N.Y. Insurance Law § 7118: Plan for acquisition of minority interests in a subsidiary insurer

§ 7118. Plan for acquisition of minority interests in a subsidiary

insurer. (a) Definitions. In this section:

(1) "Parent" means a corporation directly or indirectly owning at

least ninety-five percent of the aggregate issued and outstanding shares

of all classes of voting shares of a subsidiary.

(2) "Subsidiary" means a domestic company whose voting shares are so

owned.

(b) Any parent or subsidiary may, pursuant to a plan for acquisition

of minority interests in such subsidiary, adopted by the board of

directors, trustees or other governing body of the parent or subsidiary,

acquire all of the subsidiary's remaining issued and outstanding voting

shares, by exchange of shares, other securities, cash, other

consideration or any combination thereof.

(c) Such plan shall set forth:

(1) the name of the subsidiary;

(2) the total number of issued and outstanding voting shares of each

class of the subsidiary, the number of its shares owned by the parent

and, if either of the foregoing is subject to change prior to the

effective date of acquisition, the manner in which any change may occur;

(3) the terms and conditions of the plan, including the manner and

basis of exchanging the shares to be acquired for shares or other

securities of the parent, for cash, other consideration, or any

combination of the foregoing, the proposed effective date of acquisition

and a statement clearly describing the rights of dissenting shareholders

to demand appraisal;

(4) if the parent has adopted the plan and is neither a domestic

corporation nor an authorized insurer, its agreement to be bound by

section seven thousand one hundred nineteen of this article with respect

to the plan, its consent to the enforcement against it in this state of

the rights of shareholders pursuant to the plan, and a designation of

the superintendent as the agent upon whom process may be served against

the parent in the manner set forth in section one thousand two hundred

twelve of this chapter in any action or proceeding to enforce any such

rights; and

(5) such other provisions with respect to the plan as the board of

directors, trustees or other governing body deems necessary or

desirable, or which the superintendent may prescribe.

(d) Upon adoption of the plan, it shall be executed by the president

and attested by the secretary, or officers corresponding to either of

them, under the corporate seal of the parent or subsidiary which has

adopted the plan, as the case may be. Thereupon, a certified copy of the

plan, together with a certificate of its adoption subscribed by such

officers and affirmed by them as true under the penalties of perjury and

under the seal of the parent or the subsidiary, as the case may be,

shall be submitted to the superintendent for his approval. The

superintendent shall thereupon consider the plan and, if satisfied that

it complies with this article, is fair and equitable and not

inconsistent with law, he shall approve the plan. If the superintendent

disapproves the plan, notification of his disapproval, assigning the

reasons therefor, shall be given in writing by him to the parent or

subsidiary that submitted the plan. No plan shall take effect unless the

approval of the superintendent has been obtained.

(e) If the superintendent approves the plan, the parent or the

subsidiary which has adopted the plan shall deliver to each person who,

as of the date of delivery, is a holder of record of shares to be

acquired, a copy of the plan, or a summary thereof approved by the

superintendent, in person or by depositing the same in the post office,

postage prepaid, addressed to the shareholder at his address of record.

On or before the date of acquisition proposed in the plan, the parent or

the subsidiary which has adopted the plan shall file with the

superintendent a certificate, executed by its president and attested by

its secretary, or by officers corresponding to either of them, and

subscribed by such officers and affirmed by them as true under the

penalties of perjury, and under the seal of the parent or the

subsidiary, as the case may be, attesting to compliance with this

subsection.

(f) Upon compliance with this section, ownership of the shares to be

acquired pursuant to the plan shall vest in the parent or the subsidiary

which has adopted the plan on the date of acquisition proposed in the

plan whether or not the certificates for such shares have been

surrendered for exchange. If the plan was adopted by the parent it shall

be entitled to have new certificates registered in its name. If the

plan was adopted by the subsidiary the shares shall be retired and the

capital of the subsidiary reduced by the par value of the retired

shares. Shareholders whose shares have been so acquired shall thereafter

retain only the right either to receive the consideration to be paid in

exchange for their shares pursuant to the plan or to demand appraisal

pursuant to section seven thousand one hundred nineteen of this article.

(g) Neither the right granted by this section nor the exercise thereof

by a parent or subsidiary shall preclude the exercise by it of any other

rights it may have under this article.