SIMPLIFICATION OF HOLDING COMPANY SYSTEM

Retirement of Preferred Stock

Retirement of preferred stock of holding company under Commission order
to liquidate and dissolve but contemplating seeking modification of such order
to permit it to continue as investment company, held appropriate step in com-
pliance with standards of Act, and plan filed pursuant to Section 11 (d) providing
for compulsory exchange of such preferred stock for portfolio securities of
holding company on a basis found by the Commission to compensate the pre-
ferred stockholders adequately for the rights surrendered, held fair and equi-
table, and plan filed by stockholder proposing voluntary retirement of preferred
stock on a different basis, rejected * * * Page 399

Plan Under Section 11 (e)-Necessity-Fairness and Equity

Plan filed under Section 11 (e) of the Act by registered holding company
ordered by Commission to dissolve and by its public utility subsidiary providing
for the sale by the holding company of an office building property pursuant to
competitive bidding with the simultaneous lease of the property to the public
utility subsidiary, approved, the Commission finding the plan to be an appro-
priate step in compliance with the liquidation order and therefore necessary to
effectuate the provisions of Section 11 (b) and the terms of the sale and lease
not unreasonable and therefore fair and equitable to the security holders of the
holding company and its public utility subsidiary * * * Page 22

Plan under Section 11 (e) providing for the merger of the parent registered
holding company and its public-utility subsidiary companies, the issuance and
exchange of capital stock of the resulting public-utility operating company for
the outstanding capital stock of the parent holding company on a share for share
basis, the assumption by the resulting company of the outstanding debt and other
obligations of the merging companies and the securing of the payment of such
debt obligations by a direct lien on the physical property of the resulting operat-
ing company, held, “fair and equitable" to the persons affected thereby *
Page 356

Plan providing for the retirement of preferred stock of registered holding com-
pany, which has been ordered to liquidate and dissolve, through a voluntary ex-
change of portfolio common stocks and, in the event a sufficient number of stock-
holders accept, for the retirement of the unexchanged preferred stock for cash at
its call price, held, an appropriate step in compliance with the liquidation order
and necessary to effectuate the provisions of Section 11 (b) ** Page 117
Plan providing for the retirement of preferred stock of registered holding
company, which has been ordered to liquidate and dissolve, through a voluntary
exchange of portfolio common stocks having market values equal to the call
price of the preferred stock and, in the event a sufficient number of stockholders
accept, for the retirement of the unexchanged preferred stock for cash at its call
price, held, fair and equitable to the persons affected thereby ✦✦✦ Page 117
Plan under Section 11 (e) providing for the elimination of a holding company
through the merger thereof with its subsidiary companies, held, “necessary" to
effectuate the provisions of Section 11 (b) *** Page 356

Plan pursuant to Section 11 (e) of the Public Utility Holding Company Act of
1935 proposing the distribution by a registered holding company of its entire
stock interest in its only remaining domestic public-utility subsidiary pro rata to
the holders of its outstanding stock and the dissolution of one of its non-utility
subsidiary companies; held, necessary to effectuate the provisions of Section
11 (b) of the Act and fair and equitable to the persons affected by such
plan *** Page 462

35 S. E. C.

Conversion into Investment Company

Where plan by registered holding company providing for certain dispositions of utility holdings and its conversion into a registered investment company is amended, to meet objections of stockholders' committee sustained by enforcement court, so as to require retention of one-third of company's funds in cash and liquid securities, held, plan will be approved * * * Page 236

Plan Under Section 11 (e) for Dissolution

Where a registered holding company, which had previously been ordered to dissolve pursuant to an order under Section 11 (b) of the Public Utility Holding Company Act of 1935 and which had previously reclassified its former preferred and common stocks into a single class of capital stock and had distributed the bulk of its assets to its stockholders pursuant to various proceedings under Section 11 (e) of the Act, filed a plan under Section 11 (e) providing for distribution of its remaining assets and dissolution, held, that the plan should be approved, the Commission finding that the plan was necessary to effectuate the provisions of Section 11 (b) and the Commission's order thereunder, and was fair and equitable to those affected *** Page 46

Sale of System Properties

Application-declaration by registered holding company under order of liquidation pursuant to Section 11 of the Public Utility Holding Company Act of 1935, regarding sales of properties, approved and permitted to become effective; the Commission finding that the sales are appropriate notwithstanding proposals for continuation of the company as an investment company, that competitive conditions have been maintained, and that the proposed considerations are adequate *** Page 100

35 S. E. C.

PART III

INVESTMENT COMPANY ACT OF 1940

Open-end Investment Company

EXEMPTIONS

An open-end investment company created by authority of state law, the securities of which may be sold only to savings banks of that state, the investment policies of which are limited by statute and which has subjected itself to supervision of the State Banking Department, held entitled, in view of the circumstances of its organization, its purposes and the restricted character of its potential investors, to exemption from provisions of the Investment Company Act of 1940 (1) which require registered investment companies to register their securities offered publicly under the Securities Act of 1933, (2) which require that such securities be issued at a public offering price described in a prospectus, (3) which regulate the redemption of open-end investment companies (4) which govern solicitation of proxies, and (5) which relate to affiliations of directors with the investment adviser of the investment company * ** Page 72

Modification of Order Granting Exemption

Application, by depositor and principal underwriter of investment companies who had been enjoined from acting in those capacities but thereafter was given conditional permisison to so act, for approval of employment of salesmen without a guaranty of a minimum weekly salary and on a part-time basis, granted, in view of proceedures adopted for supervision of salesmen and sales practices, for disclosure of loading charges to purchasers, and affording purchasers 30-day right of cancellation *** Page 147

Exempt Transaction Between Affiliated Persons

The proposed purchase by an investment company from, and the sale to said company by an affiliated person, of shares of common stock of a steel company, held, entitled to an exemption pursuant to Section 17 (b) of the Investment Company Act of 1940 where the record indicates that the terms of the transaction, including the consideration to be paid and received, are fair and reasonable and involve no overreaching on the part of any person and the transaction is consistent with the policies of the investment company and the purposes of the Investment Company Act *** Page 277

Practice and Procedure

Request by stockholder for hearing to controvert issues relating to company's application for exemption with respect to sale of securities to affiliated registered investment company, granted, despite company's objections, the hearing to be convened promptly to avoid delay and the hearing officer being instructed to limit scope of hearing to matters directly relevant to issues *** Page 267

35 S. E. C.

O

DO NOT CIRCULATE