40-302. Order authorizing issuance of stocks, bonds or other evidences of debt; hearing on application to issue; amount of issue; issuance of short term notes without commission order; capitalization of certain items prohibited; accounting for proceeds of issues

A. Before a public service corporation issues stocks and stock certificates, bonds, notes and other evidences of indebtedness, it shall first secure from the commission an order authorizing such issue and stating the amount thereof, the purposes to which the issue or proceeds thereof are to be applied, and that, in the opinion of the commission, the issue is reasonably necessary or appropriate for the purposes specified in the order, pursuant to section 40-301, and that, except as otherwise permitted in the order, such purposes are not, wholly or in part, reasonably chargeable to operative expenses or to income. Before an order is issued under this section, notice of the filing of the application for such order shall be given by the commission or the applicant in such form and manner as the commission deems appropriate. The commission may hold a hearing, and make inquiry or investigation, and examine witnesses, books, papers and documents, and require filing data it deems of assistance.

B. The commission may grant or refuse permission for the issue of evidences of indebtedness or grant the permission to issue them in a lesser amount, and may attach to its permission conditions it deems reasonable and necessary. The commission may authorize issues less than, equivalent to or greater than the authorized or subscribed capital stock of the corporation, and the provisions of the general laws of the state with reference thereto have no application to public service corporations.

C. A public service corporation shall not, without consent of the commission, apply the issue of any stock or stock certificate, bond, note or other evidence of indebtedness, or any part thereof, or any proceeds thereof, to any purpose not specified in the commission's order, or to any purpose specified in the commission's order in excess of the amount authorized for the purpose, or issue or dispose of the proceeds of such issuance on any terms less favorable than those specified in the order.

D. A public service corporation may issue notes, not exceeding seven per cent of total capitalization if operating revenues exceed two hundred fifty thousand dollars, for proper purposes and not in violation of law payable at periods of not more than twelve months after date of issuance, without consent of the commission, but no such note shall, wholly or in part, be refunded by any issue of stocks or stock certificates, bonds, notes or any other evidence of indebtedness without consent of the commission.

E. The commission may not authorize the capitalization of the corporate franchise, or of any franchise or permit whatever, or the right to own, operate or enjoy any such franchise or permit, in excess of the amount, exclusive of taxes or annual charges, actually paid to the state or to a political subdivision thereof as the consideration for the grant of the franchise, permit or right, nor shall any contract for consolidation or lease be capitalized, nor shall any public service corporation issue any bonds, notes or other evidences of indebtedness against or as a lien upon any contract for consolidation or merger.

F. The commission may require public service corporations to account for the disposition of the proceeds of all sales of stocks and stock certificates, bonds, notes and other evidences of indebtedness, in the form and detail it deems advisable, and may establish rules and regulations it deems reasonable and necessary to insure the disposition of such proceeds for the purpose specified in its order.