CHAPTER 1. EXCHANGE OF SECURITIES
IC 27-3
ARTICLE 3. CONSOLIDATIONS ANDREORGANIZATION
IC 27-3-1
Chapter 1. Exchange of Securities
IC 27-3-1-1
Construction and application
Sec. 1. This chapter shall be supplemental to IC 27-1. Allprovisions of IC 27-1 shall be fully and completely applicable to thischapter in the same manner as if the provisions of this chapter hadbeen an original part of IC 27-1; provided, that the provisions of thischapter shall be controlling in the event there exists any conflictbetween the provisions of this chapter and the provisions of IC 27-1.
(Formerly: Acts 1967, c.61, s.1.) As amended by P.L.252-1985,SEC.138.
IC 27-3-1-2
Authority to adopt plan of exchange
Sec. 2. Any domestic stock insurance company (referred to in thischapter as the "domestic company") may adopt a plan of exchangeproviding for the exchange by its shareholders of their stock in thedomestic company for:
(i) shares of stock issued by any other stock insurancecorporation organized or reorganized under the provisions ofIC 27-1 or any statute enacted prior to March 8, 1935, or anystock corporation organized under the provisions of IC 23-1 orany foreign stock corporation (such other corporation is referredto in this chapter as the "acquiring corporation");
(ii) other securities issued by the acquiring corporation;
(iii) cash;
(iv) other consideration; or
(v) any combination of such stock, such other securities, cash,or other consideration.
(Formerly: Acts 1967, c.61, s.2.) As amended by P.L.252-1985,SEC.139.
IC 27-3-1-3
Manner of adoption of plan of exchange; approvals; compensationof dissenting shareholders
Sec. 3. (a) Subject to section 2 of this chapter, any domesticcompany may adopt a plan of exchange with any acquiringcorporation providing for the exchange of the outstanding stock ofthe domestic company for shares of stock or other securities issuedby the acquiring corporation or cash or other consideration, or anycombination, in the following manner. The boards of directors of thedomestic company and of the acquiring corporation by resolutionsapproved by a majority of the whole of each board shall adopt a planof exchange that sets forth the terms and conditions of the exchange
and the mode of carrying the terms and conditions into effect andother provisions with respect to the exchange as may be deemednecessary or desirable.
(b) The domestic company and the acquiring corporation shallsubmit to the insurance commissioner three (3) copies of the plan ofexchange certified by an officer of each as having been adopted inaccordance with subsection (a). The copies of the plan of exchangeshall be accompanied by financial statements of the domesticcompany for its last preceding fiscal year prepared pursuant toIC 27-1-20-21, pro forma financial statements of each corporationbased on the assumption that the plan of exchange was effective asproposed at the end of the last preceding fiscal year of the domesticcompany, an estimate of expenses already incurred and of expensesexpected to be incurred in connection with the proposed plan ofexchange, and a written statement that sets forth for each corporationthe proposed changes, if any, in management policies and in theidentity of officers and directors of the domestic company and of theacquiring corporation that are initially contemplated if the plan ofexchange is effected as proposed. The insurance commissioner shallhold a hearing upon the fairness of the terms, conditions, andprovisions of the plan of exchange and the proposed exchange ofstock or other securities of the acquiring corporation or cash or otherconsideration or any combination thereof for the stock of thedomestic company at which the policyholders and the shareholdersof both the domestic company and the acquiring corporation and anyother interested party may appear and to become party to theproceeding. The commissioner shall require the domestic companyand the acquiring corporation to produce evidence as thecommissioner considers necessary to establish the foregoing,including evidence concerning the valuation of the respectivecompanies and the method utilized by the management of eachcorporation to accomplish the valuation, inclusive of the valueestablished with respect to the stock of the domestic company that isproposed to be exchanged as well as the value of the stock,securities, and consideration other than cash to be offered by theacquiring corporation in the exchange. The hearing shall becommenced not less than twenty (20) days after the date on whichthe plan of exchange is presented to the commissioner. The hearingshall be held in Indianapolis, Indiana, at a place, date, and timespecified by the insurance commissioner. Notice of the hearing shallbe published in a newspaper of general circulation in the city wherethe principal office of the domestic company and of the acquiringcorporation are located and Indianapolis once a week for two (2)successive weeks. Written notice of the hearing shall be mailed atleast ten (10) days before the hearing by the domestic company andby the acquiring corporation to all of their respective shareholders.All expenses of publication shall be borne by the domestic companyor the acquiring corporation, or both, as specified in the plan ofexchange. Except as otherwise provided in this section, the hearingand the determination are subject to IC 4-21.5-3. The commissioner
shall issue an order approving the plan of exchange as delivered tothe commissioner by the domestic company and the acquiringcorporation and the modifications approved by a majority of thewhole board of directors of each corporation if the commissionerfinds:
(1) that the plan, including all modifications, if effected, willnot tend adversely to affect the financial stability ormanagement of the domestic company or the general capacityor intention to continue the safe and prudent transaction of theinsurance business of the domestic company, or of the acquiringcorporation, if it is a domestic insurance company;
(2) that the interests of the policyholders and shareholders ofthe domestic company, and, if the acquiring corporation is adomestic insurance company, the policyholders of the acquiringcorporation are protected;
(3) that the fulfillment of the plan will not affect either thecontractual obligations of the domestic company and of theacquiring corporation, if it is a domestic insurance company, toits policyholders or the ability and tendency of either to renderservice to its policyholders in the future; and
(4) that the terms and conditions of the plan of exchange andthe proposed issuance and exchange are fair and reasonable.
The order of the commissioner approving or disapproving the planof exchange shall be filed in the department within sixty (60) daysafter the date the plan of exchange is presented to the commissioner.The department shall give notice of the order in the mannerprescribed in IC 4-21.5-3 to all parties to the proceeding, and thedepartment shall endorse the commissioner's approval or disapprovalon the plan of exchange in the manner provided in IC 27-1-6-8 andshall deliver copies to the domestic company and to the acquiringcorporation. Any party to the proceeding aggrieved by the order areentitled to a judicial review of the order in accordance withIC 4-21.5-5.
(c) The plan of exchange as approved by the insurancecommissioner shall then be submitted to a vote of the shareholdersof the domestic company at an annual or special meeting of theshareholders. Notice of the submission of the plan to theshareholders shall be included in the notice of the annual or specialmeeting. The shareholders entitled to vote in respect of the plan mayvote in person or by proxy, and each shareholder has one (1) vote foreach share of voting stock held by the shareholder. Jointly ownedshares may only be voted jointly. The plan shall be approved by theshareholders of the domestic company upon receiving the affirmativevotes representing two thirds (2/3) of the outstanding capital stock ofthe domestic company or a larger proportion as may be specified inthe plan of exchange. Notwithstanding shareholder adoption of theplan of exchange and at any time before the filing of the certificatesetting forth the plan of exchange by the department, pursuant tosection 4 of this chapter, the plan of exchange may be abandonedpursuant to a provision for abandonment, if any, contained in the
plan of exchange.
(d) Within ten (10) days after the plan of exchange is adopted bythe shareholders of the domestic company, a written notice of theadoption of the plan of exchange shall be mailed or deliveredpersonally to each shareholder of record of the company who wasentitled to vote on the plan. The domestic company shall file with thedepartment an affidavit of the secretary or an assistant secretary ofthe company or of an officer of the transfer agent of the companythat the notice was given.
(e) Any shareholder of the domestic company owning shares notvoted in favor of the plan at the meeting at which the plan wasapproved by the shareholders of the domestic company may objectin writing to the plan and demand payment, should the plan becomeeffective, of the fair value of any shares as of the day on which theplan of exchange was approved by the shareholders of the domesticcompany pursuant to subsection (c). The objection and demand mustbe received, together with the certificate or certificates representingthe shares with respect to which objection and demand have beenmade for notation that the objection and demand have been made, bythe domestic company or its transfer agent within thirty (30) daysafter the date of the meeting of shareholders. The objection anddemand may not pertain to any shares that were voted in favor of theplan. Objection and demand can only be made jointly by the holdersof any share jointly held. The objection and demand may not bewithdrawn unless the domestic company, by an authorized officer,consents in writing. Upon the plan of exchange becoming effective,the holder of any shares, with respect to which the objection anddemand have been made and certificates for which have beendelivered to the domestic company or its transfer agent for notation,or any transferee, ceases to be a shareholder of the domesticcompany with respect to the shares and does not have rights withrespect to the shares except the right to receive payment for theshares under this subsection. Every shareholder failing to makeobjection and demand accompanied by certificates representing theshares with respect to which the objection and demand have beenmade or withdrawing the objection and demand as provided in thissubsection are conclusively presumed to have assented to, and tohave agreed to be bound by, the plan of exchange in accordance withits terms. Within forty-five (45) days after the date of the meeting ofshareholders of the domestic company at which the plan of exchangewas approved by the shareholders, the domestic company, or, if theplan of exchange specifies, the acquiring corporation, shall mail awritten offer to each holder of record of shares with respect to whichan objection and demand have been made, as provided in thissubsection, to pay for the shares a price per share considered by thecorporation to be the fair value of the shares as of the date of themeeting. The form of written offer to be used, including the price pershare, shall first be submitted to and approved by the insurancecommissioner. If the offer is accepted in writing by the holder, thecorporation shall pay the holder, within forty-five (45) days after the
date of the plan of exchange becoming effective, the price upon thesurrender of the certificate or certificates representing the shares. If,within thirty (30) days after the date of the mailing of the writtenoffer, the domestic company or the acquiring corporation, as the casemay be, and a shareholder do not agree, the corporation or theshareholder may, within ninety (90) days after the date of the mailingof the written offer, petition the circuit or the superior court of thecounty in which the principal office of the domestic company islocated to appraise the fair value of the shares as of the date of themeeting of shareholders of the domestic company at which the planof exchange was approved by the shareholders and payment of theappraised value of the shares shall be made by the domestic companyor, if the plan of exchange so specifies, the acquiring corporationwithin sixty (60) days after the entry of the judgment or order findingthe appraised value upon the surrender of the certificate orcertificates representing the shares. The practice, procedure, andjudgment in the circuit or superior court upon the petition is thesame, so far as practical, as that under IC 32-24. The judgment of thecircuit or superior court is final. All shares acquired by the domesticcompany upon payment of the value of the shares shall be canceledby the board of directors of the domestic company upon the plan ofexchange becoming effective or at any time after the plan becomeseffective and the capital stock of the domestic company shall bedecreased in accordance with IC 27-1-8-12. If the plan of exchangedoes not become effective, the right of shareholders or transferees tobe paid the fair value of their shares under this subsection shallcease, and their status shall be the same as that of shareholders whovoted in favor of the plan. If a shareholder or the shareholder'stransferee with respect to any share or shares for which objection anddemand has been made:
(1) withdraws the objection and demand in the manner providedby this subsection;
(2) fails to submit a certificate or certificates at the time and inthe manner required by this subsection;
(3) does not file a petition for the determination of fair valuewithin the time and in the manner provided in this subsectionand neither the domestic company nor the acquiring corporationfiles a petition for such determination; or
(4) is adjudged by a court of competent jurisdiction not to beentitled to the relief provided by this subsection;
the right of the shareholder or the shareholder's transferee to be paidthe fair value of the share or shares under this subsection shall cease,and the shareholder's status with respect to the share or shares is thesame as that of a shareholder who voted in favor of the plan.
(Formerly: Acts 1967, c.61, s.3.) As amended by P.L.252-1985,SEC.140; P.L.7-1987, SEC.143; P.L.2-2002, SEC.82.
IC 27-3-1-4
Filing; time plan becomes effective
Sec. 4. Not earlier than thirty-one (31) days after the date of the
meeting of shareholders of the domestic company at which the planof exchange was approved by such shareholders, a certificate settingforth the plan of exchange, the manner of the approval thereof by thedirectors of the acquiring corporation and the domestic company andthe manner of its adoption and the vote by which adopted by theshareholders of the domestic company or setting forth that the planof exchange has been abandoned shall be signed on behalf of eachsuch corporation by its president or a vice-president and shall then bepresented in triplicate to the department at its office for filing. Thedepartment shall file one (1) copy of such certificate in its officesand shall deliver copies bearing the date and time of filing endorsedthereon to the domestic company and the acquiring corporation.Upon the filing of such certificate, the plan of exchange and theissuance and exchange provided for therein shall become effective,unless a later date and time is specified in the plan of exchange, inwhich event the plan of exchange and the issuance and exchangeprovided for therein shall become effective upon such later date andtime.
(Formerly: Acts 1967, c.61, s.4.)
IC 27-3-1-5
Vesting of title to shares without physical transfer or deposit ofcertificates; rights represented by outstanding certificates
Sec. 5. (a) Upon the plan of exchange becoming effective, theexchange provided for therein shall be deemed to have beenconsummated, each shareholder of the domestic company shall ceaseto be a shareholder of such company, the ownership of all shares ofthe issued and outstanding stock of the domestic company, exceptshares payment of the value of which is required to be made by thedomestic company or the acquiring corporation pursuant to section3 of this chapter, shall vest in the acquiring corporation automaticallywithout any physical transfer or deposit of certificates representingsuch shares, and all shares payment of the value of which is requiredto be made by the domestic company or the acquiring corporationpursuant to section 3 of this chapter shall be deemed no longeroutstanding shares of the domestic company. The acquiringcorporation shall thereupon become the sole shareholder of thedomestic company and shall have all of the rights, privileges,immunities, and powers and, except as otherwise provided in thischapter, shall be subject to all of the duties and liabilities to theextent provided by law of a shareholder of an insurance companyorganized or reorganized under IC 27-1 or any statute enacted priorto March 8, 1935.
(b) Certificates representing shares of the domestic company priorto the plan of exchange becoming effective, except certificatesrepresenting shares payment of the value of which is required to bemade pursuant to section 3 of this chapter and bearing a notationthereon that objection and demand pursuant to such section havebeen made, shall, after the plan of exchange becomes effective,represent: (i) shares of the issued and outstanding capital stock or othersecurities issued by the acquiring corporation; and
(ii) the right, if any, to receive such cash or other considerationupon such terms as shall be specified in the plan of exchange;
provided, that the plan of exchange may specify that all certificatesrepresenting shares of stock of the domestic company, exceptcertificates representing shares payment of the value of which isrequired to be made pursuant to section 3 of this chapter, shall afterthe plan of exchange becomes effective represent only the right toreceive shares of stock or other securities issued by the acquiringcorporation or cash or other consideration or any combinationthereof upon such terms as shall be specified in the plan of exchange.Certificates representing shares of the domestic company withrespect to which an objection and demand have been made pursuantto section 3 of this chapter and bearing a notation thereon that suchobjection and demand have been made, shall, after the plan ofexchange becomes effective, represent only the right to receivepayment therefor, subject to the provisions of this chapter.
(Formerly: Acts 1967, c.61, s.5.) As amended by P.L.252-1985,SEC.141.
IC 27-3-1-6
Effect of acquisition on insurance business conducted
Sec. 6. Nothing contained in this chapter shall be construed toauthorize any insurance company to engage in any kind or kinds ofinsurance business not authorized by its articles of incorporation, orto authorize any acquiring corporation which is not an insurancecompany to engage directly in the business of insurance. Subsequentto the effective date of the plan of exchange, the insurancedepartment, pursuant to the authority vested in it by IC 27-1-3-7 andIC 27-1-3.1 and having regard to the findings stated in section 3(b)of this chapter, shall have the authority to require that the affairs ofthe domestic company be conducted in such manner as to assure thecontinuing safe conduct and transaction of the domestic company'sbusiness of insurance.
(Formerly: Acts 1967, c.61, s.7.) As amended by P.L.252-1985,SEC.142; P.L.26-1991, SEC.25.
IC 27-3-1-7
Continuation of domestic corporation and acquiring corporationas separate entities
Sec. 7. The domestic company and the acquiring corporation shallin all respects stand before the law as separate and distinctcorporations, with neither of such corporations having any liabilityto the creditors, policyholders, if any, or shareholders of the other,any acts or omissions of the officers, directors, or shareholders ofeither or both of such corporations notwithstanding.
(Formerly: Acts 1967, c.61, s.8.)