[Federal Register Volume 60, Number 43 (Monday, March 6, 1995)]
[Notices]
[Pages 12260-12261]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5334]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Rel. No. 20925/International Rel. No. 788 812-
8970]
Enersis S.A.; Notice of Application
February 27, 1995.
agency: Securities and Exchange Commission (``SEC'').
action: Notice of Application for Exemption under the Investment
Company Act of 1940 (``Act'').
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applicant: Enersis S.A.
Relevant Act Section: Section 2(a)(9).
summary of Application: Applicant seeks an order declaring that it
controls [[Page 12261]] Empresa Nacional de Electricidad S.A.
(``Endesa''), notwithstanding that it owns less than 25% of its voting
securities.
filing date: The application was filed on April 28, 1994 and amended on
July 8, 1994 and October 6, 1994.
hearing or notification of hearing: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicant with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on March 23, 1995,
and should be accompanied by proof of service on applicant, in the form
of an affidavit or, for lawyers, a certificate of service. Hearing
requests should state the nature of the writer's interest, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request such notification by writing to the
SEC's Secretary.
addresses: Secretary, SEC, 450 Fifth Street NW., Washington, DC 20549.
Applicant, Santo Domingo 789, Santiago, Chile.
for further information contact: Fran Pollack-Matz, Senior Attorney, at
(202) 942-0570, or Barry Miller, Senior Special Counsel, at (202) 942-
0564 (Division of Investment Management, Office of Investment Company
Regulation).
Supplementary Information: The following is a summary of the
application. The complete application may be obtained for a fee from
the SEC's Public Reference Branch.
Applicant's Representations
1. Applicant is a Chilean holding company primarily engaged through
its majority-owned subsidiaries and related companies in the utility
business. Applicant is not registered under the Investment Company Act
by virtue of its reliance on rule 3a-1.\1\
\1\Rule 3a-1 provides that an issuer meeting the statutory
definition of an investment company is not an investment company if:
(a) no more than 45% of the value of its total assets (exclusive or
government securities and cash items) consists of securities other
than government securities, securities issued by employee securities
companies, securities of certain majority-owned subsidiaries, and
securities issued by companies under the primary control of the
issuer that are not investment companies; and (b) no more than 45%
of its income after taxes (over the last four fiscal quarters
combined) is received from such securities.
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2. Endesa is a Chilean electric generation company, Applicant owns
directly and indirectly approximately 17% of Endesa and is Endesa's
largest shareholder. Four of the five remaining largest shareholders of
Endesa are entities comparable to United States pension funds. Under
Chilean law, the amount one of these entities can invest in a company
similar to Endesa is the lesser of 7% of its assets or 7% of Endesa's
equity. The fifth large shareholder of Endesa is a company owning
approximately 3.4% of Endesa's shareholder equity. Applicant,
therefore, owns more than twice as many shares as the next largest
shareholder.
3. Three of Endesa's nine member board are Enersis officers or
directors. Enersis's equity ownership gives it the power to elect two
of Endesa's directors; a third Enersis official on Endesa's board
publicly campaigned for the position. These persons also hold the
positions of Enersis's Chairman of the Board, its Chief Executive
Officer, and its Director of Planning and Development. Applicant's
Chief Executive Officer is the Chairman of the board of Endesa. The
Chairman is entitled to cast a second vote in the event of a tie of
Endesa's board of directors, thereby giving Enersis an additional vote.
4. Enersis, previously a government-owned utility, was privatized
in 1987 and restructured to become a holding company. Since its
privatization, all of Enersis's stock acquisitions have been of utility
businesses. Enersis's strategy has been to concentrate its activities
on its core utility business and to take stock positions in other
entities only under circumstances where it is the dominant shareholder
or where it and Endesa together are the dominant shareholders of the
entity whose stock is being acquired.
5. Jose Yuraszeck, Enersis's Chief Executive Officer, became
Endesa's Chairman in April 1992. He is commonly referred to as the
``Electricity Czar'' in Chile and is identified by the public as
personifying Endesa.\2\ Mr. Yuraszeck is also Chairman of Endesa's
subsidiary formed to build, own, and mange Endesa's major power plant
development.
\2\``Electricity Czar,'' Que Pasa, May 1992.
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6. Endesa's Director of Planning and Development was assigned to
Endesa at Enersis's direction and the planning and development staffs
of Enersis and Endesa have collaborated on various projects.
Applicant's Legal Analysis
1. Section 2(a)(9) defines ``control'' as ``the power to exercise a
controlling influence over the management or policies of a company,
unless such power is solely the result of an official position with
such company.'' Section 2(a)(9) also creates a presumption that owners
of more than 25% of a company's voting securities control such company,
and the owners of 25% or less of a company's voting securities do not
control such company. A securityholder may obtain an SEC order
rebutting either presumption by producing evidence to the contrary.
2. Applicant seeks an order of the SEC declaring that it controls
Endesa, notwithstanding the presumption under the Act that ownership of
less than 25% of a company's voting securities is insufficient to
establish control.\3\
\3\Any order concerning the application will be limited to
determining whether Enersis controls Endesa under section 2(a)(9).
Enersis is not seeking any determination as to whether it
``primarily'' controls Endesa for purposes of rule 3a-1 or whether
applicant falls within the definition of investment company under
the Act.
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3. Applicant argues that the facts set forth in the application are
sufficient to support a finding that applicant controls Endesa.
Applicant holds the largest share of Endesa's voting securities and has
significant representation on Endesa's board of directors.
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-5334 Filed 3-3-95; 8:45 am]
BILLING CODE 8010-01-M