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OTHER MATTERS CONSIDERED

PROPOSED AMENDMENTS TO CERTIFICATE OF INCORPORATION AND BY-LAWS

The amendment with respect to the reclassification of the two classes of common stock has already been discussed. The other amendments, including specifically the cumulative voting provision, which are proposed to be made in Power's charter, and which have heretofore been described, are similar to those which have been approved or required in connection with the United and Bond and Share cases and do not merit any extended discussion.

INTERIM INVESTMENT PROGRAM

As previously described, Power proposes during the interim period between our approval of the plan and its conversion into an investment company to engage in a limited program of purchasing and selling securities. For the reasons herein before stated Power will not be in a position to request a Section 5 (d) order until it has at least reduced its holdings in the Duquesne common stock to less than 10% of the number of such shares then outstanding. Thus, Power's application to embark on its limited investment program prior to securing a Section 5 (d) order presents primarily the question whether it may be relieved from the requirements of Section 9, except Section 9 (a) (2), of the Act with respect to the acquisition of securities in the interim period. Under Section 9 (c) (3) of the Act, the Commission may permit a registered holding company to acquire securities within such limitations as may be appropriate in the ordinary course of business of a registered holding company and as not detrimental to the public interest or the interest of investors or consumers. In view of the self-imposed limitations which will surround Power's investment program during the interim period; in view of Power's commitment to file and prosecute diligently an application under Section 5 (d) of the Act not later than 60 days after Power shall have reduced its holdings of Duquesne common stock to less than 5% of the number of such shares then outstanding; and in view of the fact that Power is assured of securing a Section 5 (d) order, terminating its status as a registered holding company and thus permitting it to become an investment company, by reason of its commitment to take all steps which we might require, subject to its right of appeal, in order for it to obtain a Section 5 (d) order, we conclude that the

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interim investment program outlined in Power's plan satisfies the standards of Section 9 (c) (3) of the Act.19

In connection with its proposal to reduce its holdings of Duquesne common stock the plan provides that if the Commission reserves jurisdiction in this regard Power will not sell or otherwise dispose of any such shares without approval of the Commission, unless the Commission within 10 days after the mailing to the Commission by Power of a notice that Power intends to effect such sale or disposition, shall have notified Power that no declaration need be filed with the Commission.

We find it is appropriate for the protection of Power's security holders to reserve jurisdiction with respect to these future divestments and our order will contain a reservation in accordance with Power's proposal.

RESTATEMENT OF ACCOUNTS

The plan provides that upon the reclassification of its capital stock Power shall restate its balance sheet as of a date not more than 90 days prior to the consummation date of the plan on the basis of market values during that period. The final entries to be reflected on the restated balance sheet are to be subject to the Commission's approval and our order herein will reserve jurisdiction for this purpose. Attached hereto as Exhibit A is a balance sheet of Power as at September 30, 1955, and pro forma to reflect the proposed restatement of accounts on the assumption that the portfolio securities were valued at market prices on that date.

POWER'S REPRESENTATION ON THE BOARD OF DIRECTORS OF DUQUESNE

The Commission has a policy that, in the absence of special circumstances, it will not approve a plan under Section 11 (e) of the Act involving the divestiture of the securities of a public-utility subsidiary unless such plan provides the mechanics for the termination of interlocking directorates and other relationships. Although Power's plan does not contain a specific provision in this regard, the record does contain a statement by Power, submitted as an integral part of the plan, that Condition No. 6 of our order dated March 13, 1953 20 becomes effective when Duquesne ceases to be a prima facie

19 Cf. In re Electric Bond and Share Company, 113 F. Supp. 547 (S. D. N. Y. 1953); Electric Bond and Share Company, 35 S. E. C. 236 (1953); The United Corporation, 35 S. E. C. 591 (1954).

20 Standard Gas and Electric Company, 34 S. E. C. 749 (1953), enforced, unreported (D. Del., Civil Action No. 1497, February 11, 1955). Condition No. 6 required a commitment from Duquesne, which has been submitted to us, that that company and its subsidiaries considered as a unit would not at any time after Duquesne ceased to be a

statutory subsidiary in the Power holding company system and that said condition precludes Power and its subsidiaries from having such interlocking directorates or relationships with Duquesne.21

FEES AND EXPENSES

The plan provides that Power will pay such fees and expenses in connection with the plan and any and all transactions related thereto as we may award or allow, subject to judicial review. The record contains insufficient information in this regard and, therefore, we shall reserve jurisdiction over all the fees and expenses to be paid by Power in connection with this proceeding.

COURT ENFORCEMENT

Power has requested that we apply to an appropriate United States District Court to carry out the terms and provisions of the plan. This request will be granted and our order will provide that it is not to operate as authorizing or directing the consummation of the plan until an appropriate court order has been entered.

TAX RECITALS

We will also grant Power's request that our order approving the plan recite that the transactions in the plan are necessary or appropriate to the integration or simplification of the holding company system of which Power is a member and are necessary or appropriate to effectuate the provisions of Section 11 (b) of the Act, all in accordance with the meaning and requirements of Section 1081 (f), Section 4392, and related provisions of the Internal Revenue Code of 1954.

CONCLUSION

For the reasons stated above, it is our conclusion that our June 19, 1942 order should be modified so as to permit Power to carry out its plan which we approve as necessary to effectuate the provisions of Section 11 (b) of the Act and fair and equitable to the persons affected by it. Because the carrying out by Power of its plan is contingent upon the disposition of this proceeding, we find that it is inappropriate to delay for 30 days the effective date of our order to be entered herein and that good cause exists for making such order effective immediately upon its issuance. In any event consummation of the plan cannot be effected immediately after the entry of our order,

subsidiary in the Power holding company system, have as an officer or director a person who is at the same time an officer or director of any other company then or formerly in the holding company system of Power.

"Power has reserved the right to request that Condition No. 6 of said order be rescinded or modified in a proper proceeding or proceedings.

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since it will be conditioned upon approval by a United States District Court in a proceeding which normally requires 30 days or more. An appropriate order will issue.

By the Commission (Chairman Armstrong and Commissioners Adams, Orrick and Patterson).

EXHIBIT A

STANDARD POWER AND LIGHT CORPORATION

Balance sheet and pro forma balance sheet giving effect to restatement of ledger amount of investments, write-off of organization expenses and capital stock discount and expenses, and restatement of capital stock, on assumption that plan dated Mar. 7, 1955, was effective as of Sept. 30, 1955 (unaudited)

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