.
(2) A copy of each chart of accounts
shall be annexed as an exhibit to the
filing in which it is identified, except
that it is unnecessary to file a copy of
an official chart of accounts which any
company subject to this rule is required to use by the Federal Energy
Regulatory Commission, a state commission or by § 250.27 or § 250.93 under
the Act. A company electing to use a
chart of accounts promulgated by the
Federal Energy Regulatory Commission also need not file a copy thereof.
(3) An amendment to Form U5S shall
be filed as to any modification of such
chart of accounts, except a modification made to an official chart of accounts by the commission which promulgated it. The amendment shall describe the nature, purpose and effect of

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§ 250.27

17 CFR Ch. II (4–1–11 Edition)

the proposed modification and the date
it is to be placed in effect. It shall be
filed at least 30 days prior to its effective date. Unless the Commission directs otherwise, the chart of accounts,
as so modified, shall be used thereafter.
(c) Every registered holding company
and every subsidiary company thereof
shall hereafter follow the equity method of accounting for investments in
any subsidiary company.
(1) Each investment shall be recorded
at its carrying value heretofore established and the actual cost of investments hereafter made. Each investment shall be periodically adjusted for
the proportionate share of earnings or
losses or capital changes of the subsidiary company since its acquisition,
crediting any dividends received from
such subsidiary company.
(2) Every company subject to this
rule shall maintain a subaccount to its
retained earnings account which shall
be periodically debited or credited with
its proportionate share of undistributed retained earnings of subsidiary
companies.
(3) No company subject to this rule
shall declare or pay any dividends or
reacquire any of its own securities
from or on the basis of any balances recorded in the subaccount referred to in
paragraph (c)(2) of this section, except
pursuant to a declaration under section
12(c) of the Act.
(d) No registered holding company
which is not a public utility company
shall dispose, without authorization
from the Commission, of any accounts,
books, or other records, except pursuant to 17 CFR part 257.
(e) This rule shall not modify or revoke any order of the Commission
heretofore entered as to the accounting
by any company subject to this rule including any continuing provision as to
amortization or other disposition of
any item governed thereby.
(f) Nothing in this rule shall relieve
any company subject thereto from
compliance with the requirements as
to recordkeeping and retention that
may be prescribed by any other regulatory agency.
(g) Any references in other rules,
forms or releases under the Act to the

uniform system of accounts shall be
hereafter deemed to refer to this rule.
[40 FR 22129, May 21, 1975, as amended at 49
FR 27309, July 3, 1984; 59 FR 21927, Apr. 28,
1994]

§ 250.27 Classification of accounts prescribed for utility companies not already subject thereto.
(a) Every registered holding company
and subsidiary thereof, which is a public utility company and which is not
required by either the Federal Energy
Regulatory Commission or a State
commission to conform to a classification of accounts, shall keep its accounts, insofar as it is an electric utility company, in the manner currently
prescribed for similar companies by the
Federal Energy Regulatory Commission or, and insofar as it is a gas utility
company, in the manner currently recommended by the National Association
of Railroad and Utilities Commissioners, except any company whose
public utility activities are so limited
that the application to it of such system of accounts is clearly inappropriate. A company claiming that its activities are thus limited, shall apply to
the Commission for written instructions to that effect.
(b) All references, in the systems of
accounts made applicable by paragraph
(a) of this section, to the authority prescribing the same and to orders and instructions by, and reports to, said authority, shall be deemed to refer to the
Securities and Exchange Commission
as the ‘‘Commission’’ thereby designated.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 8 FR 15814, Nov. 23, 1943; 59 FR 21927, Apr.
28, 1994]

§ 250.28 Inconsistent financial statements.
Except as otherwise authorized or required by the Commission by rule, regulation, order, statement of administrative policy, or otherwise, no registered holding company or subsidiary
company thereof shall distribute to its
security holders, or publish, financial
statements which are inconsistent with
the book accounts of such company or
financial statements filed with this
Commission by, or on behalf of, such
company. This section shall not be

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Securities and Exchange Commission

§ 250.40

deemed to prevent the distribution or
publication of reasonable condensations or of unaudited financial statements or of financial statements (on a
cash or other basis) pursuant to the requirements of an indenture or mortgage given to secure bonds or similar
instruments, or of appropriate financial statements of a receiver or trustee
appointed by a court of the United
States.
[25 FR 1942, Mar. 5, 1960]

§ 250.29 Filing of reports to State Commissions.
PRELIMINARY NOTE: Reports to State Commissions shall be submitted to the Commission in paper only, whether or not the filer is
otherwise required to file in electronic format.

A copy of each annual report submitted by any registered holding company or any subsidiary thereof to a
State Commission covering operations
not reported to the Federal Energy
Regulatory Commission shall be filed
with the Securities and Exchange Commission no later than ten days after
such submission.
[59 FR 21927, Apr. 28, 1994]

REGULATION AND EXEMPTION OF
VARIOUS FINANCIAL TRANSACTIONS 2

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§ 250.40 Exemption of certain acquisitions from nonaffiliates.
(a) Section 9(a) (49 Stat. 817; 15 U.S.C.
79i), shall not apply to the acquisition,
from a person other than an associate
or affiliate of the acquiring company
or an affiliate of an associate company,
of any of the securities (excluding securities issued by the acquiring company) as specified below:
(1) Readily marketable securities. Any
bond or other evidence of indebtedness
issued by any nonassociate company
which qualifies as a legal investment
for trust funds or for saving banks
under the laws of New York, Pennsylvania or Massachusetts, if after giving
effect to such acquisition the acquiring
company, together with its associate

companies, will not own more than 5
percent of the particular class of such
securities.
(2) Commercial paper and similar securities. Any prime commercial paper,
trade acceptance or bank certificate of
deposit maturing within 12 months
from the date of issuance or payable in
not more than 60 days after demand.
(3) Acquisitions resulting from previous
ownership of securities. Securities received as a dividend, or in renewal of
an evidence of indebtedness, or pursuant to the exercise of preemptive right
or conversion privilege, or as a result
of any reclassification, general exchange offer or reorganization: Provided, That no exemption shall be
available under this paragraph as to
the acquisition of any voting securities
or securities convertible into voting securities if after giving effect to such
acquisition the acquiring company
will, directly or indirectly, own, control, or hold 5 percent or more of the
particular class of such securities.
(4) Securities acquired in connection
with routine business transactions. In the
ordinary course of the acquiring company’s business (other than the business of a holding company or investment company as such), any evidence
of indebtedness executed by its customers in consideration of utility or
other services by such company or executed in connection with the sale of
goods or of real property other than
utility assets. 3
(5) Securities of local enterprises. Any
security issued by an industrial or
other nonutility enterprise located in
the service territory of the acquiring
public-utility company or, if the acquiring company is not a public-utility
company, in the service territory of
the registered holding-company system: Provided,
(i) The total cost of acquisitions by
the acquiring company of securities of
industrial development companies organized for the purpose of, and in accordance with a State law that specifically relates to, promoting the development of business and industry in

1

[Reserved]
also, § 250.70(b)(2) as to dealings with
financial institutions where there are or
have been, certain interlocking relationships.
2 See,

3 See,
also, § 250.48 for exemption concerning the acquisition of appliance paper in
connection with the sale of electric or gas
appliances.

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WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 250.41

17 CFR Ch. II (4–1–11 Edition)

such state does not exceed an annual
aggregate amount of $5 million, and
(ii) The total cost of acquisitions of
securities of other local industrial or
nonutility enterprises does not exceed
an annual aggregate amount of $1 million. In no event, however, will the
above exemption apply where, by reason of such acquisition, the acquiring
company would become an affiliate of
the issuer.
(6) Small minority interests. Any security of any subsidiary company, if prior
to such acquisition the acquiring company owns 95 percent or more of the
outstanding securities of the class acquired.
(b) Section 9(a) (49 Stat. 817; 15 U.S.C.
79i) shall not apply to the acquisition
of any securities of a mutual or subsidiary service company: Provided,
That such acquisition is in accordance
with a program as to ownership of securities of such service company which
the Commission has found to meet the
requirements of section 13 (49 Stat. 825;
15 U.S.C. 79m) of the Act.
(c) Section 9(a)(1) shall not apply to
the acquisition of securities of a company whose principal business is the
ownership and/or licensing of trade
names, trade-marks and service marks
used by public-utility companies in the
ordinary course of their business and
the preparation, distribution and/or
sale of material and services related
wholly to such names and marks.
(d) Section 9(a)(2) shall not apply to
the acquisition by a person who is neither a registered holding company, nor
a subsidiary company thereof, of securities owned by a registered holding
company, or subsidiary thereof, which
are the subject of a divestment order
under section 11(b), where such securities constitute all the vendor’s interest
in a company which does not operate
any utility assets and which is a public-utility company only by reason of
the ownership of a reversionary interest in utility assets: Provided, That
such utility assets are operated under
lease by a company which is not an affiliate of either the vendor or of the
vendee, and the Commission finds that
by reason of the duration of the lease,
the ownership by the lessee of securities of the lessor and similar matters,
there is no substantial probability of

the lessor resuming operation of said
utility assets. Such finding of the Commission may be made in connection
with an application by the vendor company with respect to such sale.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 8 FR 5831, May 6, 1943; 18 FR 8890, Dec. 31,
1953; 28 FR 5664, June 11, 1963; 59 FR 21927,
Apr. 28, 1994]

§ 250.41 Exemption of public utility
subsidiaries with respect to limited
acquisition of utility assets.
Any public utility company which is
a subsidiary of a registered holding
company shall be exempt from every
obligation, duty, and liability imposed
upon such company as a subsidiary
company by the provisions of section
9(a)(1) of the Act (49 Stat. 817; 15 U.S.C.
79i) with respect to an acquisition of
utility assets provided that the following conditions are met:
(a) Electric utility assets. Any electric
utility assets to be acquired are, prior
to the acquisition, or will be immediately thereafter, connected with electric utility assets already owned and
operated by the acquiring company, excluding connections over lines not operated by the acquiring company.
(b) Gas utility assets. Any gas utility
assets to be acquired are located in or
adjacent to the same service area as
that in which gas utility assets already
owned and operated by the acquiring
company are located.
(c) Limit in amount. The total consideration paid for utility assets acquired
pursuant to the exemption granted by
this section does not exceed in any calendar year the lesser of $5 million or
five percent of the gross annual revenues of the acquiring company derived
from its operations as a public-utility
company during the preceding calendar
year.
(d) Prohibition of fees. No fees or commissions are to be paid by any person
or company in connection with the acquisition of such utility assets except
to a person or company subject to the
rules of the Commission adopted under
section 13 of the Act (49 Stat. 825; 15
U.S.C. 78m) or to a person or company
not affiliated with the acquiring company.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 59 FR 21928, Apr. 28, 1994]

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Securities and Exchange Commission

§ 250.45

§ 250.43 Sales to affiliates.
(a) General provisions. No registered
holding company or subsidiary thereof
shall, directly or indirectly, sell to any
company in the same holding company
system or to any affiliate of a company
in such holding company system any
securities or utility assets or any other
interest in any business, except pursuant to a declaration notifying the Commission of the proposed transaction,
which has become effective in accordance with the procedure specified in
§ 250.23, and pursuant to the order of
the Commission with respect to such
declaration under the applicable provisions of the Act.
(b) Exception. The foregoing requirement in paragraph (a) shall not apply
to any sale of securities or utility assets or any other interest in any business in an aggregate amount of up to
$5,000,000 during any calendar year if
the acquisition of such securities, assets or other interest does not require
prior Commission approval.

proposed transaction, which has become effective in accordance with the
procedure specified in § 250.23, and pursuant to the order of the Commission
with respect to such declaration under
the applicable provisions of the Act.
(b) Exception. The foregoing requirement in paragraph (a) shall not apply
to any sale of securities or of utility
assets in an aggregate amount of up to
$5,000,000 during any calendar year if
the acquisition of such securities or assets does not require prior Commission
approval.
(c) Sales pursuant to order or plan
under section 11. No registered holding
company or subsidiary thereof shall,
directly or indirectly, sell or otherwise
dispose of any security, asset or other
interest in any business which it is required to dispose of by reason of any
order of this Commission under section
11(b) of the Act, or pursuant to the provisions of any plan pending or approved
under section 11(e) of the Act, unless it
shall have given at least 10 days’ notice
to the Commission of its intention to
make such sale or other disposition
and;
(1) No notice shall have been given to
said company by the Commission within said 10 day period that a declaration
should be filed with respect to the proposed transaction, or notice shall have
been given by the Commission within
said 10 day period that no declaration
is required; or
(2) A declaration filed by the company with respect to such transaction
shall have been permitted to become
effective by order of the Commission:
Provided, That the provisions of this
paragraph shall not apply to any transaction as to which a declaration is required under § 250.43(a) (Rule U–43(a)) or
paragraph (a) of this section.

[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 10 FR 15413, Dec. 29, 1945; 59 FR 21928, Apr.
28, 1994]

[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 10 FR 15413, Dec. 29, 1945; 59 FR 21928, Apr.
28, 1994]

§ 250.44 Sales of securities and assets.
(a) Sales of utility securities or assets.
No registered holding company shall,
directly or indirectly, sell to any person any security which it owns of any
public utility company, or any utility
assets, except pursuant to a declaration notifying the Commission of the

§ 250.45 Loans, extensions of credit,
donations and capital contributions
to associate companies.

§ 250.42 Acquisition, retirement and
redemption of securities by the
issuer thereof.
A registered holding company or its
subsidiary company may acquire, retire or redeem any security of which it
is the issuer (or which it has assumed
or guaranteed) without the need for
prior Commission approval under sections 9(a), 10 and 12(c) of the Act: Provided, This section shall not apply to a
transaction by a registered holding
company or its subsidiary company
with an associate company, an affiliate, or an affiliate of an associate
company, or to a transaction by a registered holding company, as defined in
§ 240.13e-3(a)(3) of this chapter.

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[59 FR 21928, Apr. 28, 1994]

(a) General provision. No registered
holding company or subsidiary company shall, directly or indirectly, lend
or in any manner extend its credit to
nor indemnify, nor make any donation

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WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 250.45

17 CFR Ch. II (4–1–11 Edition)

or capital contribution to, any company in the same holding company system, except pursuant to a declaration
notifying the Commission of the proposed transaction, which has become
effective in accordance with the procedure specified in § 250.23, and pursuant
to the order of the Commission with respect to such declaration under the applicable provisions of the Act.
(b) Exceptions. The following transactions shall be exempt from the declaration requirements of this section:
(1) A loan or extension of credit involving an acquisition of securities approved by the Commission under section 10 (49 Stat. 818; 15 U.S.C. 79j) or exempt from section 9(a) of the Act by
section 9(b)(2) (49 Stat. 817; 15 U.S.C.
79i) thereof or by any rule in this part.
(2) Extensions of credit without interest in connection with service, construction or sales contracts (including
sales of materials and supplies) or from
sales of electric energy or natural or
manufactured gas, or other obligations
accruing in the ordinary course of business: Provided, That payment is made
as soon as reasonably practicable.
(3) Extensions of credit to a subsidiary without interest to meet emergency requirements: Provided, That
both the borrowing and lending company forthwith join in a statement notifying the Commission of the transaction and agreeing to take such action with respect thereto as the Commission may require.
(4) Capital contributions or open account advances, without interest, by a
company to its subsidiary company;
Provided, That capital contributions or
open account advances to any energyrelated company subsidiary, as defined
in § 250.58, shall not be exempt hereunder unless, after giving effect thereto, the aggregate investment by a registered holding company or any subsidiary thereof in such company and all
other such energy-related company
subsidiaries does not exceed the limitation in § 250.58(a)(1).
(5) Failure to demand or enforce payment with respect to all or part of any
obligation which is by its terms payable on demand, or of any security
which has matured, if no new agreement is entered into with respect to

the terms or conditions of the unpaid
balance thereof.
(6) An agreement by a registered
holding company or subsidiary company of a registered holding company
to guarantee, to assume joint liability,
or to act as a surety or as an
indemnitor with respect to contingent
liabilities or other obligations of a subsidiary of such company, incurred in
the ordinary course of such subsidiary’s business, if said agreement is in
the form of:
(i) A direct guarantee, assumption of
liability, surety or indemnification of
the subsidiary company’s obligations
which is required to meet the requirements of federal, state or local law; or
(ii) An indirect guarantee of a subsidiary through a surety or indemnification of one or more surety companies or agencies, which have agreed
to provide bonds of the following kinds
required by subsidiary companies in
the holding-company system:
(A) Court and fiduciary bonds such as
appeal bonds, supersedeas bonds, condemnation bonds, or bonds required to
free property from attachment or to
lift an injuction;
(B) License and permit bonds such as
blasting and oversize load permit
bonds;
(C) United States, state and local
government bonds such as customs
bonds, workers’ compensation self-insurance bonds, bonds required by the
Internal Revenue Services, mineral
right-of-way or drilling lease bonds and
notary public bonds;
(D) Lost instrument bonds or other
bonds which may be necessary or desirable in connection with the processing
of securities or any bonds which may
be required by a stock exchange on
which any security is listed;
(E) Admiralty bonds;
(F) Bonds required for engineering or
construction purposes such as bid, performance or payment bonds;
(G) Any other bonds of a similar nature required for routine operational
purposes;
Provided, however, That: (1) No payment, compensation or other consideration shall be paid or accrue to the parent company in consideration for such
guarantee, assumption of liability, surety or indemnification; (2) this rule

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WReier-Aviles on DSKGBLS3C1PROD with CFR

Securities and Exchange Commission

§ 250.45

shall not be construed to apply to a direct or indirect guarantee, assumption
of liability, surety or indemnification
of a subsidiary company’s indebtedness
for borrowed money; and (3) the aggregate of all such direct and indirect
guarantees, assumptions of liability,
sureties or indemnifications by the
parent company, shall not exceed the
greater of $50,000,000, or 5 percent of the
aggregate amount of the other securities of the company then outstanding,
such securities to be valued at (i) original principal amount, if there is such a
principal amount, and (ii) fair market
value as of the date of issuance, if
there is no such principal amount. Par
value stock shall be treated in the
same manner as no par value stock,
i.e., as stock issued without any principal amount.
(7) An agreement by any subsidiary
company of a registered holding company to assume liability (as guarantor,
co-maker, indemnitor, or otherwise)
with respect to any security issued by
any other subsidiary company in the
same holding company system, provided that the issuance and sale of such
security is exempt, and such assumption of liability constitutes the
issuance of a security that is exempt,
from the declaration requirements of
section 6(a) of the Act (15 U.S.C. 79f(a))
under § 250.52.
(c) A declaration under paragraph (a)
of this section shall not be required for
the filing of a consolidated tax return
by the eligible associate companies in
a registered holding company system,
or the execution or performance of the
agreement referred to herein, if such
consolidated tax return is filed pursuant to a tax agreement, in writing, relating to either federal or state taxes,
for a term of one or more tax years
among the associate companies included in the consolidated return, and
the agreement provides for allocation
among such associate companies of the
liabilities and benefits arising from
such consolidated tax return for each
tax year in a manner not inconsistent
with the following conditions:
(1) Definitions:
Consolidated tax is the aggregate tax
liability for a tax year, being the tax
shown on the consolidated return and
any adjustments thereto thereafter de-

termined. The consolidated tax will be
the refund if the consolidated return
shows a negative tax.
Corporate tax credit is a negative separate return tax of an associate company for a tax year, equal to the
amount by which the consolidated tax
is reduced by including a net corporate
taxable loss or other net tax benefit of
such associate company in the consolidated tax return.
Corporate taxable income is the income
or loss of an associate company for a
tax year, computed as though such
company had filed a separate return on
the same basis as used in the consolidated return, except that dividend income from associate companies shall
be disregarded, and other intercompany transactions eliminated in the
consolidated return shall be given appropriate effect. It shall be further adjusted to allow for applicable rights accrued to the associate company under
paragraphs (c) (4) and (5) of this section
or under prior rules or orders, on the
basis of other tax years, but carryovers
or carrybacks shall not be taken into
account if the associate company has
been paid a corporate tax credit therefor. If an associate company is a member of the registered system’s consolidated tax group for only part of a tax
year, that period will be deemed to be
its tax year for all purposes under
paragraph (c) of this section.
Separate return tax is the tax on the
corporate taxable income of an associate company computed as though
such company were not a member of a
consolidated group.
(2) The consolidated tax shall be apportioned among the several members
of the group in proportion to (i) the
corporate taxable income of each such
member, or (ii) the separate return tax
of each such member, but the tax apportioned to any subsidiary shall not
exceed the separate return tax of such
subsidiary.
(3) The tax agreement shall provide
for appropriate and equitable adjustment of the allocation specified under
paragraph (c) (2)(i) or (2)(ii) of this section if the sum of the corporate taxable
incomes or separate return taxes of all
members of the group in any taxable

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§ 250.46

17 CFR Ch. II (4–1–11 Edition)

year differs from the consolidated taxable income or tax because of intercompany transactions excluded from
the consolidated return. It shall provide for appropriate and equitable adjustment of the allocation specified
under paragraph (c)(2)(ii) to the extent
that the consolidated tax and separate
return tax for any year include material items taxed at different rates or
involving other special benefits or limitations. Such adjustments will be directed to allocating to the individual
members of the group the material effects of any particular features of the
tax law applicable to them.
(4) The tax agreement may exclude
from the allocation under paragraph
(c)(2)(i) of this section associate companies not having a positive corporate
taxable income for the year being allocated, or under paragraph (c)(2)(ii) of
this section associate companies not
having a positive separate return tax
for the year being allocated. An agreement under this paragraph shall make
appropriate and equitable provision for
preserving to each subsidiary company
so excluded the equivalent of any
rights which such company would have
had, under the applicable tax law, had
it filed a separate return, to use in
other years any loss or credit availed
of by the group through the consolidated return. With respect to carryover
rights, such provisions will normally
consist of recognition of the carryover
in future allocations by reducing the
consolidated tax allocation in the subsequent year of the subsidiary company entitled to the benefit, and by
charging the excess to the companies
which had benefited by the prior deduction or credit. In the case of a
carryback, the excluded subsidiary
company should normally be paid the
amount of refund to which it would
have been entitled had it filed a separate return.
(5) The agreement may, instead of excluding members as provided in paragraph (c)(4), include all members of the
group in the tax allocation, recognizing
negative corporate taxable income or a
negative corporate tax, according to
the allocation method chosen. An
agreement under this paragraph shall
provide that those associate companies
with a positive allocation will pay the

amount allocated and those subsidiary
companies with a negative allocation
will receive current payment of their
corporate tax credits. The agreement
shall provide a method for apportioning such payments, and for carrying over uncompensated benefits, if
the consolidated loss is too large to be
used in full. Such method may assign
priorities to specified kinds of benefits.
(6) The tax agreement for each taxable year shall be filed as an exhibit to
the system’s annual report on Form
U5S (§ 259.5s of this chapter) for the
previous taxable year. The initial filing
after the effective date of this amendment shall be made as an amendment
to the last Form U5S filed. If an existing tax agreement is merely renewed or
amended, prior filings may be incorporated by reference. Amendments to a
tax agreement shall be filed as an
amendment to the Form U5S. Any
amendment which would alter the allocation to any associate company for
any period preceding its adoption shall
be conditioned on approval by the Commission if the Commission directs,
within 60 days after its filing, that it
be deemed to be a declaration under
Rule 45(a).
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 20 FR 488, Jan. 21, 1955; 46 FR 18534, Mar.
25, 1981; 52 FR 48986, Dec. 29, 1987; 62 FR 7915,
Feb. 20, 1997; 63 FR 9741, Feb. 26, 1998]

§ 250.46 Dividend declarations and
payments on certain indebtedness.
(a) Dividends. No registered holding
company or subsidiary thereof shall declare or pay any dividend on any security of such company out of capital or
unearned surplus, except pursuant to a
declaration notifying the Commission
of the proposed transaction, which has
become effective in accordance with
the procedure specified in § 250.23, and
pursuant to the order of the Commission with respect to such declaration
under the applicable provisions of the
act.
(b) Payments on certain indebtedness.
No registered holding company or subsidiary company thereof shall, directly
or indirectly, make any payment of
principal or interest on any note, bond,
book account or any indebtedness however evidenced which is or was issued

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Securities and Exchange Commission

§ 250.48

as, or based upon a dividend or dividends created or issued or declared
from, or charged against, capital or unearned surplus, or in renewal of, or in
exchange for any such obligation,
whether such dividend was declared before or after the act took effect, except
pursuant to a declaration notifying the
Commission of the proposed transaction, which has become effective in
accordance with the procedure specified in § 250.23, and pursuant to the
order of the Commission with respect
to such declaration under the applicable provisions of the Act. In determining whether proposed payments on
any such indebtedness issued or declared as a dividend in part out of
earned surplus and in part out of capital or unearned surplus, or issued in
renewal of, or in exchange for, such indebtedness, fall within this paragraph,
past payments on account of such indebtedness or any predecessor indebtedness shall be deemed to have been
first applied in reduction of the portion
of such indebtedness issued or declared
as a dividend out of earned surplus.

WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 250.47 Exemption of public utility
subsidiaries as to certain securities
issued to the Rural Electrification
Administration.
(a) Exemption. Any public utility
company which is a subsidiary company of a registered holding company
shall be exempt from the obligations,
duties, or liabilities imposed by the act
or any rule thereunder, on such company as a subsidiary company, with respect to the issue and sale to the Rural
Electrification Administration, of any
security of which it is the issuer in an
amount not exceeding in any one calendar year 2 percent of the aggregate
of the outstanding funded indebtedness
plus the capital and surplus accounts
of the issuer as of the end of the prior
calendar year. Such company shall also
be exempt with respect to the pledge of
any security or other property as collateral for any security so issued or
sold, and with respect to the redemption or retirement, in whole or in part,
of any such security.
(b) Certificate of notification. Within 10
days after the issue or sale of any security exempt under this section, the
issuer shall file with the Commission a

certificate of notification on Form U–
6B–2 containing the information prescribed by that form.
§ 250.48 Certain exemptions in connection with appliance sales and loans
to officers or employees.
(a)(1) Exemptions in connection with
appliance sales. Any public utility company, or subsidiary thereof, or associate service company thereof, shall be
exempt from section 9(a) of the Act (49
Stat. 817; 15 U.S.C. 79i) with respect to
the acquisition, in the ordinary course
of business, of any evidence of indebtedness executed by customers of such
public utility company as consideration for the purchase (whether from
such public utility company, from an
associate company thereof, or from
dealers) of standard electric or gas appliances, or reacquisition of any such
security guaranteed by such company.
(2) Guarantee. Any public utility company, or subsidiary thereof, or associate service company thereof, shall be
exempt from the provisions of section
6(a) of the Act (49 Stat. 814; 15 U.S.C.
79f) and of § 250.44 with respect to the
guarantee, by endorsement or otherwise, and sale of any such customers’
evidence of indebtedness. This paragraph shall be inapplicable to any company which is a registered holding
company. 4
(3) Issuance of note. Any public utility
company, or subsidiary thereof, or associated service company thereof, shall
be exempt from the provisions of section 6(a) of the Act with respect to the
issue or sale of any note or draft which
is, and at all times will be, secured by
a pledge of such customers’ evidence of
indebtedness
having
a
principal
amount still unpaid at least equal to
the unpaid principal amount of such
note or draft. This paragraph shall be
inapplicable to any company which is a
registered holding company. 4
(4) Acquisition of guaranteed paper or
retirement of notes. Any public utility
company, or subsidiary thereof, or associate service company thereof, shall
4 Any registered holding company which is
also a public utility company and whose regular course of business involves activities
within the scope of this section may file a
declaration, regarding such activities. See
§ 250.22(a).

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§ 250.49

17 CFR Ch. II (4–1–11 Edition)

be exempt from section 9(a) of the Act
and § 250.42 with respect to the acquisition, retirement or redemption of any
note or draft or customers’ evidence of
indebtedness issued or guaranteed by
such company under the circumstances
described in paragraph (b) or (c) of this
section.
(b) Exemption in connection with loans
to employees. Each registered holding
company and any subsidiary company
thereof is exempted from section 9(a)(1)
of the Act (49 Stat. 817; 15 U.S.C. 79i)
with respect to the acquisition of any
evidence of indebtedness from its employee in consideration of a loan made
to such employee and each subsidiary
of a registered holding company is exempted from section 6(a) of the Act (49
Stat. 814; 15 U.S.C. 79f) with respect to
the guarantee of indebtedness of it employee:
(1) If such transaction is made pursuant to a personnel policy of general application adopted in writing by the
board of directors of such company, or
by a committee or executive officer authorized by the board of directors so to
act and communicated to the class of
employees to which it applies; and does
not cause the total amount of guarantees and loans of all companies in the
holding-company system to or for the
account of such employee, outstanding
at the time of the transaction, to exceed the limits specified in the applicable personnel policy.
(2) The exemption also extends to securities or guarantees incident to bona
fide advances to the employee for travel or other reimbursable expenses and
current indebtedness of the employee
for goods or services sold by the system
companies in the ordinary course of
business.
(3) Each company intending to avail
itself of this exemption subsequent to
the effective date of this rule shall file,
as an exhibit or as an amendment to
the system’s annual report on Form
U5S, a copy of such personnel policy.
As used in this rule, the term ‘‘employee’’ includes an officer and does
not include a director who is not an officer or employee; and the term ‘‘guarantee’’ includes the assumption of an
indebtedness or of an obligation to purchase such indebtedness or otherwise

to provide a means of payment if the
primary obligor fails to pay.
(Secs. 5(b), 9(c) and 14 of the Act, 15 U.S.C.
79e(b), 79i(c) and 79m)
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 49 FR 4717, Feb. 8, 1984]

§ 250.49 Certain exemptions granted to
non-utility subsidiaries.
(a) Companies exempted. The exemptions provided by this section shall
apply to any subsidiary of a registered
holding company which subsidiary is
not:
(1) A holding company,
(2) A public utility company,
(3) A company engaged in the business of performing services or construction for or selling goods to associate holding or public utility companies, or
(4) A company controlling, directly
or indirectly, any company specified in
paragraphs (a) (1) to (3) of this section.
(b) Exemptions from sections 6(a) and
12(c). Any such subsidiary company
shall be exempt from the provisions of
section 6(a) of the Act (49 Stat. 814; 15
U.S.C. 79f) with respect to the issuance
or sale of any securities to the vendor
of supplies or equipment for use in the
business of such subsidiary company,
and from the provisions of any rule
under section 12(c) of the Act with respect to the acquisition, redemption or
retirement of any such securities.
(c) Transactions approved by a reorganization court. Any such subsidiary
company which is the subject of a proceeding for reorganization in any court
of the United States in which proceeding the Commission has filed a notice of appearance pursuant to section
1109(a) of chapter 11 of the Bankruptcy
Code (11 U.S.C. 1109(a)) or which is a
subsidiary within the meaning of section 2(a)(8) of the Public Utility Holding Company Act (49 Stat. 804; 15 U.S.C.
79b), of any such subsidiary company
which is the subject of such a proceeding, shall be exempt from any provision of the act applicable to the appointment of any trustee for such company or to any transaction entered
into with the approval (direct or indirect) of such court: Provided, That such
transaction does not involve the acquisition of any utility assets or securities

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Securities and Exchange Commission

§ 250.51

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of any public utility or holding company; Provided further, That this paragraph shall be inapplicable to any subsidiary company which is the subject of
reorganization proceedings (or any subsidiary of such subsidiary company
within the meaning of section 2(a)(8) of
the Public Utility Holding Company
Act), where such subsidiary company,
or any subsidiary thereof, is the issuer
of any securities, or is the obligor on
any obligations, which have been guaranteed or assumed by any registered
holding company.
(d) Exemption from section 9(a). (1) Any
such subsidiary company primarily engaged in the production of natural gas
or crude oil or sulphur, or in two or
more of such businesses, shall be exempt from section 9(a) of the Act (49
Stat. 817; 15 U.S.C. 79i) with respect to
the acquisition, from a person other
than an associate or an affiliate of the
acquiring company or an affiliate of an
associate company, of gas leases, oil
leases, or other production leases, in
connection with the business in which
such subsidiary is so engaged: Provided,
however, That the exemption provided
by this paragraph shall not be applicable if such acquisition is part of a
transaction which involves the filing of
an application or declaration with the
Commission by such subsidiary company.
(2) Any such subsidiary company
which is subject to regulation as a
water, telephone, common carrier or
other public service company, under
the laws of the State in which it operates, shall be exempt from section 9(a)
of the Act with respect to any acquisition expressly authorized by the State
commission of such State provided
that such acquisition does not include
utility assets, securities of a public
utility or holding company, or any
other interest in any class of business
other than that in which such public
service company is engaged.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 12 FR 1649, Mar. 11, 1947; 59 FR 21928, Apr.
28, 1994]

§ 250.50

[Reserved]

§ 250.51 Acquisitions pursuant to preliminary agreements and invitation
for tenders.
For the purpose of section 9(a) of the
Act, the term ‘‘acquire’’ is defined to
include the making of a contract or
agreement (herein called Preliminary
Agreement) pursuant to which a person
subject to section 9(a) (of the Act)
(herein called the Proposed Acquirer)
contingently or otherwise acquires any
right or becomes subject to any obligation to acquire directly or indirectly
any securities or utility assets or any
other interest in any business, or to direct any other person to make any sale
or acquisition of any securities or utility assets or any other interest in any
business. Except where an exemption
from section 9(a) (of the Act) may be
applicable, the making of such Preliminary Agreement or the taking of any
action in connection therewith, without prior approval of the Commission,
by any person so subject to section 9(a)
(of the Act) shall be deemed unlawful,
unless all of the following conditions
are satisfied:
(a) The transaction contemplated by
the Preliminary Agreement is expressly conditioned on Commission approval and the application for such approval is filed with the Commission as
soon as practicable.
(b) No standby, option, or similar fee
is paid or payable by or on behalf of the
Proposed Acquirer as consideration for
the Preliminary Agreement.
(c) The Proposed Acquirer does not
indemnify or agree to indemnify any
person against any market or investment risk in connection with such person’s acquisition, retention or disposition of the subject matter of the proposed acquisition.
(d) The Proposed Acquirer does not
transfer to any person (other than a
subsidiary or successor in interest by
merger or consolidation), by way of assignment or otherwise, any of its
rights or interests in respect of the
subject matter of the proposed acquisition unless such transfer is conditioned
upon consummation of the Preliminary
Agreement following its approval by
the Commission.

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§ 250.52

17 CFR Ch. II (4–1–11 Edition)

(e) In case a proposed transaction includes an acquisition of securities pursuant to an invitation for tenders to be
made prior to the approval of such acquisition, provision shall be made that
any person tendering such securities
(the Tenderer) may demand in writing
the return of any deposited securities
at any time after 60 days from the initial mailing or publication of the invitation for tenders unless prior to the
receipt of such demand either (1) the
proposed acquisition has been approved
by the Commission and the Proposed
Acquirer is obligated to consummate
the transaction or (2) the Tenderer has
been issued a transferable certificate of
deposit which meets the conditions
specified in paragraph (f) of this section.
(f) A transferable certificate of deposit for purposes of paragraph (e) of
this section may be issued in exchange
for tendered securities subject to the
following conditions:
(1) The terms of the certificate of deposit as proposed to be issued are specified in the invitations for tenders, including equitable provisions for return
of the tendered securities in the event
the proposed transaction is not approved by the Commission or otherwise
fails of consummation, for exercise of
voting rights and for receipt of dividends or interest by the Tenderer during the deposit period.
(2) The Proposed Acquirer files with
the Commission an application-declaration proposing the issuance of such
certificates of deposit in exchange for
tendered securities.
(3) Upon notice and after a hearing
which shall be limited to the fairness
of the terms and conditions of such
issuance and exchange and to compliance with the conditions of this Rule,
the Commission in its descretion may
by order permit such issuance and exchange on such terms and conditions as
it shall approve. Any person to whom
it is proposed to issue a certificate of
deposit shall be entitled to appear at
such hearing.
(4) If the terms and conditions specified in the certificates of deposit to be
issued pursuant to order of the Commission differ from those specified in
the invitation for tenders previously
published by the Proposed Acquirer,

the Commission may in such order require the Proposed Acquirer to give notice thereof by mail (and publication if
deemed appropriate) to all persons who
have tendered their securities and to
provide up to 20 days after mailing of
such notice for any such person to
elect, in a manner prescribed by the
Commission, either to continue to or
revoke his tender. The terms and conditions specified in the certificates of
deposit may be modified only pursuant
to order of the Commission.
[33 FR 9287, June 25, 1968]

§ 250.52 Exemption of issue and sale of
certain securities.
(a) Any registered holding-company
subsidiary which is itself a public-utility company shall be exempt from section 6(a) of the Act (15 U.S.C. 79f(a))
and rules thereunder with respect to
the issue and sale of any security, of
which it is the issuer if:
(1) The issue and sale of the security
are solely for the purpose of financing
the business of the public-utility subsidiary company;
(2) The issue and sale of the security
have been expressly authorized by the
state commission of the state in which
the subsidiary company is organized
and doing business; and
(3) The interest rates and maturity
dates of any debt security issued to an
associate company are designed to parallel the effective cost of capital of
that associate company.
(b) Any subsidiary of a registered
holding company which is not a holding company, a public-utility company,
an investment company, or a fiscal or
financing agency of a holding company,
a public-utility company or an investment company shall be exempt from
section 6(a) of the Act (15 U.S.C. 79f(a))
and related rules with respect to the
issue and sale of any security of which
it is the issuer if:
(1) The issue and sale of the security
are solely for the purpose of financing
the existing business of the subsidiary
company; and
(2) The interest rates and maturity
dates of any debt security issued to an
associate company are designed to parallel the effective cost of capital of
that associate company; Provided, That
any security issued to an associate

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Securities and Exchange Commission

§ 250.53

company by any energy-related company subsidiary, as defined in § 250.58,
shall not be exempt under these provisions unless, after giving effect to the
issue of the security, the aggregate investment by a registered holding company or its subsidiary in the energy-related company subsidiary and all other
energy-related company subsidiaries
does not exceed the limitation in
§ 250.58(a)(1).
(c) Within ten days after the issue or
sale of any security exempt under this
section, the issuer or seller shall file
with the Commission a Certificate of
Notification on Form U–6B–2 (17 CFR
259.206) containing the information prescribed by that form. However, with respect to exempt financing transactions
between associate companies which involve the repetitive issue or sale of securities or are part of an intrasystem
financing
program
involving
the
issuance and sale of securities not exempted by this section, the filing of information on Form U–6B–2 may be
done on a calendar quarterly basis.
(d) The acquisition by a company in
a registered holding company system
of any security issued and sold by any
associate company, pursuant to this
section, is exempt from the requirements of section 9(a) of the Act (15
U.S.C. 79i(a)); provided that the exemption granted by this paragraph (d) shall
not apply to any transaction involving
the issue and sale of securities to form
a new subsidiary company of a registered holding company.
(e) A copy of any Certificate of Notification on Form U–6B–2 (§ 259.206) that
is filed with this Commission under
this section with respect to any security issued by a subsidiary of a registered holding company under paragraph (b) of this section and acquired
by a public-utility company that is an
associate company of the issuer, shall
be submitted concurrently to each
state commission having jurisdiction
over the retail rates of the public-utility company.
[60 FR 33639, June 28, 1995, as amended at 62
FR 7915, Feb. 20, 1997; 63 FR 9741, Feb. 26,
1998]

§ 250.53 Certain registered holding
company financings in connection
with the acquisition of one or more
exempt wholesale generators.
(a) In determining whether to approve the issue or sale of a security by
a registered holding company for purposes of financing the acquisition of an
exempt wholesale generator, or the
guarantee of a security of an exempt
wholesale generator by a registered
holding company, the Commission
shall not make a finding that such security is not reasonably adapted to the
earning power of such company or to
the security structure of such company
or companies in the same holding company system, or that the circumstances are such as to constitute
the making of such guarantee an improper risk for such company, if the
following conditions are met:
(1) Aggregate investment does not exceed 50% of the system’s consolidated
retained earnings.
(i) Aggregate investment means all
amounts invested, or committed to be
invested, in exempt wholesale generators and foreign utility companies, for
which there is recourse, directly or indirectly, to the registered holding company. Among other things, the term includes, but is not limited to, preliminary development expenses that culminate in the acquisition of an exempt
wholesale generator or a foreign utility
company; and the fair market value of
assets acquired by an exempt wholesale
generator or a foreign utility company
from a system company (other than an
exempt wholesale generator or a foreign utility company).
(ii) Consolidated retained earnings
means the average of the consolidated
retained earnings of the registered
holding company system as reported
for the four most recent quarterly periods on the holding company’s Form 10–
K or 10–Q (§ 249.308a or § 249.310 of this
chapter, respectively) filed under the
Securities Exchange Act of 1934, as
amended.
(2) The registered holding company
maintains books and records to identify investments in and earnings from
any exempt wholesale generator or foreign utility company in which it directly or indirectly holds an interest.
In addition:

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§ 250.53

17 CFR Ch. II (4–1–11 Edition)

(i) For each United States exempt
wholesale generator in which the registered holding company directly or indirectly holds an interest:
(A) The books and records of such entity shall be kept in conformity with
United States generally accepted accounting principles (‘‘GAAP’’).
(B) The financial statements shall be
prepared according to GAAP.
(C) The registered holding company
undertakes to provide the Commission
access to such books and records and
financial statements as the Commission may request.
(ii) For each foreign exempt wholesale generator or foreign utility company which is a majority-owned subsidiary company of the registered holding company:
(A) The books and records of such entity shall be kept in conformity with
GAAP.
(B) The financial statements for such
entity shall be prepared in conformity
with GAAP.
(C) The registered holding company
undertakes to provide the Commission
access to such books and records and
financial statements, or copies thereof,
in English, as the Commission may request.
(D) For purposes of this section, a
‘‘majority-owned subsidiary company’’
is one in which the registered holding
company directly or indirectly owns
more than 50% of the voting securities.
(iii) For each foreign exempt wholesale generator or foreign utility company in which the registered holding
company directly or indirectly owns
50% or less of the voting securities, the
registered holding company shall proceed in good faith, to the extent reasonable under the circumstances, to
cause:
(A) The books and records of such entity to be kept in conformity with
GAAP; provided, that if the books and
records are maintained according to a
comprehensive body of accounting
principles other than GAAP, the registered holding company shall, upon request, describe and quantify each material variation from GAAP in the accounting principles, practices and
methods used to maintain the books
and records.

(B) The financial statements for such
entity to be prepared according to
GAAP; provided, that if the financial
statements are prepared according to a
comprehensive body of accounting
principles other than GAAP, the registered holding company shall, upon request, describe and quantify each material variation from GAAP in the balance sheet line items and net income
reported in the financial statements.
(C) Access by the Commission to such
books and records and financial statements, or copies thereof, in English, as
the Commission may request; provided,
that in any event, the registered holding company shall make available to
the Commission any books and records
of the foreign exempt wholesale generator or foreign utility company that
are available to the registered holding
company.
(3) No more than two percent of the
employees of the system’s domestic
public-utility companies render services, at any one time, directly or indirectly, to exempt wholesale generators
or foreign utility companies in which
the registered holding company, directly or indirectly, holds an interest;
provided, that the Commission has previously approved the rendering of such
services.
(4) The registered holding company
simultaneously submits a copy of any
Form U–1 (17 CFR 259.101) and certificate under section 250.24 filed with the
Commission under this section, as well
as a copy of Item 9 of Form U5S (17
CFR 259.5s) and Exhibits G and H thereof with every federal, state or local
regulator having jurisdiction over the
retail rates of any affected public-utility company.
(b) Notwithstanding the foregoing
provisions, the section shall not be
available if:
(1) The registered holding company,
or any subsidiary company having assets with book value exceeding an
amount equal to 10% or more of consolidated retained earnings, has been
the subject of a bankruptcy or similar
proceeding, unless a plan of reorganization has been confirmed in such proceeding; or
(2) The average consolidated retained
earnings for the four most recent quarterly periods have decreased by 10%

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Securities and Exchange Commission

§ 250.58

from the average for the previous four
quarterly periods and the aggregate investment in exempt wholesale generators and foreign utility companies exceeds two percent of total capital invested in utility operations; provided,
this restriction will cease to apply once
consolidated retained earnings have returned to their pre-loss level; or
(3) In the previous fiscal year, the
registered holding company reported
operating losses attributable to its direct or indirect investments in exempt
wholesale generators and foreign utility companies, and such losses exceed
an amount equal to 5% of consolidated
retained earnings.
(c) An applicant that is unable to satisfy the requirements of paragraphs (a)
and (b) of this section must affirmatively demonstrate that the proposed
issue and sale of a security to finance
the acquisition of an exempt wholesale
generator, or the guarantee of a security of an exempt wholesale generator:
(1) Will not have a substantial adverse impact upon the financial integrity of the registered holding company
system; and
(2) Will not have an adverse impact
on any utility subsidiary of the registered holding company, or its customers, or on the ability of State commissions to protect such subsidiary or
customers.
(d) The Commission shall issue an
order with respect to a proposed transaction under section 32(h)(3) of the Act
within 120 days of completion of the
record concerning such issue, sale or
guarantee.

WReier-Aviles on DSKGBLS3C1PROD with CFR

[58 FR 51504, Oct. 1, 1993]

§ 250.54 Effect of exempt wholesale
generators on other transactions.
In determining whether to approve
the issue or sale of a security by a registered holding company for purposes
other than the acquisition of an exempt wholesale generator or a foreign
utility company, or other transactions
by such registered holding company or
its subsidiaries other than with respect
to exempt wholesale generators or foreign utility companies, the Commission shall not consider the effect of the
capitalization or earnings of any subsidiary which is an exempt wholesale
generator or a foreign utility company

upon the registered holding company
system if § 250.53 (a), (b) and (c) are satisfied.
[58 FR 51505, Oct. 1, 1993]

§ 250.57 Notices and reports to be filed
under section 33.
(a) Notification of Status as Foreign
Utility Company. Form U–57 (§ 259.207 of
this chapter), notification of status as
a foreign utility company, may be filed
by, or on behalf of, an entity that seeks
to become a foreign utility company. If
the criteria of section 33 of the Act are
otherwise met, the entity shall be
deemed to be a foreign utility company
upon the filing of such form.
(b) Reporting Requirement for Associate
Public-Utility Companies. A United
States public-utility company that is
an associate company of a foreign utility company shall file with the Commission a report on Form U–33–S
(§ 259.405 of this chapter) on or before
May 1 of each year. This requirement
shall not apply to public-utility companies that are subsidiaries of a registered holding company or of a holding company that is exempt from registration under section 3(a) (1) or (2) of
the Act, pursuant to section 250.2. In
addition, a holding company that is exempt from registration by Commission
order may file a single Form U–33–S on
behalf of all of its public-utility subsidiaries.
[58 FR 51505, Oct. 1, 1993]

§ 250.58 Exemption of investments in
certain nonutility companies.
(a) Exemption from Section 9(a). Section 9(a) of the Act (15 U.S.C. 79i(a))
shall not apply to:
(1) The acquisition by a registered
holding company, or a subsidiary company thereof, of the securities of an energy-related company; Provided, That,
after giving effect to any such acquisition, the aggregate investment by such
registered holding company and subsidiaries in all such companies does not
exceed the greater of:
(i) $50 million; or
(ii) 15% of the consolidated capitalization of such registered holding company, as reported in the registered
holding company’s most recent Annual

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§ 250.58

17 CFR Ch. II (4–1–11 Edition)

Report on Form 10–K or Quarterly Report on Form 10–Q (§ 249.308a or § 249.310
of this chapter) filed under the Securities Exchange Act of 1934, as amended
(15 U.S.C. 78 et seq.); or
(2) The acquisition by a holding company that is registered solely by reason
of ownership of voting securities of gas
utility companies, or a subsidiary company thereof, of the securities of a gasrelated company.
(b) Definitions. For purpose of this
section:
(1) The term energy-related company
shall mean any company that, directly
or indirectly through one or more affiliates, derives or will derive substantially all of its revenues (exclusive of
revenues from temporary investments)
from one or more of the following activities within the United States:
(i) The rendering of energy management services and demand-side management services;
(ii) The development and commercialization of electrotechnologies related to energy conservation, storage
and conversion, energy efficiency,
waste treatment, greenhouse gas reduction, and similar innovations;
(iii) The ownership, operation, sale,
installation and servicing of refueling,
recharging and conversion equipment
and facilities relating to electric and
compressed natural gas powered vehicles;
(iv) The sale of electric and gas appliances; equipment to promote new technologies, or new applications for existing technologies, that use gas or electricity; and equipment that enables the
use of gas or electricity as an alternate
fuel; and the installation and servicing
thereof;
(v) The brokering and marketing of
energy commodities, including but not
limited to electricity, natural or manufactured gas and other combustible
fuels;
(vi) The production, conversion, sale
and distribution of thermal energy
products, such as process steam, heat,
hot water, chilled water, air conditioning, compressed air and similar
products; alternative fuels; and renewable energy resources; and the servicing of thermal energy facilities;
(vii) The sale of technical, operational, management, and other simi-

lar kinds of services and expertise, developed in the course of utility operations in such areas as power plant and
transmission system engineering, development, design and rehabilitation;
construction; maintenance and operation; fuel procurement, delivery and
management; and environmental licensing, testing and remediation;
(viii) The development, ownership or
operation of ‘‘qualifying facilities,’’ as
defined under the Public Utility Regulatory Policies Act of 1978, as amended
(‘‘PURPA’’), and any integrated thermal, steam host, or other necessary facility constructed, developed or acquired primarily to enable the qualifying facility to satisfy the useful thermal
output
requirements
under
PURPA;
(ix) The ownership, operation and
servicing of fuel procurement, transportation, handling and storage facilities, scrubbers, and resource recovery
and waste water treatment facilities;
and
(x) The development and commercialization of technologies or processes
that utilize coal waste by-products as
an integral component of such technology or process; Provided, That any
company engaged in the activities
specified
in
paragraphs
(b)(1)(ii),
(b)(1)(iii) with respect to electric powered vehicles, (b)(1)(vi), (b)(1)(ix) or
(b)(1)(x) of this section, shall be an
‘‘energy-related company’’ for purposes
of this section only if the securities of
such company are acquired, directly or
indirectly, by a registered holding
company whose public-utility company
subsidiaries are primarily electric utility companies; and Provided further,
That any company engaged in the activities specified in paragraph (b)(1)(iii)
of this section with respect to compressed natural gas powered vehicles,
shall be an ‘‘energy-related company’’
for purposes of this section only if the
securities of such company are acquired, directly or indirectly, by a registered holding company whose publicutility company subsidiaries are primarily gas utility companies.
(2) The term gas-related company shall
mean any company that, directly or indirectly through one or more affiliates,
derives or will derive substantially all
of its revenues (exclusive of revenues

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Securities and Exchange Commission

§ 250.62

from temporary investments) from one
or more of the following activities
within the United States:
(i) Activities permitted under section
2(a) of the Gas-Related Activities Act
of 1990, 104 Stat. 2810; and
(ii) Activities specified in section 2(b)
of the Gas-Related Activities Act and
approved by order of the Commission
under sections 9 and 10 of the Act (15
U.S.C. 79i–j).
(3) The term aggregate investment
shall mean all amounts invested or
committed to be invested in energy-related companies, for which there is recourse, directly or indirectly, to the
registered holding company or any subsidiary company thereof.
(c) Report on related business activities.
For each quarter of the fiscal year of
the registered holding company in
which any acquisition that is exempt
under this section is made, and for
each such quarter thereafter in which
the acquired interest is held, the registered holding company shall file with
this Commission and with each state
commission having jurisdiction over
the retail rates of the public-utility
subsidiary companies of such registered holding company a Quarterly
Report on Form U–9C–3 (§ 259.208 of this
chapter). Such filing shall be made
within 60 days following the end of the
first three quarters of the fiscal year,
and within 90 days after the end of the
fourth quarter.
[62 FR 7916, Feb. 20, 1997]

SOLICITATIONS AND REORGANIZATIONS

WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 250.60 Meaning of word ‘‘authorization’’.
The word ‘‘authorization’’, as used in
§§ 250.60 to 250.64, includes ‘‘any proxy,
consent, authorization, power of attorney, deposit, or dissent’’, as those
words are used in section 11(g) of the
Act (49 Stat. 820; 15 U.S.C. 79k) and
‘‘any proxy, power of attorney, consent, or authorization’’, as those words
are used in section 12(e) (49 Stat. 823; 15
U.S.C. 79l) of the Act.

§ 250.61 Solicitations other than in
connection with a reorganization or
transaction which is the subject of
an application or declaration.
The solicitation of any authorization
regarding any security of a registered
holding company or subsidiary company thereof, except solicitations in
connection with any reorganization
subject to the approval of the Commission, or in connection with any other
transaction which is or will be the subject of any application or declaration
filed with the Commission, shall be
subject to all rules and regulations now
or hereafter adopted pursuant to section 14(a) of the Securities Exchange
Act of 1934 (48 Stat. 895; 15 U.S.C. 78n)
that would be applicable to such solicitation if such security were registered
on a national securities exchange: Provided, That unless such security is actually registered on a national securities exchange, no documents need be
filed with any such exchange in connection with such solicitation.
[6 FR 5485, Oct. 28, 1941]

§ 250.62 Solicitations in connection
with a reorganization or transaction which is the subject of an application or declaration.
(a) General provisions. No solicitation
of any authorization, regarding any security of a registered holding company
or a subsidiary company thereof, in
connection with any reorganization
subject to the approval of the Commission, or in connection with any other
transaction which is or will be the subject of an application or declaration
filed with the Commission, shall be
made except pursuant to a declaration
with respect to such solicitation which
has become effective in the manner
prescribed in paragraph (d) of this section.
(b) Exceptions—(1) Solicitations of a
limited number. Paragraph (a) of this
section shall not apply to a solicitation
of not more than 15 owners of securites
or claims (or of such larger number as
the Commission for cause shown may,
by order, authorize in any case) by any
person, either alone or in cooperation
or conjunction with others. For the
purpose of computing such number of
owners, all persons having any legal or

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WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 250.62

17 CFR Ch. II (4–1–11 Edition)

beneficial interest in any specific security or claim shall be counted as only
a single owner.
(2) Depositaries. Action merely as a
depositary or custodian of securities
solicited by others shall not be subject
to paragraph (a) of this section and the
depositary or custodian shall be under
no duty to ascertain that there has
been compliance with this section by
others.
(c) Contents of declaration. Every declaration pursuant to this section shall,
if in connection with any reorganization, be filed on Form U–R–1. Every
other declaration subject to this section may be filed in connection with
the appplication or declaration with respect to the proposed transaction, and
shall contain, in addition to the information otherwise specified in such application or declaration, copies of any
letters of solicitation proposed to be
used, copies of all other documents proposed to be transmitted with such letter of solicitation, and a full statement
of the manner in which the solicitation
is proposed to be made.
(d) Effective date. A declaration as to
a solicitation in connection with a reorganization shall, unless the Commission shall order a hearing thereon, become effective on (1) the 11th day after
the filing thereof, or the 4th day (excluding Saturdays, Sundays and holidays) after the filing of the last amendment thereto, whichever is the later; or
(2) such earlier date as the Commission
may, upon a showing of unusual circumstances, permit in writing or otherwise; or (3) such later date as declarant may designate in such declaration,
in any amendment thereto, or in written notice to the Commission. Any
other declaration shall, unless otherwise ordered by the Commission or unless the Commission shall order a hearing thereon, become effective at the
same time as the application or declaration with respect to the proposed
transaction; post-amendments to such
declarations shall become effective on
the 4th day (excluding Saturdays, Sundays and holidays) after the filing
thereof unless otherwise therein provided or unless an order for hearing is
issued by the Commission.
(e) Order for hearing. If the Commission shall issue an order for hearing on

a declaration under this section, such
declaration shall become effective only
pursuant to the further order of the
Commission and subject to such terms
and conditions as the Commission may
prescribe.
(f) Supplementary solicitations. The
text of any supplementary or follow-up
letters of solicitation or reports, or
statements of account shall be filed as
post-amendments to a declaration and
shall be subject to the same requirements as other amendments to declarations, except that no declaration or
post-amendment need be filed with respect to supplementary or follow-up
letters which do not include financial
or other information or representations and which merely call attention
to prior solicitations and urge action
in accordance therewith, or with respect to replies to persons making specific inquiries asking for further explanation as to details of such solicitation.
(g) Conditions imposed on persons making solicitations. (1) All persons who
make any solicitation subject to this
section shall submit, if so directed by
the Commission annual reports and
statements of accounts to the persons
from whom authorizations are procured.
(2) No securities of the company or
companies in reorganization, or of any
subsidiary of such company, or of any
other associate company thereof which
may be affected by the reorganization,
shall be bought or sold by or for the account of (whether as principal, agent,
trustee, or otherwise) any of the persons specified in paragraphs (g)(2) (i) to
(v) of this section, or in any transaction in which any such person has
any beneficial interest, direct or indirect; nor shall any investment advice
with respect to any such securities be
given, directly or indirectly, by:
(i) Any person who makes any solicitation subject to this section; or
(ii) Any person connected with any
committee
or
other
organization
formed to act under the authorization
so solicitied; or
(iii) Any company as defined in section 2(a)(2) (49 Stat. 804; 15 U.S.C. 79b)
of the act controlled by any person
specified in paragraph (g)(2) (i) or (ii) of
this section; or

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WReier-Aviles on DSKGBLS3C1PROD with CFR

Securities and Exchange Commission

§ 250.65

(iv) Any company as so defined of
which any person specified in paragraph (g)(2) (i) or (ii) of this section is
an officer, director, partner, or employee; or
(v) Any person who is a partner or
employer of any person specified in
paragraph (g)(2) (i) or (ii) of this section. No person shall make any solicitation subject to this section, or act in
connection with any committee or
other organization formed to act under
the authorization so solicited, in the
event of noncompliance with the conditions of paragraph (g)(2) of this section
on the part of any such person or of
any company having the relation to
such person specified in paragraphs
(g)(2) (iii) and (iv) of this section, or of
any partner or employer of such person.
(h) Required terms of authorizations.
No authorization shall be solicited in
connection with a reorganization unless the document evidencing such authorization:
(1) Provides for compliance by the
person soliciting with paragraph (g) of
this section; and
(2) Except as otherwise prescribed by
order of the Commission, provides for
the unconditional right to revoke or
cancel the authority granted, without
expense, at any time before such authority has been conclusively exercised; and
(3) Except in the case of a document
which only evidences consent to or dissent from a specific reorganization
plan, provides that no authority is
granted with respect to consenting to
or dissenting from any reorganization
plan.
(i) Deposits. No solicitation of deposits of securites shall be made except in
accordance with an order of the Commission pursuant to an application
showing the necessity for such deposits
and of any terms and conditions imposed in the deposit agreement.
(j) Solicitation of several classes of security holders. The solicitation of authorizations by one person, group of persons, or committee shall not be made
for more than one class of securites
without the approval of the Commission, by order upon application, which
application shall set forth facts showing that no material conflict of inter-

est exists between the different classes
of security holders concerning the subject matter of the solicitation.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 6 FR 3085, June 25, 1941; 6 FR 5485, Oct. 28,
1941; 10 FR 11283, Sept. 5, 1945; 59 FR 21928,
Apr. 28, 1994]

§ 250.63 Approval
fees.

of

reorganization

All fees, expenses and remuneration,
whether interim or final, to whomsoever paid for services rendered or to be
rendered in connection with any reorganization, dissolution, liquidation,
bankruptcy, or receivership of a registered holding company or subsidiary
thereof, in any court of the United
States, shall be subject to approval by
the Commission as to the maximum
amount that may be paid for such services. This section shall not apply to
any payments approved by a court of
the United States. in any proceeding in
which the Commission has filed a notice of appearance pursuant to section
1109(a) of chapter 11 of the Bankruptcy
Code (11 U.S.C. 1109(a)).
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 59 FR 21928, Apr. 28, 1994]

§ 250.64 Scope of applications for approval of reorganization plans.
Any application for approval of a
plan of reorganization under section 11
(49 Stat. 820; 15 U.S.C. 79k), or otherwise, shall be deemed to include all applications and declarations under the
act which would otherwise be required
as to any action necessary to consummate such plan. (See § 250.24(c)(3).)
§ 250.65 Expenditures in connection
with solicitation of proxies.
(a) General provision. Except pursuant
to a declaration notifying the Commission of the proposed transaction, which
has become effective in accordance
with the procedure specified in § 250.23
and pursuant to the order of the Commission with respect to such declaration under the applicable provisions of
the act, no registered holding company
or subsidiary thereof shall expend any
money or other consideration in connection with the solicitation of any
proxy, consent, or authorization regarding any security of such company.

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§ 250.70

17 CFR Ch. II (4–1–11 Edition)

(b) Exceptions. This section shall not
apply to:
(1) Ordinary expenditures in connection with preparing, assembling, and
mailing proxies, proxy statements, and
accompanying data; or
(2) Other expenditures not in excess
of $100,000 during any one calendar
year.
(c) Scope of declaration. A declaration
with respect to any matter within the
scope of this section shall state the
amounts and purposes of the sums proposed to be expended, and set forth any
information available to the company
as to any contest which has arisen, or
may arise, with respect to the subject
matter of such solicitation. Any such
declaration may be included in any application or declaration filed with the
Commission as to any related matter.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 59 FR 21928, Apr. 28, 1994]

OFFICERS, DIRECTORS AND REPRESENTATIVES OF REGISTERED HOLDING COMPANIES AND THEIR SUBSIDIARIES 5

WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 250.70 Exemptions from section 17(c)
of the Act.
Notwithstanding the prohibitions
contained in section 17(c) of the Act,
(a) A registered holding company
may have up to 75% of the members of
its board of directors comprised of affiliated persons of commercial banking
institutions that have their principal
places of business located within the
state or states served by the holding
company system, Provided, That:
(1) Those affiliated persons do not
also serve as officers or employees of
those local commercial banking institutions; and
(2) No more than one director or 25%
of the members of the board of directors of the holding company, whichever
is greater, is affiliated with the same
local commercial banking institution.
(b) A registered holding company
may have up to 25% of the members of
its board of directors comprised of affiliated persons of commercial banking
institutions that have their principal
5 The statements which section 17(a) requires to be filed by officers and directors of
registered holding company systems are filed
on the forms prescribed under section 16(a) of
the Securities Exchange Act of 1934.

places of business located outside the
state or states served by the holding
company system or investment bankers wherever located, Provided, That:
(1) Those affiliated persons do not
also serve as officers or employees of
those banking institutions;
(2) No more than one director or 10%
of the members of the board of directors, whichever is greater, is affiliated
with any one investment banker or
with any one commercial banking institution;
(3) The total number of directors who
are affiliated with investment bankers
or commercial banking institutions
does not exceed 75% of the members of
the board of directors; and
(4) Where an affiliated person of an
investment banker serves as a director
of any company within a holding company system, the investment banker:
(i) Has not acted as a managing underwriter for the distribution of securities issued by any company in the holding company system for at least twelve
months prior to the director’s appointment or election to the board; and
(ii) Does not act as a managing underwriter for the distribution of securities issued by any company in the holding company system while the director
serves on the board.
(c) A subsidiary company of a registered holding company may have up
to 75% of the members of its board of
directors comprised of affiliated persons of commercial banking institutions that have their principal places
of business located within the state or
states served by the subsidiary company, Provided, That:
(1) Those affiliated persons either do
not serve as officers or employees of
those local commercial banking institutions or, alternatively, do not serve
as officers or employees of the subsidiary company; and
(2) No more than one director or 25%
of the members of the board of directors of the subsidiary company, whichever is greater, is affiliated with the
same local commercial banking institution.
(d) A subsidiary company of a registered holding company may have up
to 25% of the members of its board of

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WReier-Aviles on DSKGBLS3C1PROD with CFR

Securities and Exchange Commission

§ 250.70

directors comprised of affiliated persons of commercial banking institutions that have their principal places
of business located outside the state or
states served by the subsidiary company or investment bankers wherever
located, Provided, That:
(1) Those affiliated persons do not
also serve as officers or employees of
those banking institutions;
(2) No more than one director or 10%
of the members of the board of directors, whichever is greater, is affiliated
with any one investment banker or
with any one commercial banking institution;
(3) The total number of directors who
are affiliated with investment bankers
or commercial banking institutions
does not exceed 75% of the members of
the board of directors; and
(4) Where an affiliated person of an
investment banker serves as a director
of any company within a holding company system, the investment banker:
(i) Has not acted as a managing underwriter for the distribution of securities issued by any company in the holding company system for at least twelve
months prior to the director’s appointment or election to the board; and
(ii) Does not act as a managing underwriter for the distribution of securities issued by any company in the holding company system while the director
serves on the board.
(e) An officer of a holding company
may serve as a director of a commercial banking institution, Provided,
That:
(1) The officer of the holding company does not also serve as an officer
or employee of that commercial banking institution; and
(2) No more than one other officer of
the holding company serves as a director of that commercial banking institution.
(f) An officer of a subsidiary company
may serve as a director of a commercial banking institution, Provided,
That:
(1) The officer of the subsidiary company does not also serve as an officer
or employee of that commercial banking institution; and
(2) No more than one other officer of
the subsidiary company serves as a di-

rector of that commercial banking institution.
(g) A person serving as an officer or
director of a holding company or subsidiary company on April 15, 1986, shall
not be disqualified from continuing to
serve or from serving successive terms
in that capacity solely because of an
affiliation with a commercial banking
institution or investment banker
which existed on that date.
(h) As used in section 17(c) of the Act
and in this rule:
(1) An affiliated person of a commercial banking institution or investment
banker means an officer, director, partner, appointee or representative of that
commercial banking institution or investment banker, as well as any person
that directly or indirectly owns or
holds with power to vote 5 percent or
more of the outstanding voting securities of that commercial banking institution or investment banker.
(2) A commercial banking institution
means any person:
(i) That engages directly or indirectly in the business of a bank, trust
company,
bank-holding
company,
banking association or firm; and
(ii) Any enterprise in which such person owns 20 percent or more of the equity interest.
The term excludes any person that derived 15% or less of its gross revenues
from commercial banking and investment banking activities during the fiscal year immediately preceding an affiliated person’s appointment or election to the board of directors, or appointment as officer, of a registered
holding company or subsidiary company thereof. The term also excludes
any Federal Reserve Bank, savings
bank, savings and loan association,
building and loan association, cooperative bank, homestead association, or
similar institution, or any receiver,
conservator, liquidator, liquidating
agent, or similar official or person
thereof or therefor.
(3) An investment banker means any
person:
(i) That engages directly or indirectly in the business of underwriting
or dealing in securities that are not exempted from registration under the Securities Act of 1933 by section 3 of that
Act; and

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§ 250.71

17 CFR Ch. II (4–1–11 Edition)

(ii) Any enterprise in which such person owns 20 percent or more of the equity interest.
The term excludes any person that derived 15% or less of its gross revenues
from commercial banking and investment banking activities during the fiscal year immediately preceding an affiliated person’s appointment or election to the board of directors of a registered holding company unless those
revenues were derived from acting as a
managing underwriter for the distribution of securities issued by any company in such holding company system.
(4) A person’s gross revenues from its
own commercial and investment banking activities and from its ratable
share of the commercial banking and
investment banking activities of enterprises in which it owns 20 percent or
more of the equity interest should be
considered in determining the degree
to which the person is engaged in such
activities.
(5) A director means any director of a
corporation or any individual who performs similar functions in connection
with a corporation, partnership, trust,
voting trust or other company.
(6) An officer means a chairman of the
board of directors, chief executive officer, president, vice president, treasurer, secretary, and comptroller, or
any individual who performs similar
functions in connection with a corporation, partnership, trust, voting trust,
or other company.
(7) A managing underwriter means an
underwriter (or underwriters) who, by
contract or otherwise, deals with the
issuer, organizes the selling efforts, receives some benefit directly or indirectly in which all other underwriters
similarly situated do not share in proportion to their respective interests in
the underwriting, or represents any
other underwriters in such matters as
maintaining the records of the distribution, arranging the allotments of
securities offered or arranging for appropriate stabilization activities, if
any.
WReier-Aviles on DSKGBLS3C1PROD with CFR

[51 FR 9003, Mar. 17, 1986]

§ 250.71 Statements to be filed pursuant to section 12(i).
(a) Ten-day statement. Any person
who engages in any activity within the

scope of section 12(i) of the act, shall
file with the Commission within 10
days after the date of such activity a
statement on Form U–12(I)–A, except
as to activity within the scope of any
advance statement on Form U–12(I)–B,
which is duly filed in accordance with
paragraph (b).
(b) Advance statement. An advance
statement, covering anticipated activity for the remainder of the present
calendar year, and the next two calendar years, may be filed on Form U–
12(I)–B by any person (whether or not
the compensation of such person has
been fixed in advance) who is a salaried
officer or employee or an attorney, accountant or other expert regularly retained by any company or by companies in the same holding-company system, or any person specially retained
in connection with a particular proceeding or enterprise which is expected
to involve a series of appearances or
activities, if such employment or retainer does not contemplate any expenses other than ordinary personal,
traveling or sustenance expenses, stationery, postage, telephone, telecopier
and telegraphic service, stenographic
and clerical assistance, expenditures
for the printing of briefs or other documents to be submitted to any agencies
specified in section 12(i) of the Act, and
similar items.
(c) Supplemental statement. Any person filing an advance statement on
Form U–12(I)–B shall file a supplement
to such advance statement within 30
days after the end of the period covered
thereby, and in no event later than
January 30 of the following year, giving the information specified in Items 5
and 6 thereof. Any such person renewing such advance statement may combine the renewal and supplement in the
same statement.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 6 FR 5950, Nov. 25, 1941; 59 FR 21928, Apr.
28, 1994]

§ 250.72 Filing of statements pursuant
to section 17(a).
(a) The filing of initial statements of
beneficial ownership of securities and
statements of changes in such beneficial ownership, as prescribed under
section 16(a) of the Securities Exchange Act of 1934, shall satisfy the

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Securities and Exchange Commission

§ 250.82

corresponding requirements of section
17(a) of the Public Utility Holding
Company Act of 1935.
(b) The rules under section 16 (a) and
(b) of the Securities Exchange Act of
1934, including any rules which exempt
a transaction from the duties or liabilities of section 16 (a) or (b), shall apply
to any duty or liability imposed with
respect to a transaction involving any
security of a registered holding company or subsidiary thereof under section 17 (a) or (b) of the Act.
(Sec. 17(a), 49 Stat. 830; 15 U.S.C. 79q)
[26 FR 2466, Mar. 23, 1961, as amended at 46
FR 2036, Jan. 8, 1981; 47 FR 5224, Feb. 4, 1982]

SERVICE, SALES AND CONSTRUCTION
CONTRACTS

WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 250.80 Definitions of terms used in
rules under section 13.
As used in the rules and regulations
under section 13 of the Act (49 Stat. 825;
15 U.S.C. 79m), unless the context otherwise requires:
(a) Service means any managerial, financial, legal, engineering, purchasing,
marketing, auditing, statistical, advertising, publicity, tax, research, or any
other service (including supervision or
negotiation of construction or of sales),
information or data, which is sold or
furnished for a charge.
(b) Goods means any goods, equipment (including machinery), materials,
supplies, appliances, or similar property (including coal, oil, or steam, but
not including electric energy, natural
or manufactured gas, or utility assets)
which is sold, leased, or furnished, for a
charge.
(c) Construction means any construction, extension, improvement, maintenance, or repair of the facilities or any
part thereof of a company, which is
performed for a charge.
§ 250.81 Exempted transactions.
Unless otherwise expressly provided,
the rules, regulations, and orders of the
Commission pertaining to the performance of services or construction or the
sale of goods shall not be applicable to
the sale of water, telephone service,
transportation, or a similar commodity
or service, the sale of which is normally subject to public regulation, or
to the furnishing of services, construc-

tion, or goods, to a customer incidentally to such a sale; and such transactions shall be exempt from the provisions of section 13 of the Act (49 Stat.
825; 15 U.S.C. 79m) and the rules and
regulations thereunder: Provided, That,
where any such transaction is with an
associate company in its capacity as a
consumer, comparable services, construction, or goods are offered to customers other than associate companies
on terms which are comparable having
due regard to any differences of quality
or quantity.
§ 250.82 Temporary exemption from
section 13.
(a) Every registered holding company
shall be exempt from the provisions of
section 13 (49 Stat. 825; 15 U.S.C. 79m)
and the rules and regulations adopted
thereunder for a period of 30 days after
the date when such company shall first
become a registered holding company,
and every subsidiary of such a registered holding company and every
company principally engaged in performing services or construction for, or
making sales to, associates of such registered holding company shall likewise
be exempt from such provisions for said
period: Provided, That, during such period, such company shall comply with
the provisions of § 250.90 with respect to
the performance of services or construction for associate companies on
the basis of cost and with the provisions of § 250.92 with respect to sales of
goods produced by the seller. As to any
company principally engaged in performing services or construction for, or
selling goods to, associate companies,
such exemption shall expire on the
first day of the calendar month immediately succeeding the effective date of
such registration unless on and after
the first day of such month all accounts and records of such company
with respect to such matters shall be
maintained in accordance with the provisions of § 250.93 or other rule of the
Commission with respect to the accounts and records of mutual service
companies and subsidiary service companies.
(b) If, within said period of 30 days
after registration of any such holding
company, or 30 days after the date of
its becoming a holding company in the

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§ 250.83

17 CFR Ch. II (4–1–11 Edition)

event of such company filing a notification prior to becoming a holding
company, an application or a declaration pursuant to § 250.88 shall be filed
with the Commission by or on behalf of
any company desiring to perform services or construction for, or make sales
of goods to, associate companies in
such holding company system, such applicant or declarant may, to the extent
set forth in such document, perform
services or construction for, or make
sales of goods to, such companies until
the Commission shall take final action
on such application or declaration: Provided, however, That, during such period such applicant or declarant shall
comply with all provisions of the act
and of the rules and regulations thereunder that would have been applicable
to it if the Commission had previously
taken favorable action on such application or declaration.

WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 250.83 Exemption in the case of
transactions with foreign associates.
(a) Any subsidiary company of a registered holding company, which subsidiary is or is about to become engaged in the performance of any service, sales, or construction contract for
any associate company which does not
derive, directly or indirectly, any material part of its income from sources
within the United States and which is
not a public utility company operating
within the United States, may make
application to the Commission for exemption, in whole or in part, from the
standards established by section 13(b)
of the Act (49 Stat. 825; 15 U.S.C. 79m),
and the rules and regulations promulgated thereunder, relating to the performance of any service, sales, or construction contract for such associate
companies.
(b) No form is prescribed therefor,
but every such application shall comply with the provisions of § 250.20.
Every such application shall fully set
forth information regarding ownership
of security issues, servicing activities
of the applicant, and such other data as
may be necessary to enable the Commission to determine if, by reason of
the lack of any major interest of holders of securities offered in the United
States in servicing arrangements af-

fecting such serviced subsidiaries, or
for any other reason, such an application for exemption should be granted
as necessary or appropriate in the public interest or for the protection of investors.
(c) Upon filing such an application in
good faith, the applicant shall be entitled to a temporary exemption from all
provisions of section 13(b) of the Act,
and the rules and regulations promulgated thereunder, as to which an exemption is sought, pending action by
the Commission upon the application.
(d) Any subsidiary company of a registered holding company (including a
mutual service company) may perform
service, sales, or construction contracts for any associate company
which does not derive, directly or indirectly, any material part of its income
from sources within the United States
and which is not a public utility company operating within the United
States without complying with the
standards established by section 13(b)
of the Act, and the rules and regulations thereunder, and without the necessity of filing an application for or
securing an order of exemption from
those standards, so long as the aggregate cost to all such associate companies for services, sales, or construction
performed by virtue of the exemption
granted by this paragraph (whether
performed by one or more subsidiary
companies or mutual service companies in the same holding company system) does not exceed $10,000 within any
one calendar year.
§ 250.84 Prohibition of unauthorized
transactions by registered holding
companies.
Except as authorized by rule, regulation, or order of the Commission, no
registered holding company shall—
whether or not pursuant to a contract
heretofore or hereafter entered into—
perform any service or construction
for, or sell any goods to, any associate
company thereof which is a public utility company, a mutual service company, or a company engaged in the
business of performing services or construction for, or selling goods to, associate public utility companies, or enter
into any contract to do so.

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Securities and Exchange Commission

§ 250.87

§ 250.85 Service, sales, and construction by registered holding companies.
Subject to compliance with the provisions of such rules, regulations, or
orders of the Commission as may be applicable (including § 250.90), a registered
holding company may perform services
or construction for, or sell goods to, an
associate company thereof, which is a
public utility company, a mutual service company, or a company engaged in
the business of performing services or
construction for, or selling goods to,
associate public utility companies, and
such transaction shall be exempt from
the provisions of section 13(a) of the
Act (49 Stat. 825; 15 U.S.C. 79m), if:
(a) Such holding company is principally engaged in the business of an
operating electric or gas utility company, or any business or businesses
other than that of selling goods to associate companies, that of performing
services or construction, that of a holding company or fiscal or financial
agency of a holding company, or that
of an investment company or investment trust; and, incidentally to such
business, performs such services or
construction or sells such goods; or
(b) Such services, construction, or
goods are reasonably required by such
associate to meet a break-down or
other emergency, and the parties believe in good faith that, under the conditions then existing, such transaction
will be to the advantage of such associate; or
(c) Such transaction consists of performance of a contract made before
August 26, 1935, for the construction of
a specific project, building, or unit,
pursuant to which contract substantial
expenses were incurred before August
26, 1935; or
(d) Such transaction consists of the
sale, at not more than cost less depreciation, of goods purchased by such
holding company for its own use; or
(e) Such transaction consists of a
sale of goods which is merely incidental to a sale of an entire business or
a substantial portion thereof, or to a
sale of assets other than goods; or
(f) Such transaction, although not
exempted by any of the foregoing paragraphs of this section, is not in the regular course of business of such holding

company and does not involve a cost to
the associate of more than $2,500, including the cost of such associate of all
previous transactions with such holding company consummated in the same
fiscal year which were exempted only
by this paragraph.
§ 250.86 Prohibition of unauthorized
transactions by subsidiaries.
Except as authorized by rule, regulation, or order of the Commission, no
subsidiary company (including a mutual service company) of a registered
holding company shall—whether or not
pursuant to a contract heretofore or
hereafter entered into—perform any
service or construction for, or sell any
goods to, any associate company thereof, or enter into any contract to do so.
§ 250.87 Subsidiaries authorized to
perform services or construction or
to sell goods.
(a) Subject to compliance with the
provisions of such rules, regulations, or
orders of the Commission as may be applicable (including § 250.90), the following classes of subsidiary companies
of registered holding companies may
perform services or construction for, or
sell goods to, associate companies
thereof:
(1) An approved mutual service company.
(2) A subsidiary company whose organization and conduct of business the
Commission has found, pursuant to
§ 250.88, sufficient to meet the requirements of section 13(b) of the Act.
(3) A subsidiary company which is
principally engaged in the business of
an operating electric or gas utility
company, or any business or businesses
other than that of selling goods to associate companies, that of performing
services or construction, that of a holding company of fiscal or financing
agency of a holding company, or that
of an investment company or investment trust; and which, incidentally to
such business, performs such services
or construction or sells such goods.
(b) Any subsidiary of a registered
holding company, whether or not it is
a company specified in paragraph (a)
(1), (2), or (3) of this section, may perform services or construction for; or

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§ 250.88

17 CFR Ch. II (4–1–11 Edition)

sell goods to, an associate company
thereof if:
(1) Such associate company is not an
electric or gas utility company and is
principally engaged in a business or
businesses other than that of a holding
company or fiscal or financing agency
of a holding company, or that of an investment company or investment
trust; or
(2) Such services, construction, or
goods are reasonably required by such
associate to meet a break-down or
other emergency, and the parties believe in good faith that, under the conditions then existing, such transaction
will be to the advantage of such associate; or
(3) Such transaction consists of performance of a contract made before
August 26, 1935, for the construction of
a specific project, building, or unit,
pursuant to which contract substantial
expenses were incurred before August
26, 1935; or
(4) Such transaction consists of the
sale, at not more than cost less depreciation, of goods purchased by such
subsidiary company for its own use; or
(5) Such transaction consists of a sale
of goods which is merely incidental to
a sale of an entire business or a substantial portion thereof, or to a sale of
assets other than goods; or
(6) Such transaction consists of a sale
of goods produced by the seller.
(c) This section shall not be applicable to a subsidiary which is itself a registered holding company. Such a company may perform services or construction for, or sell goods to, associate
companies as provided in § 250.85.

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§ 250.88 Approval of mutual service
companies; organization and conduct of business of subsidiary service companies.
(a) Application for approval of a company as a mutual service company
shall be filed by the company, or the
persons proposing to organize it, with
the Commission on Form U–13–1, as
specified in the instructions for that
form. The Commission will not approve
any company as a mutual service company unless it finds that the company
is so organized as to capitalization,
ownership by, and representation of,
member companies, costs, revenues,

and the sharing thereof, and other matters as reasonably to insure the efficient and economical performance of
services or construction or sale of
goods by the company for or to its
member companies, at cost fairly and
equitably allocated among them and at
a reasonable saving over the cost of
comparable services or construction
performed or goods sold by independent
persons.
(b) A finding by the Commission that
a subsidiary company of a registered
holding company (other than a mutual
service company) is so organized and
conducted or to be conducted, as to
meet the requirements of section 13(b)
of the Act (49 Stat. 825; 15 U.S.C. 79m)
with respect to reasonable assurance of
efficient and economical performance
of services or construction or sale of
goods for the benefit of associate companies, at cost fairly and equitably allocated among them (or as permitted
by § 250.90), will be made only pursuant
to a declaration filed with the Commission on Form U–13–1, as specified in the
instructions for that form, by such
company or the persons proposing to
organize it.
(c) Within a reasonable time after
the filing of an application for approval
of a mutual service company, the Commission shall, after notice and opportunity for hearing, enter an order
granting or refusing approval or otherwise disposing of the application.
(d) Within a reasonable time after
the filing of a declaration with respect
to the organization and conduct of
business of a subsidiary service company, the Commission shall, after notice and opportunity for hearing, enter
an order finding that the company’s organization and conduct of business
meet the requirements of section 13(b)
of the Act, or refusing so to find, or
otherwise disposing of the declaration.
(e) Unless the Commission shall otherwise by order provide, the approval of
a mutual service company, or the finding that a subsidiary service company’s
organization and conduct of business
are sufficient to meet the requirements
of section 13(b) of the Act, shall continue in effect until the Commission,
after notice and opportunity for hearing, shall find that the conditions
which led to such approval or finding

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Securities and Exchange Commission

§ 250.91

are not satisfied or shall find that the
company in question has persistently
violated a provision of section 13 of the
Act, or of any rule, regulation, or order
of the Commission.
§ 250.89

Termination of contracts.

Every service, sales, or construction
contract made after April 1, 1936, between a registered holding company
and an associate company thereof
which is a public utility company, a
mutual service company, or a company
engaged in the business of performing
services or construction for, or selling
goods to, associate public utility companies, or between a subsidiary company of a registered holding company
(including a mutual service company)
and any associate company thereof,
shall contain provision for its termination to the extent that performance
may conflict with any rule, regulation
or order of the Commission adopted before or after the making of such contract.

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§ 250.90

Transactions limited to cost.

(a) Except as permitted by this section, or any other appliable rule, regulation, or order of the Commission:
(1) No registered holding company
shall perform any service or construction for, or sell any goods to, any associate company thereof which is a public utility company, a mutual service
company, or a company engaged in the
business of performing service or construction for, or selling goods to, associate public utility companies, or enter
into any contract to do so, and
(2) No subsidiary company of a registered holding company (including a
mutual service company) shall perform
any service or construction for, or sell
any goods to, any associate company
thereof, or enter into any contract to
do so, at more than cost as determined
pursuant to § 250.91 or any other applicable rule, regulation, or order of the
Commission, or in the absence thereof,
in accordance with sound methods of
determining cost. In the case of a sale
of used goods the price shall be not
more than cost less depreciation. Any
charges on a basis of estimated cost
shall be readjusted to actual cost at
least annually, if for services or goods,

and upon completion of individual
projects, in case of construction.
(b) In the case of construction for an
associate company of a specific project, building, or unit on which substantial expenses were incurred before August 26, 1935, pursuant to a contract
made before that date, the holding
company or subsidiary performing the
construction shall be entitled to the
proportion of its profit or fee earned
prior to April 1, 1936.
(c) If a sale of goods is merely incidental to a sale of an entire business or
a substantial portion thereof, or to a
sale of assets other than goods, a lump
sum price for the entire transaction
may include such goods without the assignment of a specific portion of the
price to the cost of such goods.
(d) The price of services, construction, or goods need not be limited to
cost although the transaction comes
within the terms of paragraph (a) of
this section if:
(1) Neither the company performing
the services or construction, or selling
the goods, nor the associate company
receiving such services or construction,
or buying such goods, is (i) a public
utility or holding company, (ii) an investment company or investment
trust, including any company or trust
which is a medium of investment in securities for the benefit of a registered
holding company or its employees or
officers, or (iii) a company engaged in
the business of selling goods to associate companies or performing services
or construction, or (iv) a company controlling, directly or indirectly, any
company specified in paragraph (d)(1)
(i), (ii), or (iii) of this section; or
(2) Such transaction consists of a sale
of goods produced by the seller.
§ 250.91

Determination of cost.

(a) Subject to the provisions of this
section and of any other applicable
rule, regulation, or order of the Commission, a transaction shall be deemed
to be performed at not more than cost
if the price (taking into account all
charges) does not exceed a fair and equitable allocation of expenses (including the price paid for goods) plus reasonable compensation for necessary
capital procured through the issuance

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§ 250.92

17 CFR Ch. II (4–1–11 Edition)

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of capital stock (or similar securities
of an unincorporated company).
(b) Direct charges shall be made so
far as costs can be identified and related to the particular tranactions involved without excessive effort or expense. Other elements of cost, including taxes, interest, other overhead, and
compensation for the use of capital
procured by the issuance of capital
stock (or similar securities of an unincorporated company) shall be fairly
and equitably allocated. Interest on
borrowed capital and compensation for
the use of capital shall represent a reasonable return on only the amount of
capital reasonably necessary for the
performance of services or construction for, or the selling of goods to, customers for whom transactions are required by the rules of the Commission
to be performed at cost. Such amount
shall not include the cost of assignment of, or any capitalization of, any
service, sales, or construction contract.
(c) Any expense (including the price
paid for goods) incurred in a transaction with an associate company of
the performing or selling company (directly or through one or more other associate companies thereof), to the extent that it exceeds the cost of such
transaction to such associate company,
shall not be included in determining
cost to such performing or selling company.
(d) Any expense (including the price
paid for goods) incurred in a transaction with a person other than an associate company but not at arm’slength, to the extent that it exceeds
the expense at which the performing or
selling company might reasonably be
expected to obtain elsewhere, or to furnish itself, comparable performance,
goods, capital, or other items of expense involved (giving due regard to
quality, quantity, regularity of supply,
and other factors entering into the calculation of a fair price), shall not be included in determining cost to such performing or selling company.
§ 250.92 Sales of goods produced by
seller.
(a) No registered holding company
shall sell any goods produced by it to
any associate company thereof which
is a public utility company, a mutual

service company, or a company engaged in the business of performing
services or construction for, or selling
goods to, associate public utility companies, or enter into any contract to do
so, and,
(b) No subsidiary company of a registered holding company (including a
mutual service company) shall sell any
goods produced by it to any associate
company thereof, or enter into any
contract to do so,
at a price which exceeds the price at
which the purchaser might reasonably
be expected to obtain comparable
goods elsewhere, or to furnish them
itself, giving due regard to quality,
quantity, regularity of supply, and
other factors entering into the calculation of a fair price.
§ 250.93 Accounts and records of mutual and subsidiary service companies.
Every mutual service company and
every company whose organization and
conduct of business the Commission
has found, pursuant to § 250.88, to meet
the requirements of section 13(b) (49
Stat. 825; 15 U.S.C. 79m) shall keep such
accounts, cost-accounting procedures,
correspondence, memoranda, papers,
books, and other records in such manner and preserve them for such periods,
as are prescribed in 17 CFR part 257,
and shall keep no other records with
respect to the same subject matter except (a) records other than accounts,
(b) records required by state law, (c)
subaccounts or supporting accounts
which are not inconsistent with the accounts required by the Uniform System
of Accounts (17 CFR part 256), and (d)
such other accounts as may be authorized by the Commission.
(Sec. 15(a) and 20(a), 15 U.S.C. 79o and 79t)
[49 FR 27310, July 3, 1984]

§ 250.94 Annual reports by mutual and
subsidiary service companies.
(a) On or before the first day of May
in each calendar year, every mutual
service company and every subsidiary
service company whose organization
and method of conducting business the
Commission, pursuant to § 250.88, has
found sufficient to meet the requirements of section 13(b) (49 Stat. 825; 15

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Securities and Exchange Commission

§ 250.102

U.S.C. 79m), and every company whose
application for approval, or declaration
pursuant to § 250.88, is pending, shall
file with the Commission a report for
the prior calendar year, or any portion
thereof during which there was effective as to such company any uniform
system of accounts presecribed by any
rules of the Commission. Every such
report shall be submitted on the Form
U–13–60 then in effect and shall be prepared in accordance with the instructions incorporated in such form. For
appropriate cause shown, the Commission may extend the time within which
any such report is to be filed.
(Secs. 13, 15, and 20(a), 49 Stat. 825, 828, 833; 15
U.S.C. 79m, 79o, 79t)

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[45 FR 14548, Mar. 6, 1980, as amended at 61
FR 49961, Sept. 24, 1996]

§ 250.95 Reports required from affiliate service companies and companies principally engaged in performing services.
No affiliate of a registered holding
company or subsidiary company thereof shall take any step in the performance of any service or construction for,
or any sale of goods to, any company of
which it is an affiliate and no company
whose principal business is the performance of service or construction for,
or sale of goods to, one or more registered holding companies or public
utility subsidiary companies thereof,
either directly or through one or more
other companies, shall take any step in
the performance of any such service,
construction or sale of goods, unless
such affiliate or company:
(a) Has filed with the Commission a
report on Form U–13E–1 containing the
information prescribed by that form,
and
(b) Files with the Commission such
information supplementing its report
on Form N–13E–1 and regarding its accounts, costs, charges, maintenance of
competitive conditions, disclosure of
interests, duration of contracts, and
other similar matters at such times
and in accordance with such forms and
instructions as the Commission shall
designate. The provisions of this section are not applicable to a company
authorized to perform service or construction for, or sell goods to, associate
companies by § 250.85, § 250.87 or § 250.88.

MISCELLANEOUS RULES
§ 250.100 Orders granting 6 or withdrawing exemptions.
(a) Orders granting exemption from
rules. Any transaction subject to the
requirements of any rule promulgated
under the act may be exempted therefrom by the Commission upon application, or upon its own motion provided
an application for approval of such
transaction or a declaration with respect thereto is pending, if it appears
to the Commission that such requirements as applied to such transaction
are not necessary or appropriate in the
public interest or for the protection of
investors or consumers.
(b) Orders withdrawing exemption. Any
unexecuted transaction which is within
the exemption provided in any rule
from the requirements of any provision
of the act or of the rules, may nevertheless be subjected thereto by order,
after notice and opportunity for hearing, if it appears to the Commission
that the withdrawal of such exemption
as applied to such transaction would be
appropriate in the public interest or
the interest of investors or consumers.
The Commission may by such notice
suspend the applicability of any such
exemption to any transaction pending
final determination.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 47 FR 5224, Feb. 4, 1982]

§ 250.101 Standards and interpretations of rules.
All rules shall be construed in the
light of, and so as to be consistent
with, any applicable requirements of,
and standards contained in, the act.
Such standards shall be deemed to be
incorporated in and a part of every
rule.
§ 250.102 Effective date of rules.
Unless the Commission otherwise
prescribes in any case, the manner of
publication of rules of the Commission
shall be by making a copy of such rule
or amendment available for public inspection in the office of the Secretary
of the Commission, by filing a copy
thereof with the Office of the Federal
Register, The National Archives, and
6 See

§ 250.20(a).

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§ 250.103

17 CFR Ch. II (4–1–11 Edition)

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by publication in the FEDERAL REGISTER. Rules shall not become effective
prior to the effective date therein specified if such date is later than the date
of publication. In any case where the
method of publication prescribed as to
any rule is other than that above specified, such rule shall not be effective as
against any person who has not had actual knowledge thereof prior to the filing of a copy thereof with the Office of
the Federal Register, and the making
available for inspection of such a copy
as prescribed in section 7 of the Federal
Register Act (49 Stat. 502; U.S.C. 307).
§ 250.103 References and definitions.
As used in the rules in this part, unless the context indicates otherwise:
(a) The term Commission means the
Securities and Exchange Commission.
(b) The term act means the Public
Utility Holding Company Act of 1935.
(c) The term section refers to a section of the act.
(d) The term rule includes rule and
regulation, as those words are used in
the Act and refers to the rules prescribed by the Commission pursuant to
the Act. All forms and instructions
thereto shall be deemed rules and regulations adopted by the Commission
pursuant to the Act.
(e) Any definition of a term contained in the act shall be applicable to
such term as used in the rules.
(f) The term parent or parent company
of a specified company means a company of which such specified company
is a subsidiary, whether by virtue of direct or indirect ownership or control of
securities.
(g) The phrase direct subsidiary of a
specified company means a company of
which such specified company itself directly owns, controls, or holds with
power to vote, 10 percent or more of
the outstanding voting securities, and
directly owns a greater percentage of
such voting securities than are owned
by any other company.
(h) The phrase ‘‘any person having a
bona fide interest as used in sections
11(d), 11(f), and 11(g) (49 Stat. 820; 15
U.S.C. 79k), shall, with respect to the
reorganization of any company, be
deemed to include such company; any
creditor or stockholder of such company or any authorized representative

thereof; any receiver or trustee of such
company; any trustee under an indenture pursuant to which securities of
such company are outstanding; any
State commission having regulatory
jurisdiction over such company; any
person authorized to prepare a plan by
any court before which a reorganization proceeding is pending; and any
other person found by the Commission
to have a substantial interest in the reorganization.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 30 FR 4129, Mar. 30, 1965]

§ 250.103A Liability for certain statements by issuers.
(a) A statement within the coverage
of paragraph (b) of this section which is
made by or on behalf of an issuer or by
an outside reviewer retained by the
issuer shall be deemed not to be a
fraudulent statement (as defined in
paragraph (d) of this section), unless it
is shown that such statement was made
or reaffirmed without a reasonable
basis or was disclosed other than in
good faith.
(b) This rule applies to the following
statements:
(1) A forward-looking statement (as
defined in paragraph (c) of this section)
made in a document filed with the
Commission, in Part I of a quarterly
report on Form 10–Q and Form 10–QSB,
§ 249.308a of this chapter, or in an annual report to shareholders meeting
the requirements of Rules 14a–3 (b) and
(c) or 14c–3(a) and (b) under the Securities Exchange Act of 1934, a statement
reaffirming
such
forward-looking
statement subsequent to the date the
document was filed or the annual report was made publicly available, or a
forward-looking statement made prior
to the date the document was filed or
the date the annual report was made
publicly available if such statement is
reaffirmed in a filed document, in Part
I of a quarterly report on Form 10–Q
and Form 10–QSB, or in an annual report made publicly available within a
reasonable time after the making of
such forward-looking statement: Provided, That;
(i) At the time such statements are
made or reaffirmed, either the issuer is
subject to the reporting requirements

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Securities and Exchange Commission

§ 250.104

of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and has complied with the requirements of Rule
13a–1 or 15d–1 thereunder, if applicable,
to file its most recent annual report on
Form 10–K and Form 10–KSB; or, if the
issuer is not subject to the reporting
requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934,
the statements are made in a registration statement filed under the Securities Act of 1933 or pursuant to section
12(b) or (g) of the Securities Exchange
Act of 1934, and
(ii) The statements are not made by
or on behalf of an issuer that is an investment company registered under
the Investment Company Act of 1940;
and
(2) Information which is disclosed in
a document filed with the Commission,
in part I of a quarterly report on Form
10–Q and Form 10–QSB or in an annual
report to shareholders meeting the requirements of Rules 14a–3 (b) and (c) or
14c–3 (a) and (b) under the Securities
Exchange Act of 1934 and which relates
to:
(i) The effects of changing prices on
the business enterprise, presented voluntarily or pursuant to Item 303 of
Regulation S-K (§ 229.303 of this chapter), ‘‘Management’s discussion and
analysis of financial condition and results of operations,’’ or Item 302 of
Regulation S-K (§ 229.302 of this chapter), ‘‘Supplementary financial information,’’ or
(ii) The value of proved oil and gas
reserves (such as a standardized measure of discounted future net cash flows
relating to proved oil and gas reserves
as set forth in paragraphs 30–34 of
Statement of Financial Accounting
Standards No. 69) presented voluntarily
or pursuant to Item 302 of Regulation
S-K (§ 229.302 of this chapter).
(c) For the purpose of this rule, the
term forward-looking statement shall
mean and shall be limited to:
(1) A statement containing a projection of revenues, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure or
other financial items;
(2) A statement of management’s
plans and objectives for future operations;

(3) A statement of future economic
performance contained in management’s discussion and analysis of financial condition and results of operations included pursuant to Item 303 of
Regulation S-K (§ 229.303 of this chapter); or
(4) Disclosed statements of the assumptions underlying or relating to
any of the statements described in
paragraph (c) (1), (2), or (3) of this section.
(d) For the purpose of this rule the
term fraudulent statement shall mean a
statement which is an untrue statement of a material fact, a statement
false or misleading with respect to any
material fact, an omission to state a
material fact necessary to make a
statement not misleading, or which
constitutes the employment of a manipulative, deceptive, or fraudulent device, contrivance, scheme, transaction,
act, practice, course of business, or an
artifice to defraud, as those terms are
used in the Public Utility Holding
Company Act of 1935 and other acts referred to in section 16(b) thereof or the
rules or regulations promulgated thereunder.
[46 FR 13991, Feb. 25, 1981, as amended at 46
FR 19457, Mar. 31, 1981; 47 FR 11474, Mar. 16,
1982; 47 FR 57915, Dec. 29, 1982]

§ 250.104 Public disclosure of information and objections thereto.
PRELIMINARY NOTE: If any person wishes to
object to the public disclosure of any information contained in a filing with the Commission under any provision of the Act then
that portion thereof which contains such information shall be submitted in paper format
only, whether or not the filer is an electronic
filer.

(a) General provision. Unless otherwise directed by the Commission, all
information contained in any notification, statement, application, declaration, report, or other document filed
with the Commission shall be available
to the public, and copies of any or all
information filed in connection with or
as a part of any of the above documents will be furnished to any person
upon request and upon the payment of
the charge therefor.
(b) Confidential treatment. If any person filing a notification, statement, application, declaration, report, or other

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WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 250.105

17 CFR Ch. II (4–1–11 Edition)

document with the Commission under
any provision of the act, or of any rules
or order of the Commission thereunder,
wishes to object to the public disclosure of any information contained
therein, he shall file that portion
thereof which contains such information separately from the remainder and
shall plainly mark it ‘‘Confidential
Treatment’’. There shall also be filed
with such information written objection to its public disclosure which (1)
shall identify that portion of the notification, statement, application, declaration, report or other document to
the public disclosure of which objection is made, (2) shall state the reasons
why public disclosure thereof is not
necessary or appropriate in the public
interest or for the protection of investors or consumers, and (3) may request
a hearing on the question of public disclosure. Thereafter such information
shall not be made available to the public unless and until the Commission so
directs.
(c) Information obtained in the course
of examinations, studies, and investigation. Information or documents obtained by officers or employees of the
Commission in the course of any examination, study or investigation pursuant to section 13(g), section 15(f) (49
Stat. 825, 828; 15 U.S.C. 79m, 79o), or
paragraph (a) or (d) of section 18 (49
Stat. 831; 15 U.S.C. 79r) shall, unless
made a matter of public record, be
deemed confidential. Except as provided by 17 CFR 203.2, officers and employees are hereby prohibited from
making such confidential information
or documents or any other non-public
records of the Commission available to
anyone other than a member, officer,
or employee of the Commission, unless
the Commission or the General Counsel, pursuant to delegated authority,
authorizes the disclosure of such information or the production of such documents as not being contrary to the
public interest. Any officer or employee who is served with a subpoena
requiring the disclosure of such information or the production of such documents shall appear in court, and, unless the authorization described in the
preceding sentence shall have been
given, shall respectfully decline to disclose the information or produce the

documents called for, basing his or her
refusal upon this rule.
(d) Any officer or employee who is
served with such a subpoena, shall
promptly advise the General Counsel of
the service of such subpoena, the nature of the information or documents
sought, and any circumstances which
may bear upon the desirability of making available such information or documents.
[Rule U, 6 FR 2015, Apr. 19, 1941, as amended
at 20 FR 7036, Sept. 20, 1955; 26 FR 3102, Apr.
12, 1961; 44 FR 50836, Aug. 30, 1979; 53 FR 17459,
May 17, 1988; 58 FR 15005, Mar. 18, 1993]

§ 250.105 Disclosure detrimental to the
national defense or foreign policy.
(a) Any requirement to the contrary
notwithstanding,
no
notification,
statement, application, declaration, report, or other document filed with the
Commission shall contain any document or information which, pursuant
to Executive order, has been classified
by an appropriate department or agency of the United States for protection
in the interests of national defense or
foreign policy.
(b) Where a document or information
is omitted pursuant to paragraph (a) of
this section, there shall be filed, in lieu
of such document or information, a
statement from an appropriate department or agency of the United States to
the effect that such document or information has been classified or that the
status thereof is awaiting determination. Where a document is omitted pursuant to paragraph (a) of this section,
but information relating to the subject
matter of such document is nevertheless included in material filed with the
Commission pursuant to a determination of an appropriate department or
agency of the United States that disclosure of such information would not
be contrary to the interests of national
defense or foreign policy, a statement
from such department or agency to
that effect shall be submitted for the
information of the Commission. A registrant may rely upon such statement
in filing or omitting any document or
information to which the statement relates.
(c) The Commission may protect any
information in its possession which

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Securities and Exchange Commission

Pt. 251

may require classification in the interests of national defense or foreign policy pending determination by an appropriate department or agency as to
whether such information should be
classified.
(d) It shall be the duty of the registrant to submit the documents or information referred to in paragraph (a)
of this section to the appropriate department or agency of the United
States prior to filing them with the
Commission and to obtain and submit
to the Commission, at the time of filing such documents or information, or
in lieu thereof, as the case may be, the
statements from such department or
agency required by paragraph (b) of
this section. All such statements shall
be in writing.
[33 FR 7682, May 24, 1968]

§§ 250.106–250.107

[Reserved]

§ 250.110 Small entities for purposes of
the Regulatory Flexibility Act.
For purposes of Commission rulemaking in accordance with the provi-

sions of Chapter Six of the Administrative Procedure Act (5 U.S.C. 601 et
seq.), and unless otherwise defined for
purposes of a particular rulemaking
proceeding, the terms ‘‘small business’’
and ‘‘small organization,’’ for purposes
of the Public Utility Holding Company
Act of 1935, shall mean a holding company system whose gross consolidated
revenues from sales of electric energy
or of natural or manufactured gas distributed at retail for its previous fiscal
year did not exceed $1,000,000. There
may be excluded from such gross revenues:
(a) Sales or electric energy or natural
or manufactured gas to tenants or employees of any operating subsidiary
company of such holding company for
their own use and not for resale; and
(b) Sales of gas to industrial consumers or in enclosed portable containers.
[47 FR 5222, Feb. 4, 1982]

PART 251—INTERPRETATIVE RELEASES RELATING TO THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935 AND GENERAL RULES AND REGULATIONS THEREUNDER
Release
No.

WReier-Aviles on DSKGBLS3C1PROD with CFR

Subject
Statement of policy regarding first mortgage bonds subject to the Public Utility Holding Company Act of 1935.
Statement of policy regarding preferred stock subject to the Public Utility
Holding Company Act of 1935.
Opinion and statement of the Commission in regard to proper reporting of
deferred income taxes arising from installment sales.
Statement of the Commission to clarify the meaning of ‘‘beneficial ownership
of securities’’ as relates to beneficial ownership of securities held by family
members.
Statement of the Commission setting the date of May 1, 1966 after which filings must reflect beneficial ownership of securities held by family members.
Statement of the Commission authorizing the adoption of modifications of
policies regarding provisions of long-term debt securities issued and sold
under the Holding Company Act; 5-year refunding limitation.
Conclusion of the Commission that it is appropriate to permit the issuers of
preferred stock under the Holding Company Act of 1935 to include a 5year refunding limitation on all stocks sold on and after June 22, 1970.
Announcement by the Commission that no informal exceptions from the requirements (17 CFR 250.50) of competitive bidding will be granted.
Publication of the Commission’s procedure to be followed if requests are to
be net for no action or interpretative letters and responses thereto to be
made available for public use.
Commission endorses the establishment by all publicly held companies of
audit committees composed of outside directors.
Commission’s statement and policy on misleading pro rata stock distributions
to shareholders.
Commission’s guidelines on independence of certifying accountants; example cases and Commission’s conclusions.

Date

Fed. Reg. Vol. and
Page

13105

Feb. 16, 1956

21 FR 1286.

13106

Feb. 16, 1956

21 FR 1288.

15359

Dec. 7, 1965

30 FR 15420.

15381

Jan. 19, 1966

31 FR 1005.

15403

Feb. 14, 1966

31 FR 3175.

16369

May 8, 1969

34 FR 9553.

16758

June 22, 1970

16832

Sept. 17, 1970

35 FR 15210.

16972

Jan. 25, 1971

36 FR 2600.

17514

Mar. 23, 1972

37 FR 6850.

17583

June 1, 1972

37 FR 11559.

17636

July 5, 1972

37 FR 14294.

35 FR 10585.

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