N.Y. Insurance Law § 6603: Incorporation of co-operative property/casualty insurance companies

§ 6603. Incorporation of co-operative property/casualty insurance

companies. (a) A corporation may be organized and licensed as an advance

premium corporation or as an assessment corporation in the manner

prescribed in this section and subject to any other applicable

requirements of this chapter. The successive steps shall be as follows:

(1) The proposed incorporators, who shall be natural persons not less

than thirty in number, shall submit to the superintendent in writing,

the proposed name of the corporation, which shall include the word

"co-operative," and the county in which its principal office will be

located, and the name and address of a public newspaper of general

circulation in said county. Such proposed incorporators shall also

submit at the same time statements subscribed and affirmed by them as

true under the penalties of perjury, in such form as the superintendent

may require, which shall show that each incorporator is the true and

bona fide owner of improved real property worth not less than two

thousand dollars; that the real property so owned by such incorporators

is worth in the aggregate not less than two hundred thousand dollars;

and that such real property is located wholly within the territory

wherein the corporation desires to do business.

(2) If the superintendent approves the proposed name of the

corporation and the designated newspaper, each as conforming to the

requirements of law, and if he finds that the affidavits required by

paragraph one hereof are sufficient in form and substance, he shall

notify the proposed incorporators, or their representative, in writing.

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

thereof the declaration and charter have not been filed pursuant to this

section. However, upon application made prior to the expiration of such

six months, the superintendent for good cause shown in such application

may extend such approval for an additional period not to exceed six

months.

(3) The proposed incorporators shall cause to be published in the

approved 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 kind or kinds of insurance

business to be transacted and whether on the advance premium plan or

assessment plan, the names and respective residence addresses of the

proposed incorporators, and the location of its principal office in this

state.

(4) The proposed incorporators shall submit to the superintendent

proof of such publication by the statement of the publisher or of his

foreman or clerk, subscribed and affirmed by him as true subject to the

penalties of perjury, and a declaration subscribed and affirmed as true

under the penalties of perjury by each and all of the incorporators,

setting forth the items hereinafter specified.

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

the intention of the proposed incorporators to form a corporation for

the purpose of doing one or more kinds of insurance business specified

in subsection (a) of section one thousand one hundred thirteen of this

chapter and shall specify the provision or provisions of such section

defining the kind or kinds of insurance business, insofar as such kinds

of insurance are specifically available to such a corporation by section

six thousand six hundred four or six thousand six hundred five of this

article, whichever is applicable. Such declaration shall also set forth

a copy of the proposed charter of the corporation, which shall contain:

(A) The name of the proposed corporation.

(B) The territory in this state wherein the corporation desires to do

business.

(C) The kind or kinds of insurance to be transacted, specified as

above required, and whether on the advance premium or assessment plan.

(D) The mode and manner in which its corporate powers are to be

exercised.

(E) The number of its directors, which shall be not less than seven,

and a provision that in no case shall the number of directors be less

than seven.

(F) The times and manner of electing its directors and officers, the

manner of filling vacancies in such offices, and a provision that at all

times a majority of the directors shall be citizens and residents of

this state and that not less than one shall be a resident within the

territory in which the corporation is licensed to do business.

(G) The names and the residence addresses of the directors who shall

serve until the first annual meeting of the members of the corporation.

(H) Such other particulars as may be necessary to explain the objects,

purposes, management and control of the corporation. The superintendent

may by regulation prescribe the additional information to be required,

pursuant to this subparagraph.

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

declaration, and charter to the attorney general. If the same be

approved by the attorney general, as conforming to the requirements of

law, upon receipt of such approval the superintendent shall file such

declaration, charter and proof of publication in his office, and shall

issue a certified copy thereof to the incorporators. If requested by

such incorporators, the superintendent shall also issue to them a

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

of the state. Such incorporators shall thereupon become a body corporate

and shall then have the powers enumerated in paragraph seven hereof, but

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

until it shall have obtained a license therefor.

(7) (A) Such a corporation shall have power to receive such monies as

are necessary to comply with the requirements of this article relative

to the initial surplus fund of such corporation and to borrow monies in

accordance with section one thousand three hundred seven of this

chapter.

(B) Any such corporation shall have power to open books to receive

applications for insurance in such corporation from persons desiring and

eligible to become members thereof, and to keep them open until the

minimum number and amount of such applications, together with the

premium payments or advance payments thereon as required by section six

thousand six hundred four or six thousand six hundred five of this

article, whichever is applicable, have been received; to invest the

monies so received in the manner prescribed in section one thousand four

hundred two of this chapter; and to expend money or incur liabilities

necessary or proper as organization expenses, such expenses not to

exceed the maximum amount prescribed in the permit hereinafter

mentioned.

(C) No such corporation shall solicit applications for insurance or

receive premium payments thereon or advance payments, as the case may

be, until it has received a permit therefor from the superintendent.

(D) Such 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 eligible for investment under section one

thousand four hundred two of this chapter, at least equal to the amount

required of such a corporation as its cash organization or initial

surplus fund, such trust to terminate if and when a license to do an

insurance business of the kind or kinds provided in its corporate

charter has been obtained; and

(ii) the corporation shall have submitted to the superintendent an

estimate of the total amount to be expended for organization expenses,

and the superintendent shall have approved the same. Such estimate shall

be recited in the permit, which shall also fix the maximum amount, to be

prescribed by the superintendent, which may be expended for organization

expenses.

(E) The directors and incorporators of any co-operative

property/casualty insurance company shall be jointly and severally

liable for all debts or liabilities of such corporation until it shall

have been licensed to do an insurance business of the kind or kinds

proposed.

(8) (A) Before licensing any such corporation to do any insurance

business, the superintendent shall require proof, by statements of at

least three incorporators subscribed and affirmed by such incorporators

as true under the penalties of perjury and by such investigation or

examination of the affairs of such corporation as he may deem it

expedient to make pursuant to article three of this chapter, that:

(i) the corporation has fully complied with this chapter applicable to

such corporations;

(ii) that it has the required cash organization or initial surplus

fund in cash or in investments as prescribed in this chapter;

(iii) that it has the required number and amount of bona fide

applications for insurance;

(iv) that the membership list is genuine; and

(v) that every member has paid in cash the required amount of premium

or advance payment, as the case may be, on the insurance applied for and

will take the contracts as agreed within sixty days after a license has

been issued to such corporation.

(B) If the superintendent finds the proof of the facts itemized in

subparagraph (A) hereof to be sufficient, he shall file the same in his

office and notify the corporation thereof.

(C) Upon payment of the appropriate fees by such corporation, the

superintendent shall cause a copy of its declaration and charter,

certified by him, to be filed and recorded in the office of the clerk of

the county in which such corporation has its principal office.

(D) The superintendent may refuse a license to any such corporation if

he finds, after notice and hearing, that any of the proposed

incorporators or directors of such corporation has been convicted of any

crime involving fraud, dishonesty, or like moral turpitude, or is

otherwise an untrustworthy person.

(9) Upon compliance with the foregoing and any other lawful

prerequisites for the issuance of an insurer's license, the

superintendent may, in accordance with the provisions of section one

thousand one hundred two of this chapter, grant a license to such

corporation to do the kind or kinds of insurance business specified in

its charter.

(b) No person shall participate as an incorporator in the organization

of more than one assessment corporation within a period of five years

from the date of incorporation of the assessment corporation of which he

was an incorporator.