When any report is erroneous or defective or appears to the Commission to be erroneous or defective, the Commission may notify the public utility to amend such report within thirty days, and before or after the termination of such period the Commission may examine the officers, agents, or employees, and books, records, accounts, vouchers, plant, equipment and property of such public utility, and correct such items in the report as upon such examination the Commission may find defective or erroneous.

All reports made to the Commission by any public utility and the contents thereof shall be open to public inspection, unless otherwise ordered by the Commission. Such reports shall be preserved in the office or [of] the Commission.

Any public utility which fails to make and file any report called for by the Commission within the time specified; or to make specific answer to any question propounded by the Commission within thirty days from the time it is lawfully required to do so, or within such further time, not to exceed ninety days, as may in its discretion be allowed by the Commission, shall forfeit $100 for each and every day it may so be in default.

Any person who wilfully makes any false return or report to the Commission, or to any member, officer or employee thereof, and any person who aids or abets such person shall, upon conviction, be subject to imprisonment in the county jail not exceeding one year, or to a fine not exceeding one thousand dollars, or both.

ARTICLE III.

STOCKS AND BONDS-CAPITALIZATION-INTERCORPORATE RELATIONS— FRANCHISES-VALUATION.

20. Right to Issue Stocks, Bonds, Etc.

§ 20. The power of public utilities to issue stocks, stock certificates, bonds, notes and other evidences of indebtedness and to create liens on their property is a special privilege, the right of supervision, regulation, restriction and control of which is and shall continue to be vested in the State, and such power shall be exercised by the Commission hereby created according to the provisions of this Act and under such rules and regulations as the Commission may prescribe.

The Commission shall provide, by serial number or other device to be placed on the face thereof, for the proper and easy identification of such stocks, stock certificates, bonds, notes and other evidences of indebtedness as may be issued by public utilities under the provisions of this article.

NOTE-One utility may be authorized to issue bonds to purchase property from another at a price in excess of its value, where better service will result; but the excess must not be charged to operating expenses or capital and with the expense of the bond issue must be amortized or charged to profit and loss. Re Tyrone Electric Co., III I. P. U. C. 140, P. U. R. 1916-E 708.

A gas company, upon organization, was permitted to use "$473,700 proceeds from the sale of stock and bonds for acquisition of property and construction of facilities; $67,928 for engineering, superintendence, omissions, interest during construction, and legal expenses.; $50,000 for working capital and development expenses; and $38.372 for organization, promotional, financing and general penses; and salaries until operation is begun. Re Southern Ill. Gas Co., III I. P. U. C. 192, 574, P. U. R. 1916-C 704.

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21. Approval of Securities Issues-Application of Proceeds-Indebtedness for a Year or Less-Franchises Not to be Capitalized.

§ 21. Subject to the provisions of this Act and of the order of the Commission issued as provided in this Act, a public utility may issue stocks and stock certificates, and bonds, notes and other evidences of indebtedness payable at periods of more than twelve months after the date thereof, for the following purposes and no others, namely: For the acquisition of property, or for the construction, extension or improvement of or addition to its facilities, or for the discharge or lawful refunding of its obligations; or for the reimbursement of moneys actually expended from income or from any other moneys in the treasury of the public utility not directly or indirectly secured by or obtained from the issue of stocks or stock certificates, or bonds, notes or other evidences of indebtedness of such public utility, within five years next prior to the filing of an application with the Commission for the required authorization, for any of the aforesaid purposes except maintenance of service, replacements and substitutions in cases where the applicant shall have kept its accounts and vouchers for such expenditures in such manner as to enable the Commission to ascertain the amount of moneys so expended and the purposes for which such expenditures were made, and the sources of the funds in the treasury of the public utility applied to such expenditures: Provided, that such public utility, in addition to the other requirements of law, shall first have secured from the Commission an order authorizing such issue and stating the amount thereof and the purpose or purposes to which the issue or the proceeds thereof are to be applied, and that, in the opinion of the Commission, the money, property or labor to be procured or paid for by such issue is reasonably required for the purpose or purposes specified in the order, and that, except as otherwise permitted in the order in the case of notes or other evidences of indebtedness, such purpose or purposes are not, in whole or in part, reasonably chargeable to operating expenses or to income. To enable it to determine whether it will issue such order, the Commission shall hold a hearing and may make such additional inquiry or investigation, and examine such witnesses, books, papers, accounts, documents and contracts and require the filing of such data as it may deem of assistance. The public utility may be required by the Commission to disclose every interest of the directors of such public utility in any transaction under investigation. The Commission shall have power to investigate all such transactions and to inquire into the good faith thereof, to examine books, papers, accounts, documents and contracts of public utilities, construction or other companies or of firms or individuals with whom the public utility shall have had financial transactions, for the purpose of enabling it to verify any statements furnished, and to examine into the actual value of property acquired by, or services rendered to such public utility. Before issuing its order the Commission, when it is deemed necessary by the Commission, shall make an adequate physical valuation of all property of the public utility, but a valuation already made under proper public supervision may be adopted, either in whole or in part, at the discretion of the Commission; and shall also examine all previously authorized or outstanding securi

ties of the public utility, and fixed charges attached thereto. A statement of the results of such physical valuation, and a statement of the character of all outstanding securities, together with the conditions under which they are held, shall be included in the order. The Commission may require that such information or such part thereof as it thinks proper, shall appear upon the stock, stock certificate, bond, note or other evidence of indebtedness authorized by its order. The Commission may by its order grant permission for the issue of such stock certificates, or bonds, notes or other evidences of indebtedness in the amount applied for, or in a lesser amount, or not at all, and may attach to the exercise of its permission such condition or conditions as it may deem reasonable and necessary. The Commission may also require the public utility to compile for the information of its shareholders such facts in regard to its financial transactions, in such form as the Commission may direct.

No public utility shall, without the consent of the Commission, apply the issue of any stock or stock certificate, or 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 such purpose, or issue, or dispose of the same on any terms less favorable than those specified in such order, or a modification thereof. The Commission shall have the power to require public utilities to account for the disposition of the proceeds of all stocks and stock certificates, and bonds, notes and other evidences of indebtedness, in such form and detail as it may deem advisable, and to establish such rules and regulations as it may deem reasonable and necessary to insure the disposition of such proceeds for the purpose or purposes specified in its order.

A public utility may issue notes, for proper purposes and not in violation of any provision of this Act or any other Act, payable at periods of not more than twelve months after the date of issuance of the same, without the consent of the Commission; but no such note shall, in whole or in part, be renewed from time to time without the consent of the Commission for an aggregate period of longer than two years, or be refunded by any issue of stocks and stock certificates, or of bonds, notes of any term or character or any other evidence of indebtedness, without the consent of the Commission.

The Commission shall have no power to authorize the capitalization of the right to be a corporation, or to authorize the capitalization of any franchise, license, or permit whatsoever or the right to own, operate or enjoy any such franchise, license, or permit, in excess of the amount (exclusive of any tax or annual charge) actually paid to the State or to a political subdivision thereof as the consideration for the grant of such franchise, license, permit or right; nor shall any contract for consolidation or lease be capitalized, nor shall any public utility hereafter issue any bonds, notes or other evidences of indebtedness against or as a lien upon any contract for consolidation or merger.

NOTE-See Re Illinois Northern Utilities Co. et al., III I. P. U. C. 107, P. U. R. 1917-A 816.

SECURITIES ISSUES IN GENERAL.

Re Illinois Central R. Co., II I. P. U. C. 148, P. U. R. 1915-D 1032; Re New York Central R. Co., II I. P. U. C. 607 abstracted, P. U. R. 1915-D 1024; Re Tyrone Elec. Co., III I. P. U. C. 140, P. U. R. 1916-E 708; Re Southern Illinois Gas Co., III I. P. U. C. 579 abstracted, P. U. R. 1916-C 704; Re Illinois Northern Utilities Co., III I. P. U. C. 107, P. U. R. 1917-A 816.

22. Consolidation and Reorganization-Capitalization.

§ 22. The capitalization of a public utilities formed by a merger or consolidation of two or more corporations shall be subject to the approval of the Commission, but in no event shall the Commission approve a capitalization exceeding the sum of the capital stock of the corporations so consolidated, at the par value thereof, and any additional sum actually paid in cash for improvements; nor shall any contract for consolidation or lease be capitalized in the stock of any corporation whatever; nor shall any corporation hereafter issue any bonds. against or as a lien upon any contract for consolidation or merger. In any reorganization of a public utility, resulting from forced sale, or in any other manner, the amount of capitalization, including therein all stocks and stock certificates and bonds, notes, and other evidences of indebtedness, shall be such as is authorized by the Commission, which in making its determination, shall not exceed the fair value of the property involved. Issuance of stocks and stock certificates, and bonds, notes or other evidences of indebtedness in connection with any consolidation, merger, or reorganization shall be subject to all the terms of sections 20 and 21 of this Act.

NOTE.-See Re Illinois Northern Utilities Co. et al., III I. P. U. C. 107, 1917-A 816, holding that the Commission need not determine the value of the property of constituent companies in order to authorize a stock issue by the consolidated companies for the purpose of effecting the consolidation, provided the proposed issue of securities does not exceed the sum of the par value of the outstanding securities of the constituent companies; but the Commission may require that the securities recite that the authorization shall not be taken as a finding of value. 23. Securities Unlawfully Issued.

§ 23. All stock and every stock certificate, and every bond, note or other evidence of indebtedness, of a public utility, not payable within twelve months issued without an order of the Commission authorizing the same then in effect shall be void, unless issued upon the authority of any articles of incorporation or amendments thereto, and of a vote of the stockholders or directors, filed and taken before this Act becomes a law, and likewise all stock and every stock certificate, and every bond, note or other evidence of indebtedness of a public utility not payable within twelve months, issued with the authorization of the Commission, but not conforming in its provisions to the provisions, if any, which it is required by the order of authorization of the Commission to contain, shall be void; but no failure in any other respect to comply with the terms or conditions of the order of authorization of the Commission shall render void any stock or stock certificate, or any bond, note or other evidence of indebtedness, except as to a corporation or person taking the same with notice of the failure to comply with the order of the Commission.

NOTE. See Conference Rule No. 23, III I. P. U. C. 11.

24. Penalty for Unlawfully Issuing Securities.

§ 24. Every public utility which, directly or indirectly, issues or causes to be issued, any stock, stock certificate, bond, note or other evidence of indebtedness, in non-conformity with the order of the Commission authorizing the same, or contrary to the provisions of this Act, or which applies the proceeds from the sale thereof, or any part thereof, to any purpose other than the purpose or purposes specified in the Commission's order, as herein provided, or to any purpose specified in the Commission's order in excess of the amount authorized for such purpose, shall upon conviction, be subject to a penalty of not less than five hundred dollars ($500) nor more than twenty thousand dollars ($20,000) for each offense.

25. Penalty for False Statement, Etc.

§ 25. Every officer, agent or employee of a public utility, and every other person who knowingly authorizes, directs, issues or executes, causes to be issued or executed, or aids in the issue or execution of any stock, stock certificate, bond, note or other evidence of indebtedness, in non-conformity with the order of the Commission authorizing the same, or contrary to the provisions of this Act; or who, in any proceeding before the Commission, knowingly makes any false statement or representation, or with the knowledge of its falsity files or causes to be filed with the Commission any false statement or representation, which said statement or representation so made, filed or caused to be filed may tend in any way to influence the Commission to make an order authorizing the issue of any stock or stock certificate, or any bond, note or other evidence of indebtedness, or which results in procuring from the Commission the making of any such order, or who, with knowledge that any false statement or representation was made to the Commission, in any proceeding, tending in any way to influence the Commission to make such order, issues or executes or negotiates, or causes to be issued, executed, or negotiated any such stock or stock certificate, or bond, note or other evidence of indebtedness, or who, directly or indirectly, knowingly applies, or causes or assists to be applied the proceeds or any part thereof, from the sale of any stock or stock certificate, or bond, note or other evidence of indebtedness, 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 such purpose, or who, with know!edge that any stock certificate, or bond, note or other evidence of indebtedness, has been issued or executed in violation of any of the provisions of this Act, negotiates, or causes the same to be negotiated, shall, on conviction thereof, be imprisoned in the State penitentiary for a term of not less than two years and not more than ten years.

26. No Guaranty of Utility Securities by State.

§ 26. No provision of this Act, and no deed or act done or performed under or in connection therewith, shall be held or construed to obligate the State of Illinois to pay or guarantee, in any manner whatsoever, any stock or stock certificate, or bond, note or other evidence of indebtedness, authorized, issued or executed under the provisions of this