N.Y. Insurance Law § 1201: Incorporation of stock or mutual insurance companies

§ 1201. Incorporation of stock or mutual insurance companies. (a) A

corporation may be organized and licensed to do an insurance business in

this state by taking the following successive steps, subject to

applicable requirements of this chapter:

(1) The proposed incorporators, comprising at least nine natural

persons (except as provided in section six thousand four hundred two of

this chapter), shall submit to the superintendent, in writing, the

corporation's proposed name, the county in which its principal office

will be located, and the name and address of a public newspaper of

general circulation in such county.

(2) If the superintendent approves the proposed name and newspaper,

each as conforming to the requirements of law, he shall so notify the

proposed incorporators, or their representative, in writing. Such

approval shall become void if within six months from its date the

declaration and charter referred to in paragraphs four and five hereof

are not filed pursuant to paragraph six hereof.

(3) The proposed incorporators shall publish in such newspaper, twice

a week for three successive weeks or once a week for six successive

weeks, a notice of intention to form such a corporation, stating its

proposed name, the kinds of insurance business to be transacted, the

names and city and state of residence of the proposed incorporators, the

location of its principal office in this state, and, if a stock

corporation, the amount of its proposed initial capital.

(4) The proposed incorporators shall submit to the superintendent:

(A) proof of such publication by the affidavit of the publisher or of

his foreman or clerk; and

(B) a declaration, signed by each incorporator and duly acknowledged

before a notary public or other officer authorized to take

acknowledgments of conveyances of real property within this state.

(5) (A) Such declaration shall be in the English language, shall state

the proposed incorporators' intention to form a corporation to do one or

more kinds of insurance business authorized by section one thousand one

hundred thirteen of this chapter, shall specify the paragraphs defining

such kinds of insurance business and shall set forth a copy of the

corporation's proposed charter.

(B) The corporation's proposed charter shall contain:

(i) the corporation's name, which shall include a distinctive word or

words, and, if a mutual corporation, shall contain the word "mutual";

(ii) the place where its principal office is to be located;

(iii) the kinds of insurance to be transacted, specified as above

required;

(iv) the manner in which corporate powers are to be exercised;

(v) the number of directors, or that it shall be not less than a

stated minimum nor more than a stated maximum. Except as provided in

section six thousand four hundred two of this chapter the number of

directors shall not be less than seven. As used in this item, "number of

directors" means the total number of directors which the corporation

would have if there were no vacancies;

(vi) the times and manner of electing directors and officers, the

manner of filling vacancies, and provision that each director shall be

at least eighteen years of age and that at all times a majority shall be

citizens and residents of the United States, and that not less than one

shall be a resident of this state;

(vii) the names and city and state of residence of the directors, who

shall serve until the first annual meeting of such corporation;

(viii) the duration of its corporate existence, which shall be not

less than thirty years;

(ix) the amount of its capital, if a stock corporation; and

(x) any other particulars necessary to explain the corporation's

objects, purposes, management and control.

(C) The corporation's proposed charter may authorize the use in a

foreign country where it does or proposes to do business of a specified

translation of its name in any language commonly used in such country.

(D) The superintendent may, by regulation, prescribe additional

information to be required, pursuant to this paragraph, of all companies

or of any kind of company.

(6) The superintendent shall transmit such proof of publication,

declaration, and charter to the attorney general. If approved by the

attorney general, as conforming to the requirements of law, the

superintendent shall thereupon file them in his office and issue a

certified copy thereof to the proposed incorporators. If requested by

such proposed incorporators, the superintendent shall also issue to them

a certificate of incorporation executed by him in the name of the people

of the state and thereupon such incorporators shall become a body

corporate and have the powers enumerated in paragraph seven hereof, but

such corporation shall not be authorized to do the business of insurance

until it obtains a license therefor.

(7) Every stock corporation, upon compliance with this chapter and the

business corporation law, may create and issue the number of shares of

capital stock stated in its charter which may be of one or more classes.

If the charter authorizes shares which are entitled to preference in the

distribution of dividends or assets it shall provide that:

(A) their dividend yield shall not exceed a rate equal to the maximum

rate of interest provided in section 5-501 of the general obligations

law, in effect at the time such shares are offered for sale; and

(B) the dividends may not be cumulative for more than three years.

(8)(A) A stock corporation shall have power to:

(i) open books to receive subscriptions to its capital shares,

(ii) keep them open until all such shares, or so many as may be

necessary to satisfy the minimum capital requirements, are subscribed

for,

(iii) receive payment for such subscriptions,

(iv) invest the monies as prescribed in this chapter, and

(v) expend money or incur liabilities necessary or proper as

organization expenses, to be paid out of the proceeds of such

subscriptions, such expenses not to exceed the maximum amount prescribed

in its permit to solicit such subscriptions.

(B) The corporation shall not solicit subscriptions to its shares

until it receives a permit therefor from the superintendent which shall

be issued after the corporation submits to him an estimate of the total

amount to be expended for organization expenses, and he approves the

estimate. Such estimate shall be recited in the permit, which shall fix

the maximum amount, to be prescribed by the superintendent, which may be

expended for organization expenses.

(C) Such corporation shall not employ, as agents or brokers to sell

its securities to the public, any persons who have not complied with the

requirements of section one thousand two hundred four of this article.

(9) (A) A mutual corporation shall have power to:

(i) receive monies necessary to comply with the requirements of this

chapter relative to its initial surplus fund;

(ii) borrow such monies in accordance with the provisions of section

one thousand three hundred seven of this chapter;

(iii) open books to receive applications for insurance from persons

desiring and eligible to become members;

(iv) keep them open until the minimum number and amount of

applications, and the premium payments thereon, as required by this

chapter are received;

(v) invest the monies as prescribed in this chapter for the investment

of the minimum surplus of a mutual insurance company; and

(vi) expend money or incur liabilities necessary or proper as

organization expenses, such expenses not to exceed the maximum amount

prescribed in its permit to solicit such applications.

(B) The corporation shall not solicit applications for insurance or

receive premium payments thereon until it receives a permit therefor

from the superintendent. The permit shall be issued after:

(i) the superintendent is satisfied, by such evidence as he may

require or by such examination as he may deem expedient, that the

corporation holds in trust for prospective policyholders and creditors a

fund, in cash or securities acceptable to him, at least equal to the

amount required as its initial surplus fund, such trust to terminate

when a license to do an insurance business of the kinds provided in the

corporate charter has been obtained, and

(ii) the corporation submits to the superintendent an estimate of the

total amount to be expended for organization expenses, and he approves

the estimate. Such estimate shall be recited in the permit, which shall

fix the maximum amount, to be prescribed by the superintendent, which

may be expended for organization expenses.

(10) The directors and incorporators of any stock or mutual

corporation shall be jointly and severally liable for all its debts and

liabilities until it is licensed to do an insurance business of the kind

or kinds proposed.

(b) This section shall not apply to co-operative fire insurance

companies, fraternal benefit societies, or corporations organized under

article forty-three or sixty-seven of this chapter.