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LONG- AND SHIORT-TERM DEBT
(3) Notes Payable (Account 231) – Requests informa- other control information; officers and directors; and tion on the payee, the purpose for which the notes were long-term and short-term debt. issued, date of each note, date of maturity, interest rate, and balance outstanding at the end of the year.
Reporting Requirements Under the Natural Gas Act (4) Payables to Associated Companies (Accounts 233 and 234)-Requests notes and accounts payable to associated Section 10(a) of the Natural Gas Act (15 U.S.C. 7171) companies including the name of the company, reference to requires natural gas companies to file with the Commission FPC authorization to incur the debt, amount due and
such annual and other periodic or special reports as the interest paid.
Commission may, by rules and regulations or orders, Similar information is requested for utilities filing an prescribe as necessary or appropriate to assist the Comannual report Form No. 1-F, but the information re- mission in the proper administration of the Natural quested is less detailed and does not show any payees of Gas Act. the long-term or short-term debts.
FPC regulations (18 CFR 260.1) state that an annual In performing its statutory responsibilities under the report-FPC Form No. 2-shall be filed by each natural Federal Power Act, other information on long-term and gas company under the jurisdiction of FPC, if the comshort-term debt is requested. FPC must authorize the pany has annual operating revenues of $1 million or more. assumption of liabilities pursuant to section 204 of the Pursuant to FPC regulations (18 CFR 260.2) another Federal Power Act (16 U.S.C. 824c). In this connection annual report-FPC Form No. 2-A—is to be filed by FPC regulations (18 CFR 34) require applications to be natural gas companies under jurisdiction of FPC that filed that include a full description of the liabilities to be have annual operating revenues of $25,000, or more, but assumed.
less than $1 million. These annual reports are the sources of most information received by FPC concerning owner
ship and control, officers and directors and long-term and FPC also receives information on long-term and short- short-term debt. The information received by FPC is term debt pursuant to section 203(a) of the Federal Power discussed below in the same sequence as the information Act (16 U.S.C. 824b) which states that FPC must author requested in Senator Metcalf's letter of February 9, 1973 ize the sale, lease or other disposition, merger or consolida- except for the evaluation of the effectiveness of the rules tion of facilities or purchase or acquisition of securities of a and regulations which will be covered in the Comptroller public utility. FPC regulations (18 CFR 33) require that, General's formal response to Senator Metcalf.? with the application for FPC authorization, a statement must be submitted showing information on funded debts, 1. Information on Proprietary (Voting) Ownership including a brief description and amounts owned by affiliated corporations.
Each of the annual reports described above contains a We were informed by FPC officials that, in connection schedule entitled Security Holders and Voting Powers. with other activities, FPC requests information concerning of the 10 stockholders of the company who had the largest
On the schedules FPC requests the names and addresses the financial position of the regulated company, including long-term and short-term debt. However, the information voting powers and the number of votes each could cast at requested is in summary form and does not identify any
a stockholders' meeting. On the schedule presented in debt holder by name. For example, FPC regulations (18 FPC Form 2, FPC requires that if any of the 10 stockCFR 35) state that any utility filing rate schedules should
holders held the stock in trust, a footnote on the known submit a balance sheet.
particulars of the trust agreement should be included. On
the schedule presented in FPC Form 2-A, FPC requires 5. Enforcement and Effectiveness of Laws, Rules and Regu- the beneficial owner of the securities held in trust to be tations
In performing its statutory responsibilities, FPC reSee Comptroller General's letter on p. 197.
quests other proprietary ownership information as follows:
(1) Section 3 of the Natural Gas Act (15 U.S.C. 717b) 6. Availability and Cost of Information
states that no person shall export or import natural gas Both annual reports-FPC Form No. 1 and No. 1-F- without first having secured an order from FPC authorizing and all applications described above which are received it to do so. FPC regulations (18 CFR 153.10) require that from utilities under FPC jurisdiction are available for an application be filed for a Presidential Permit by public inspection in FPC's Office of Public Information. persons, firms or corporations contemplating the construcPersons wanting copies of documents may make copies the borders of the United States for the exportation or the
tion of, or who are operating or maintaining, facilities at in the Office of Public Information at a cost of 10¢ a page or may contract with Keuffel and Esser Company, importation of natural gas. Included as part of this 1521 North Danville Street, Arlington, Virginia 22201, application, FPC requires that, if the applicant is a corto have copies made. Keuffel and Esser Company provides poration, the amount and class of capital stock should be this service under a contract with FPC and charges 8¢ filed along with the nationality of the stockholders and per copy for a 9 x 12 page, 10¢ per copy for a 12 x 18 page
the amount and class of stock held by each. and 25¢ per copy for a 18 x 24 page and has a minimum charge of $2.00.
PERMISSION REQUIRED 7. Proposals for New Legislation or Authority
(2) Section 7 of the act (15 U.S.C. 717f) states that no
natural gas company can construct, acquire, operate or We were informed by an FPC official that, during the abandon all or any part of its facilities without the last 10 years, no proposals have been presented to the permission of FPC. In addition, FPC may order interCongress that have not been approved concerning infor- connection of facilities under section 7 of the act. FPC mation on proprietary ownership; subsidiary, parent and
See p. 197.
29-553 O - 74 - 15
regulations (18 CFR 156 and 157) require applications to preferred capital stock, and whether it is owned by an be filed to request FPC to issue orders to (a) require an affiliate, and, if so, the name and relationship of the owner interconnection between gas companies, (b) ensure public to the company. convenience, and (c) permit abandonment of facilities. (3) Section 7(a) of the Natural Gas Act (15 U.S.C. FPC requires that, as part of this application, information 717f) states that FPC can order a natural gas company be given on any person or organized group of persons, to extend or improve its transportation facilities and to directly or indirectly owning, controlling, or holding with establish physical connection of its transportation facilipower to vote, 10 percent or more of voting stock. ties with another natural gas company. FPC regulation
Small gas producers are exempt from some filing require- (18 CFR 156) requires an application to be filed by one ments and may apply for a blanket certificate to cover all natural gas company to have FPC order another natural existing and all future jurisdictional sales pursuant to FPC gas company to extend or improve transportation facilities regulations (18 CFR 157.40). Applications for a blanket or establish physical connection with the applicant comcertificate require the names of all owners of the applicant pany. FPC requires to be included with the application with an interest of 10 percent or more and their percentage information on subsidiaries and affiliates including whether of ownership in the applicant.
the applicant directly or indirectly owns, controls, or holds
with power to vote, 10 percent or more of stock of any 2. Information on Subsidiaries, Parents, or Control Over the other corporation and if any person or organized group of Subject Corporation
persons, directly or indirectly, owns, controls, or holds with The annual report, FPC Form 2, contains two primary power to vote, 10 percent or more of voting stock of the
applicant. schedules concerning subsidiaries, parents or information
(4) Section 7 of the Natural Gas Act (15 U.S.C. 7171) on control of the subject corporation-Control Over Respondent and Corporations Controlled by Respondent.
states that no natural gas company can construct, operate On the schedule entitled Control over Respondent, FPC FPC. FPC regulations (15 CFR 157) require that appli
or abandon all or any facilities without the permission of requires that, if any corporation, business trust, or similar organization or combination of such organizations jointly venience and necessity and for orders permitting and
cations be filed with FPC for certificates of public conheld control over the regulated company at the end of the approving abandonment of facilities. FPC also requires year, the company should show (a) the name of the controlling corporation or organization, (b) information on
(15 CFR 157.14) that, as part of the application for the how control was held, and (c) the extent of the control.
certificate of public convenience and necessity, information Also, if the control was in a holding company organization, including whether the applicant directly or indirectly
be provided on subsidiaries and affiliates of the applicant,
owns, controls or holds with power to vote, 10 percent or parent company or organization should be provided. On the schedule entitled Corporations Controlled by
more of voting stock of any other corporation and whether Respondent, FPC requires that the company report the
any person or organized group of persons directly or innames of all corporations, business trusts and similar directly, owns, controls
, or holds with power to vote, 10 organizations controlled, directly or indirectly, by the percent or more of voting stock of the applicant. company at any time during the year.
3. Information on Officers and Directors OTHER INFORMATION
The annual report (FPC Form 2) contains separate
schedules dealing with officers and directors. In addition to the two primary schedules discussed On the schedule entitled Officers, FPC requests the above, FPC requires other information in the FPC Form names, titles, office address and salary of each general 2 for companies having operating revenues of over officer of the regulated company. On the schedule entitled $1,000,000. The schedule is entitled Important Changes Directors, FPC requires information on all directors, During the Year and includes information on the acquisi- including their names, addresses, terms of office, director tion of the ownership of other companies; reorganizations, meetings attended during the year and fees received during mergers and consolidation with other companies.
In performing its statutory responsibilities, FPC re- Also appearing in the annual reports for all gas comquires other information on ownership and control as panies filing FPC Form 2 is a schedule entitled Security follows:
Holders and Voting Powers which requires disclosure of (1) Section 3 of the Natural Gas Act (15 U.S.C. 717b) the name and title of officers and directors who are among states that no person shall export or import natural gas the top 10 stockholders. without first having secured an order from FPC authoriz- A list of officers and directors and their addresses and ing it to do so. FPC regulation (18 CFR 153) requires that salaries received is requested from companies filing FPC an application for authorization to export or import Form 2-A; however, the companies are not required to natural gas be filed with the Commission that contains file any information on officers and directors holding stock a detailed statement of the financial and corporate rela- in the company. tionship existing between the applicant and any other In performing its statutory responsibilities, FPC also person or corporation.
requests other information on officers and directors as follows:
(a) Section 3 of the Natural Gas Act (15 U.S.C. 717b)
states that no person shall export or import natural gas (2) Section 4 of the Natural Gas Act (15 U.S.C. 717c) without first having secured an order from FPC authorstates that FPC has the responsibility for insuring that izing it to do so. FPC regulations (18 CFR 153.10) regas rates are just and reasonable. FPC regulation (18 quire that an application be filed for a Presidential Permit CFR 154) requires that rate schedules and tariffs be' by persons, firms or corporations contemplating the confiled with FPC for review. Along with rate schedules and struction of, or who are operating or maintaining, facilities tariffs, FPC requires a statement showing a company's at the borders of the United States for the exportation or
JUST AND REASONABLE
the importation of natural gas. Application for this permit 7. Proposals for New Legislation or Authority is to be filed with FPC pursuant to regulations (18 CFR 153.10). Included as part of this application; FPC requires under Reporting Requirements under the Federal Power
The response to this section is identical to that presented that, if the applicant is a corporation, the nationality of a
Act. officers and directors be given and the amount and class of stock held by each.
(6) Section 7 of the act (15 U.S.C. 717f) states that no natural gas company can construct, operate or abandon
FEDERAL TRADE COMMISSION all or any part of a facility without permission of FPC and, in addition, FPC may order interconnection of The Federal Trade Commission (FTC) was established facilities. FPC regulations (15 CFR 156 and 157) require by the Federal Trade Commission Act of 1914 (15 U.S.C. that applications must be filed for certification of con- 41) for the purpose of maintaining a free competitive struction; operation or abandonment of facilities or for enterprise system in the United States. ordering the interconnection of facilities. As part of the FTC administers part or all of several Acts as follows: application, information must be filed on officers and
Federal Trade Commission Act of 1914 (15 U.S.C. directors who directly or indirectly own, control, or
41) hold power to vote, 10 percent or more of the stock of any
Clayton Act (15 U.S.C. 12). other person or organized group of persons engaged in the
Export Trade Act (15 U.S.C. 61). construction or financing of such gas facilities, enter
Wool Products Labeling Act (15 U.S.C. 68). prises or operations. The information to be submitted
Fur Products Labeling Act (15 U.S.C. 69). includes the percentage of voting stock each holds.
Flammable Fabrics Act (15 U.S.C. 1191). Also, the same application requires a listing of officers and directors, but does not require an explanation of
Textile Fiber Products Identification Act (15 U.S.C.
70). their relationship to other corporations.
Fair Packaging and Labeling Act (15 U.S.C. 1451).
Lanham Trade-Mark Act of 1946 (15 U.S.C. 1051). 4. Information on Long-Term and Short-Term Debt
Truth-in-Lending Act (15 U.S.C. 1601). The annual report, FPC Form 2, requires detailed
We were informed by agency officials that FTC does not information on long-term debt (Accounts 221, 222 and
gather information on a regular basis relating to the owner224), notes payable (Account 231), and payables to asso(
ship of corporations; subsidiaries or parents of corporaciated companies (Accounts 233, 234).
tions; officers and directors; or the holders of long-term The schedule on long-term debt requires information on each class and series of obligation; the date issued, the date gather some information in these areas during special
and short-term debt of corporations. However, FTC does of maturity and the amount outstanding. The schedule on reviews or studies or in connection with proposed mergers. notes payable requires information on the payee, the Most information received by FTC is obtained pursuant purpose for which the note was issued and the amount
to the Federal Trade Commission Act of 1914. of interest paid. The schedule on payables to associated companies requires particulars as to notes and accounts
AUTHORITY TO REQUIRE DATA payable to associated companies, including the names of the companies, the amount of the note or account payable
Section 6(b) of the Federal Trade Commission Act of and the interest rate.
1914 (15 U.S.C. 46) gives the FTC the authority to require
corporations within its jurisdiction to submit prescribed INFORMATION LESS DETAILED
information in either annual or special reports or submit Similar information is requested on the annual report, business, conduct, practices, management and relationship
answers to specific questions concerning the organization, FPC Form 2-A, but the information requested is less detailed and does not show any payees of the long-term and individuals.
of the corporations to other corporations, partnerships or short-term debts.
FTC regulations (16 CFR 1.21) state that general and In performing its statutory responsibilities, FPC may
economic surveys, investigations and reports may be made request information pertaining to long-term and short by FTC. This regulation not only applies to the Federal term debt as follows:
Trade Commission Act of 1914 but also to the other acts Section 4 of the Natural Gas Act (15 U.S.C. 717c) listed above. states that FPC has the responsibility of insuring that gas The information received by FTC is discussed below in rates under FPC jurisdiction are just and reasonable. the same sequence as the information requested in Senator FPC regulation (18 CFR 154) requires that rate schedules Metcalf's letter of February 9, 1973 except for the evaluaand tariffs be filed with FPC for review. Also required by tion of the enforcement and effectiveness of the rules and FPC is a statement accompanying the rate schedules and regulations which will be covered in the Comptroller tariffs containing information on debt capital, including a General's formal response to Senator Metcalf.' statement as to whether the debt issue is owned by an affiliate and, if so, the name and relationship of the owner to the regulated company.
1. Information on Proprietary (Voting) Ownership
We were informed by agency officials that no informa5. Enforcement and Effectiveness of Laws, Rules and tion pertaining to proprietary ownership is received on a Regulations
recurring basis. However, we were told that there is one
staff study underway--the corporate pattern report See Comptroller General's letter, p. 197.
study-that is seeking to develop data on the product,
financial and ownership characteristics of the nation's 6. Availability and Cost of Information
largest manufacturing corporations. At the time of our (See preceding discussion under this heading).
· See p. 197.
review, only 18 companies had been selected to submit The corporate patterns report study also requires the the data required by the FTC in order to evaluate the manufacturers to state the name, address and percent of forms being used. The forms that are being sent to the 18 voting stock owned, directly or indirectly, in subsidiaries companies require the listing of the name, address, and as of December 31, 1967. number and percent of voting stock held by the 20 largest stockholders of record.
3. Information Concerning Officers and Directors Pursuant to the Export Trade Act (15 U.S.C. 65) and FTC regulations (16 CFR 1.42), every association engaged FTC regulations (16 CFR 1,42), every association engaged
Pursuant to the Export Trade Act (15 U.S.C. 65) and solely in export trade and seeking certain limited exemptions from the Sherman Act and the Clayton Act must solely, in export trade and seeking certain limited exfile with FTC within 30 days of its creation and then emptions from the Sherman Act and the Clayton Act, annually the names and addresses of its stockholders or
must file with FTC within 30 days of its creation, and shareholders.
then annually, the names and addresses of its officers.
We found no other reports or applications required by 2. Information Concerning Subsidiaries, Parents and Con
FT“ that contained information on officers and directors. trol of Corporations
4 Information on Long-Term and Short-Term Debt Pursuant to the authority granted under section 6 of the Federal Trade Commission Act of 1914 and regulations
We were informed by FTC officials that the FTC does (16 CFR 1.21), FTC requires manufacturing corporations not regularly
receive data on the long-term and short-term to submit Forms NB and MG-4 in order for FTC to debts of corporations other than balance sheet data reprepare a report entitled FTC Quarterly Financial Report ceived on Form MG-4 which includes the amount of the of Manufacturing Corporations.
debt owed. Form NB requires that each reporting corporation name all domestic or foreign corporations which own 10 percent 5. Endorsement and Effectiveness of Laws, Rules and of any class of its outstanding stock, and to state the per
Regulations cent and class of shares owned. In addition, Form NB re- See Comptroller General's letter, p. 197. quires disclosure of the name of all subsidiaries of the reporting corporation. Form MG-4 requires the reporting 6. Availability and Cost of Information corporation to name its parent, if any, and the names of subsidiaries it has acquired or released since the last form Registration statements and annual reports filed with MG-4 was completed.
FTC by export trade associations, and bulletins, pam
phlets and reports with respect to such associations are OTHER INFORMATION REQUIRED
released by the Commission as public records.
The information FTC receives from each individual We found three other instances where information is manufacturing corporation for compilation in the Quarrequired pursuant to section 6(b) of the act and paragraph terly Financial Report for Manufacturing Corporations 1.21 of the regulations.
is not available to the public. The Quarterly Financial (1) The FTC pre-merger notification program requires Report for Manufacturing Corporations is available corporations which are subject to FTC's jurisdiction, from the U.S. Government Printing Office; however, the have assets or sales of $10 million or more, and have com
parent and subsidiary information reported by the indibined assets and sales of $250 million or more, to notify the vidual firms is not included in the FTC report. FTC whenever they plan a merger and provide FTC with information on all of their subsidiaries as well as the details of the parent company's operations.
(2) FTC requires information concerning mergers in the The FTC makes public the notification it receives of food distribution industries. Form 1859-A is used to report planned mergers pursuant to the pre-merger notification certain operating information of the parent and subsidiaries of food distribution companies including their names,
program; however, the special reports filed with the FTC
by the merging corporations are considered a part of the annual sales, and number of outlets.
FTC's confidential records and are not made available (3) FTC requires information concerning vertical merg- to the public. ers in the cement industry. Among the data required to In addition, an FTC official told us that materials be submitted to FTC is the identity and principal business received in connection with (1) the economic study of the of all subsidiaries of the parties involved in the merger. prescription drug industry, (2) the corporate patterns
In addition, FTC is conducting two industry-wide report study, (3) mergers in food distribution industries, studies that are developing information on parent-sub- and (4) vertical mergers in the cement industry are not sidiary relationships as follows:
available to the public. (1) The economic study of the prescription drug industry
We were informed by FTC personnel that the cost of requires the reporting drug companies to identify the name duplicating public records is 20 cents a page. and address of its parent and the name, address and basis of control of each subsidiary engaged in the sale of drugs. 7. Proposals of New Legislation or Authority
(2) The corporate patterns report study mentioned earlier requires the reporting manufacturers to identify We were informed by FTC officials that the agency has the name and address of corporations which own more not proposed legislation for new authority concerning than 50 percent of the reporting corporation's stock. The proprietary ownership; subsidiary, parent and other manufacturers must also give the name and address of control information; officers and directors; and long-term any corporation having the power to formulate, deter- and short-term debt during the last 10 years. These mine, or veto basic business decisions through the use of officials told us that they believed that they have authority dominant minority stockholding rights, proxy voting, to collect any information they need pursuant to section contractual arrangements, agents or other means.
6(b) of the Act.
NOTIFICATIONS MADE PUBLIC
INTERSTATE COMMERCE COMMISSION of the 10 largest stockholders in the respondent company The Interstate Commerce Commission (ICC) regu
must be provided. lates interstate surface transportation. The ICC was
MUST RECEIVE APPROVAL created by the Interstate Commerce Act (49 U.S.C. 1) and its jurisdiction encompasses railroads, motor carriers, Section 5 of the act (49 U.S.C. 5) states that any water carriers and freight forwarders.
common carrier subject to the jurisdiction of part
I of Information Received From Railroads
the act must apply to, and receive approval from, the
ICC before entering into any contract, agreement, or Section 20 of the Interstate Commerce Act, as amended combination with any other such common carrier or (49 U.S.C. 20), provides ICC with authority to require carriers for the pooling or division of traffic, or of service. annual, periodical, or special reports from carriers, lessors, Pursuant to this authority, ICC regulations (49 CFR and associations; to prescribe the manner and 'form in 1111) provide that an application for railroad and water which such reports shall be made; and to require answers
carrier consolidation must include the names and business to all questions upon which ICC may deem information address of the 10 principal stockholders of each carrier to be necessary.
and their respective holdings. Pursuant to this authority, ICC regulations (49 CFR In addition to the proprietary (voting) ownership 1241) state that the following annual reports shall be information received in the annual report forms and filed by railroads subject to regulation under Part I of the application forms as discussed above, ICC order number Interstate Commerce Act:
103-67 requires that carriers reporting corporate owner
ship data to ICC are required to reveal the actual individ(1) Annual Report Form A--prescribed for Class I
ual brokerage house ownership of securities consolidated railroads (49 CFR 1241.11)
under the Cede & Co. registration because listing Cede (2) Annual Report Form C-prescribed for Class II
& Co. as a holder of outstanding stock has a misleading railroads (49 CFR 1241.12)
effect. (3) Annual Report Form E-prescribed for lessors of
railroads (49 CFR 1241.13) (4) Annual Report Form G-prescribed for electric
2. Information on Subsidiaries, Parents, or Any Other
Company or Firm Having Control Over Subject railways (49 CFR 1241.21)
Corporation (5) Annual Report Form P-prescribed for carriers by pipeline (49 CFR 1241.61)
Annual Report Form A requires the completion of four (6) Annual Report Form B-1-prescribed for re- schedules concerning the relationship of the railroad with
frigerator car lines owned or controlled by rail- affiliated companies. Schedule No. 104A, entitled Comroad companies (49 CFR 1241.70)
panies Controlled by Respondent, requires the names of (7) Annual Report Form B-2-prescribed for per- all companies which are controlled solely or jointly by the
sons furnishing railroad cars, other than re- railroad, the principal business activity of each company, frigerator car lines owned or controlled by the form of control exercised over the companies and the railroad companies (49 CFR 1241.71)
extent of the control exercised by the railroad in each The information received on the aforementioned reports directly Controlled by Respondent, requires the names of
company. Schedule No. 104B, entitled Companies Inand in special applications is discussed below in the same
all companies which are controlled by the railroad through sequence as the information requested in Senator Metcalf's intermediary companies. Information required as to the letter of February 9, 1973, except for the evaluation of the particulars of such control is the same as required in enforcement and effectiveness of the rules and regulations Schedule No. 104A. Schedule No. 104C, entitled Comwhich will be covered in the Comptroller General's formal panies Under Common Control with Respondent, reresponse to Senator Metcalf.'
quires the names of all companies which are controlled by
the same interest that controls the railroad. Information 1. Information on Proprietary (Voting) Ownership
required as to the particulars of such control is the same as Annual Report Forms A, C, G, and P require the car- required in Schedule No. 104A. Schedule No. 104D, enriers to provide schedules of the names and addresses,
titled Companies Controlling Respondent, requires the number of votes and classification of stock of the 30 largest
names of all companies controlling the railroad beginning stockholders. If any such holder held the stock in trust, the
with the company which is most remote and proceeding to particulars of the trust must be provided. In the case of the company immediately controlling the railroad. Invoting trust agreements, the names and addresses of the 30 formation required as to the particulars of such control is largest holders of the voting trust certificates and the the same as required in Schedule No. 104A. amount of their individual holdings are to be supplied.
Annual Report Form E requires the carrier to provide in a schedule the names of its five largest stockholders. If any holder held the stock in trust, particulars of the trust
Annual Report Form C requires the railroad to state must be provided. In the case of voting trust agreements, whether or not any corporation had the right to name the the names and addresses of the 30 largest holders of the major part of the railroad's board of directors, managers, voting trust certificates and the amount of their individual or trustees; and if so, to provide the names of all such holdings are required to be submitted by the respondent corporations and state how such right was derived.
Annual Report Form B-1 requires a schedule showing Annual Report Form E requires the lessor of a railroad the total voting securities outstanding and the total to complete a schedule entitled Corporate Control Over number of stockholders of record for each class of stock Respondent, providing the name of the controlling corof the respondent. In addition, the names and addresses poration, extent of control, total number of stockholders See p. 197.
and the total voting power of all security holders.
RIGHT TO NAME OFFICERS