N.Y. Insurance Law § 8018: Other requirements applicable to a stock holding company and a mutual holding company

§ 8018. Other requirements applicable to a stock holding company and a

mutual holding company. (a) From and after the effective date of the

plan, the mutual holding company shall hold, directly or through one or

more stock holding companies, at least fifty-one percent of the issued

and outstanding voting stock of the reorganized insurer. The reorganized

insurer and any stock holding company may issue to the mutual holding

company and to other persons securities, including voting stock,

non-voting stock and securities convertible into voting or non-voting

stock, provided that, such issuance and the terms of such issuance shall

have received the prior approval of the superintendent, who shall

consider the interests of the mutual holding company and its members and

who may require that, at the time of such issuance, consideration be

distributed to members. For purposes of the fifty-one percent

limitation, any issued and outstanding securities of the reorganized

insurer or any stock holding company that are convertible into voting

stock shall be considered issued and outstanding voting stock.

(b) A mutual holding company and any stock holding company shall each

be deemed to be a "holding company" of the reorganized insurer within

the meaning of article fifteen of this chapter, and all provisions of

article fifteen of this chapter shall apply to transactions occurring

between the mutual holding company, the stock holding company and the

reorganized insurer. Approval of the plan of reorganization by the

superintendent pursuant to this article shall constitute approval of the

acquisition of control by a mutual holding company and any stock holding

company under section one thousand five hundred six of this chapter, the

registration by the reorganized insurer as a controlled insurer under

section one thousand five hundred three of this chapter and notice of

the acquisition of shares of the reorganized insurer under section four

thousand two hundred three of this chapter.

(c) Outside directors of the mutual holding company, a stock holding

company or the reorganized insurer shall not own beneficially, in the

aggregate, more than three percent of the voting stock of the stock

holding company or the reorganized insurer.

(d) In no event shall any person, directly or indirectly, offer to

acquire or acquire in any manner beneficial ownership of more than

fifteen percent of any class of voting securities of the reorganized

insurer, any stock holding company or any other institution which owns

directly or indirectly a majority or all of the voting securities of the

reorganized insurer without the prior approval of the superintendent.

(e) Any issuance of voting stock or securities convertible into voting

stock or options for the purchase of voting stock of the reorganized

insurer or the stock holding company prior to an initial public

offering, private equity placement, or the issuance of public or private

voting stock or securities convertible into voting stock of the

reorganized insurer or stock holding company or any other type of

capital raised shall be subject to the approval of the superintendent as

to the proposed valuation of such stock or securities, the

superintendent may impose conditions upon such approval, and all

expenses of the superintendent's review, including without limitation

those of outside consultants in reviewing such proposed valuation, shall

be borne by the issuing company.

(f) In the event of an initial public offering, a stock holding

company or reorganized insurer may not repurchase capital stock within

one year following the date of such initial public offering, except that

repurchases of no greater than five percent of the outstanding stock may

be repurchased during this one year period without the approval of the

superintendent.

(g) In the event of any violation of this section, or of any action

which, if consummated, might constitute such a violation:

(l) all voting stock of the reorganized insurer, any stock holding

company, or the reorganized mutual holding company, acquired by any

person in excess of the maximum amount permitted to be acquired by such

person pursuant to this subsection shall be deemed to be non-voting

stock; and

(2) in addition to any other enforcement powers of the superintendent,

under this chapter, such violation or action may be enforced or

enjoined, as the case may be, by appropriate proceeding commenced on

behalf of the reorganized insurer, any stock holding company or, if

applicable, a reorganized mutual holding company, by the reorganized

insurer, the stock holding company, the mutual holding company or the

superintendent, the attorney general, any member of the mutual holding

company or, if applicable, a reorganized mutual holding company, or any

stockholder of the reorganized insurer, any stock holding company or the

reorganized mutual holding company in the supreme court in the judicial

district in which the reorganized insurer has its home office or in any

other court having jurisdiction, and such court may issue any order,

injunctive or otherwise, it finds necessary to cure such violation or to

prevent such action.