CHAPTER 4. ISSUANCE OF CAPITAL STOCK
IC 27-14-4
Chapter 4. Issuance of Capital Stock
IC 27-14-4-1
Applicability of chapter; issuance of stock
Sec. 1. (a) This chapter applies only to the initial public offeringof voting capital stock by a reorganized insurer or stock holdingcompany.
(b) A reorganized insurer or a stock holding company may issueany type of stock permitted by the law under which it is organized.However, a reorganized insurer and a stock holding company mayissue shares of stock to a person or entity other than:
(1) the MIHC of which it is a subsidiary; or
(2) a stock holding company or reorganized insurer that is adirect or indirect subsidiary of the MIHC referred to insubdivision (1);
only in compliance with this article.
As added by P.L.5-2000, SEC.4.
IC 27-14-4-2
Adoption of plan to issue stock
Sec. 2. A plan to issue stock under this chapter must be adopted:
(1) in the case of a plan to issue stock that is concurrent with theformation of the MIHC, by the board of directors of the MIC;or
(2) in the case of a plan to issue shares of stock that is notconcurrent with the formation of the MIHC, by the board ofdirectors of the MIHC and reorganized insurer or stock holdingcompany proposing to issue the stock.
As added by P.L.5-2000, SEC.4.
IC 27-14-4-3
Amendment or withdrawal of plan
Sec. 3. A board of directors that adopts a plan to issue stock underthis chapter may amend or withdraw that plan at any time before theeffective date. However, after the commissioner has approved a planto issue stock, the plan may not be amended unless the commissionerapproves the amendment.
As added by P.L.5-2000, SEC.4.
IC 27-14-4-4
Application to issue stock
Sec. 4. Within ninety (90) days after the adoption of a plan toissue stock, the reorganized insurer or stock holding companyadopting the plan must file with the commissioner an application thatcontains the following:
(1) A proposed plan to issue stock.
(2) A description of the reasons for and purpose of the proposedplan and the manner in which the issuance will benefit themembers of the MIHC. (3) If it is necessary to amend the current articles ofincorporation or bylaws of a company that is affected by theplan, a copy of the proposed articles of amendment andamended bylaws of the company, which in the case of eachdomestic insurance company must comply with IC 27-1-8.
(4) A list of the officers and directors of a company that isaffected by the plan.
(5) A description of:
(A) the stock intended to be offered by the applicant;
(B) all shareholder rights applicable to the stock intended tobe offered by the applicant;
(C) the total number of shares authorized to be issued;
(D) the estimated number of shares the applicant intends tooffer; and
(E) the intended date or range of dates for the offering.
(6) A list of:
(A) the name of any underwriter, syndicate member, orplacement agent involved;
(B) if known by the applicant, the name of each person orgroup of persons who will control five percent (5%) or moreof the total outstanding shares of the class of stock to beoffered; and
(C) if any of the persons listed under clause (A) or (B) is acorporation or other business organization, the name of eachmember of its board of directors or equivalent managementbody.
(7) A description of all expenses expected to be incurred inconnection with the offering.
(8) Any other information requested by the commissioner.
As added by P.L.5-2000, SEC.4.
IC 27-14-4-5
Mandatory provisions of plan to issue stock
Sec. 5. A plan to issue stock in a public offering (other than anoffering solely in connection with a consolidation, merger, shareexchange, or other business combination or an offering of stockunder a stock option or other employee benefit plan) must do thefollowing:
(1) Provide for each eligible member to receive, withoutpayment, nontransferable subscription rights to purchase aportion of the stock of the applicant.
(2) Specify how subscription rights are to be allocated in wholeshares of stock among the eligible members.
(3) Provide a fair and equitable means for allocating shares ofstock in the event of an over-subscription to the shares byeligible members exercising subscription rights received underthis chapter.
(4) Provide that any shares of stock not subscribed to by eligiblemembers exercising subscription rights received under thischapter, or not subscribed to by an employee benefit plan or by
directors, officers, and employees exercising subscriptionrights, will be sold:
(A) in a public offering through an underwriter;
(B) through private placement; or
(C) by any other method approved by the commissioner thatis fair and equitable to members.
(5) Provide that the MIHC will adopt articles of incorporationor articles of amendment that include a provision prohibitingthe MIHC from waiving any dividends from its subsidiariesexcept after approval of the waiver by the board of directors ofthe MIHC and by the commissioner.
(6) Establish a pricing committee within the board of directorsof the entity making the offering of stock, consistingexclusively of outside directors.
(7) Require that the shares not be issued without the favorablewritten opinion of the independent financial advisor as requiredby IC 27-14-6-4.
As added by P.L.5-2000, SEC.4.
IC 27-14-4-6
Permitted provisions of plan to issue stock
Sec. 6. Subject to the limitations of IC 27-14-5, a plan to issuestock may do the following:
(1) Provide an allocation without payment of nontransferablesubscription rights to purchase not more than ten percent (10%)of the total amount of outstanding stock to one (1) or moreemployee benefit plans that satisfy the requirements of Section401(a), 403(b), 404(c), 408, 423, or 501(c)(9) of the InternalRevenue Code, limited to the extent that unsubscribed shares ofstock remain after the members have exercised theirsubscription rights.
(2) Provide for:
(A) the establishment of; and
(B) the allocation of not more than four percent (4%) of thetotal amount of outstanding stock to;
an employee benefit plan that provides benefits that are subjectto taxation under Section 83 of the Internal Revenue Code orthat complies with the requirements of Section 422 of theInternal Revenue Code, for the purpose of granting stock orstock options.
(3) Provide that the articles of incorporation of a subsidiary ofthe MIHC may, subject to specified exceptions, prohibit a:
(A) person; or
(B) group of persons acting in concert;
acting directly or through associates, from acquiring more thana specified percentage of any class of the issued andoutstanding shares of capital stock of the issuing subsidiary.
(4) Provide that the aggregate number of shares of outstandingstock purchased by an eligible member that exercisessubscription rights may not exceed: (A) a specified number of shares equal to at least one percent(1%) of the total number of outstanding shares; or
(B) a specified percentage of not less than one percent (1%)of the total number of outstanding shares.
(5) Provide that subscription rights need not be granted to aneligible member who resides in a foreign country or otherjurisdiction for which the commissioner determines that all ofthe following apply:
(A) A small number of eligible members reside in thejurisdiction.
(B) The granting of subscription rights or the offer or sale ofstock to eligible members in the jurisdiction would requirethe issuer or its officers or directors to:
(i) register, under the security laws of the jurisdiction, asa broker, dealer, salesman, or agent; or
(ii) register, or otherwise qualify, the stock for sale in thejurisdiction.
(C) The registration, qualification, or filing in the judgmentof the commissioner would be impracticable or undulyburdensome for reasons of cost or otherwise.
(6) Provide that an eligible member that exercises subscriptionrights must subscribe for at least a minimum number of sharesof stock or a minimum dollar amount of stock unless thecommissioner has determined that either minimum isunreasonable based on the respective interests of the issuer ofstock and the eligible members.
As added by P.L.5-2000, SEC.4.
IC 27-14-4-7
Stock option as compensation of officer or director prohibited
Sec. 7. Notwithstanding any provision of this article, an MIHC oran affiliate of an MIHC may not use any form of a stock option orother preference with respect to the sale or purchase of any stock orother equity instrument of the MIHC or an affiliate of the MIHC tocompensate an officer or director of the MIHC or an affiliate of theMIHC for services in connection with a plan to issue stock.
As added by P.L.5-2000, SEC.4.
IC 27-14-4-8
Restrictions on dividends and distributions
Sec. 8. Neither a stock holding company nor a reorganized insurermay pay dividends or make other distributions with respect to itsstock to its shareholders if the reorganized insurer has failed to paypolicyholder dividends under IC 27-14-3-11.
As added by P.L.5-2000, SEC.4.