1

Rule 1. Registration (a) Notification of registration.-Notifications of registration pursuant to section 5 (a) of the Act shall be filed on form U5A.

(b) Registration statement.-Every registered holding company and person registering as a company purposing to become a holding company, shall file with the Commission a registration statement on form U5B 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; 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 2. Exemption of Holding Companies which are Intrastate or Predominantly Operating Companies 2

(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 6, be exempt from all the provi

1 Sections 5 and 14.

'Sections 3 (a) (1) and 3 (a) (2).

692-257 O - 63 - 2

sions 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 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. Rule 3. Exemption of Certain Banks 3

(a) General exemption.-Subject to the provisions of rule 6 and to the requirements contained in paragraph (c), 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

(g).

Sections 3 (a) (3), 3 (a) (4), 3 (d), 12 (f) and 12

1

(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 2 years.

(6) Exemption from Section 9 (a) (2).—Subject to the requirements contained in paragraph (c), 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 a fiduciary; or

(4) Which is not a voting security or convertible into a voting security.

(c) Statements.-Any bank claiming exemption pursuant to the provisions of this rule shall file a statement on form U-3A3-1 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 rule, 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 4. Exemption of Certain Brokers, Dealers and Underwriters *

4

(a) General exemption.-Subject to the provisions of rule 6, any broker, dealer, or underwriter, as defined in paragraph (c), 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 person 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

'Sections 3 (a) (4) and 3 (d).

distribution of the specific securities so acquired.

(b) Exemption from section 9 (a) (2).-Any broker, dealer, or underwriter, as defined in paragraph (c), shall be exempt from section 9 (a) (2) of the Act 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 rule, the terms "broker" or "dealer" have the meaning set forth in sections 3 (a) (4) and 3 (a) (5) of the Securities Exchange Act of 1934, and the term "underwriter" means any underwriter as defined in section 2 (11) of the Securities Act of 1933 who is regularly engaged in business as such and is not a registered holding company.

Rule 5. Exemption of Certain Foreign Holding Companies 5

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 rule 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 paragraph (a) of rule 10.

Rule 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 exemptions under rules 2, 3, 4, 5, or 10, or any other rule now or hereafter in force pursuant to section Section 3 (a) (5).

• Sections 3 (a) (1), 3 (a) (2), 3 (a) (3), 3 (a) (4) and 3 (a) (5).

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 rule, 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 provided for by the Act if such application is filed in good faith.

Rule 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 any 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 $100,000 during the previous calendar year. 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;

(2) Sales of gas to industrial consumers or in enclosed portable containers; and

(3) Sales of surplus electric energy at wholesale during the existence of the national emergency and for 1 year thereafter by any such company which is not a subsidiary of a registered holding company and which was not an electric utility company as of January 1, 1941.

(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 'Sections 2 (a) (3) and 2 (a) (4).

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 subparagraph (b) (1) above, 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 Atomic Energy 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 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 subparagraph (b) (1) above, any such company shall annually on or before May 1 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 Atomic Energy 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 subparagraph (b) (1), the Commission may notify such company to that effect by registered mail. Thirty days after such notification the status afforded by subparagraph (b) (1) 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 subparagraph (b) (1) above are satisfied. Rule 8. Exemption of Subsidiaries Subject to Jurisdiction of Interstate Commerce Commission 8

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) 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.

Rule 9. (Revoked)

(Rule 9, Exemption of small holding company systems, was rescinded Feb. 5, 1958, effective Feb. 29, 1960. HCAR 14122.)

Rule 10. Effect of Certain Exemption "

(a) Parent holding companies exempt where subsidiaries have obtained, or applied for, certain exemptions.-Subject to the provisions of rule 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 publicutility or holding company by rule or order under section 2 (a) (3), 2 (a) (4) or 2 (a) (7) of the Act, or is exempted without qualification by order pursuant to 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 by order under subparagraph (3), (4) or (5) of section 3 (a), or by rule 3, 4 or 5; or

(3) A company which is only indirectly a sub

sidiary of such holding company through the interest of such holding company in a subsidiary holding company of the class specified in (2) above; or

(4) A company as to which there is pending an application for an order specified in (1), (2), or (3) above: 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), whether filed before or after the adoption of this rule, 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 of 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 rule.

Rule 11. Certain Acquisitions by Affiliates Exempted From Section 9 (a) (2) 10

(a) Acquisitions by certain exempt holding companies. Any holding company which is exempt from sections 4 and 5 (a) of the Act and which is not a subsidiary of any registered holding company, shall be exempt from section 9 (a) (2) of the Act with respect to the acquisition of any securities 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) 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 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 subpara