CHAPTER 5. RESTRICTIONS ON CAPITAL AND OTHER STOCK
IC 27-14-5
Chapter 5. Restrictions on Capital and Other Stock
IC 27-14-5-1
MIHC to retain majority of voting stock
Sec. 1. After the effective date of the plan of reorganization, theMIHC must at all times have the direct or indirect:
(1) power to cast at least fifty-one percent (51%) of the votes onall matters submitted to a vote of the holders of common stock(or any other class of stock entitled to vote generally on matterssubmitted to security holders for a vote, including the electionof directors) of each reorganized insurer and any stock holdingcompany of the MIHC; and
(2) ownership of shares of stock entitled to:
(A) receipt of at least fifty-one percent (51%) of alldividends declared on common stock of each reorganizedinsurer and any stock holding company of the MIHC; and
(B) receipt of at least fifty-one percent (51%) of the netproceeds to common stockholders upon any dissolution ofeach reorganized insurer and any stock holding company ofthe MIHC.
As added by P.L.5-2000, SEC.4.
IC 27-14-5-2
Limits on aggregate number of shares owned by directors andofficers
Sec. 2. (a) As used in this section, "CPI adjustment" means thepercentage increase or decrease in the Consumer Price Index forUrban Wage Earners and Clerical Workers published monthly by theUnited States Bureau of Labor Statistics or any successor indexpublished by the United States, as of the end of each calendar year,commencing January 1, 1999.
(b) The CPI adjustment referred to under subsection (c) shall bemade by the commissioner as of January 1, 2000, and each yearthereafter, based on the CPI adjustment for the preceding year.
(c) The aggregate number of shares of equity securities owned byall of the directors and officers of the MIHC and its affiliates andassociates, excluding any shares acquired by or held for the benefitof the officers and directors and their associates through an employeebenefit plan as permitted by IC 27-14-4-6(1) and section 5 of thischapter, may not exceed the following:
(1) Fifteen percent (15%) of the total number of outstandingshares of equity securities of each reorganized insurer and anystock holding company if the total surplus of the MIHC and allof its reorganized insurers is greater than one billion fivehundred million dollars ($1,500,000,000), as adjusted annuallyby the CPI.
(2) Twenty percent (20%) of the total number of outstandingshares of equity securities of each reorganized insurer and anystock holding company if the total surplus of the MIHC and all
of its reorganized insurers is greater than seven hundred fiftymillion dollars ($750,000,000), as adjusted annually by the CPI,and less than or equal to one billion five hundred million dollars($1,500,000,000), as adjusted annually by the CPI.
(3) Twenty-five percent (25%) of the total number ofoutstanding shares of equity securities of each reorganizedinsurer and any stock holding company if the total surplus ofthe MIHC and all of this reorganized insurers is greater thantwo hundred fifty million dollars ($250,000,000), as adjustedannually by the CPI, and less than or equal to seven hundredfifty million dollars ($750,000,000), as adjusted annually by theCPI.
(4) Thirty percent (30%) of the total number of outstandingshares of equity securities of each reorganized insurer and all ofits reorganized insurers is less than or equal to two hundredfifty million dollars ($250,000,000), as adjusted annually by theCPI.
As added by P.L.5-2000, SEC.4.
IC 27-14-5-3
Limit on aggregate number of shares owned by single director orofficer
Sec. 3. The aggregate number of shares of equity securities ownedby:
(1) a single director or officer of the MIHC or any subsidiary ofthe MIHC;
(2) associates of the person referred to in subdivision (1); and
(3) persons acting in concert with the person referred to insubdivision (1) or (2);
may not exceed five percent (5%) of the total number of outstandingshares of equity securities of each reorganized insurer and any stockholding company excluding any equity securities acquired by or heldfor the benefit of the officers and directors and their associatesthrough employee benefit plans as permitted by IC 27-14-4-6(1) andsection 5 of this chapter, but including any equity securitiesbeneficially owned by officers and directors and their associatesunder employee benefit plans as provided in IC 27-14-4-6(2).
As added by P.L.5-2000, SEC.4.
IC 27-14-5-4
Fees or commissions for issuance of stock prohibited
Sec. 4. A director, officer, agent, or employee of the MIHC or itssubsidiaries, or an associate of a director, an officer, an agent, oremployee, may not receive a fee, commission, or other valuableconsideration for aiding, promoting, or assisting in the issuance ofstock under this section, except for:
(1) compensation as provided for in the plan and approved bythe commissioner;
(2) the person's usual, regular salary or compensation; or
(3) reasonable fees and compensation paid to an individual who
is an attorney, accountant, actuary, or financial adviser forservices performed in the individual's independent practice,even if the individual is also a director, an officer, an agent, oran employee of the MIHC or its subsidiaries.
As added by P.L.5-2000, SEC.4.
IC 27-14-5-5
Limit on aggregate number of shares owned by employee benefitplan
Sec. 5. The aggregate number of shares of stock that may bepurchased or held by an employee benefit plan may not exceed tenpercent (10%) of the total number of outstanding shares of areorganized insurer or any stock holding company.
As added by P.L.5-2000, SEC.4.
IC 27-14-5-6
Only publicly traded stock to be issued to directors or officers
Sec. 6. A reorganized insurer or stock holding company may notissue stock to directors or officers, or both, except stock of a classthat is publicly traded.
As added by P.L.5-2000, SEC.4.
IC 27-14-5-7
Stock option or sale of stock below fair market value ascompensation of officer or director prohibited
Sec. 7. A reorganized insurer or stock holding company may not:
(1) grant stock purchase options or warrants, or otherwise usesecurities to provide compensation to directors or officers, orboth, at a price less than the fair market value of the security onthe date of the grant; or
(2) sell securities to directors or officers, or both, at a price lessthan the fair market value of the security (except under theexercise of authorized stock options consistent with subdivision(1) and section 8 of this chapter).
As added by P.L.5-2000, SEC.4.
IC 27-14-5-8
Stock purchase options for directors or officers prohibited until sixmonths after public trading begins
Sec. 8. A reorganized insurer or stock holding company may notgrant stock purchase options to directors or officers, or both, until atleast six (6) months after public trading for the stock has begun.
As added by P.L.5-2000, SEC.4.
IC 27-14-5-9
Factors in determining compliance with ownership restrictions
Sec. 9. (a) For purposes of determining compliance withownership restrictions in this chapter, a person to whom a stockpurchase option or warrant has been granted under this chapter is notconsidered to own the underlying securities until the stock purchase
option or warrant is exercised and the securities have been issued.
(b) An increase in a person's percentage ownership of securitiesdoes not constitute a violation of the securities ownership restrictionsin this chapter if the increase in percentage ownership results solelyfrom a decrease in the aggregate number of securities outstanding.
(c) An inadvertent ownership of securities that exceeds thesecurities ownership limitations in this chapter does not violate thischapter if:
(1) a sufficient number of securities are divested within thirty(30) days after the limitation was first known to be exceeded sothat the limitation is no longer exceeded; and
(2) during the period when the limitation is known to have beenexceeded, the owner of the securities:
(A) does not vote any securities in excess of the limitation;and
(B) does not accept a dividend in respect of any securitiesthat exceed the limitations.
As added by P.L.5-2000, SEC.4.