304.37-570 Stock offering -- Application -- Conditions for approval -- Hearing -Filing of registration statement with Securities and Exchange Commission.
(1)
(2)
(3)
No stock offering by a mutual insurance holding company, an insurance company
subsidiary of a mutual insurance holding company, an intermediate holding
company subsidiary of a mutual insurance holding company, or an insurance
company subsidiary of an intermediate holding company subsidiary to a mutual
insurance holding company shall occur without the prior approval of the
commissioner. The commissioner's approval may be obtained only through an
application and hearing process.
Every application for approval of a stock offering shall contain the following
information:
(a) A description of the stock intended to be offered by the applicant, including a
description of all shareholder rights;
(b) The total number of shares authorized to be issued, the estimated number of
shares the applicant requests permission to offer, and the intended date or
range of dates for the offering;
(c) A justification for a uniform planned offering price or a justification of the
method by which the offering price will be determined;
(d) The name or names of any underwriter, syndicate member, or placement agent
involved and, if known, the name or names of each entity, person, or group of
persons to whom the stock offering is to be made who will control five
percent (5%) or more of the total outstanding class of shares, and the manner
in which the offer is to be tendered. If any entity or person is a corporation or
business organization, the name of each member of its board of directors or
equivalent management team shall be provided along with the name of each
member of the board of directors of the offeror. Copies of any filings with the
Securities and Exchange Commission disclosing intended acquisitions of the
stock shall be included in the application;
(e) A description of stock subscription rights to be afforded members of the
mutual insurance holding company in conjunction with the stock offering;
(f) A detailed description of all expenses to be incurred in conjunction with the
stock offering;
(g) An explanation of how funds raised by the stock offering are to be used; and
(h) Any other information requested by the commissioner.
No application regarding a planned stock offering shall be approved unless the plan
contains provisions:
(a) Requiring a majority of the members of the board of directors of the mutual
insurance holding company to be persons who are not interested persons of
the mutual insurance holding company or of any subsidiary or affiliated
person of the company. The commissioner may waive this requirement upon a
showing of good cause based on clear and convincing evidence;
(b)
(c)
(d)
(e)
(f)
(g)
(h)
For the mutual insurance holding company to adopt articles of incorporation
prohibiting any waiver of dividends from stock subsidiaries except under
conditions specified in its articles of incorporation and after approval of the
waiver by the board of directors of the mutual insurance holding company and
the commissioner;
Requiring that the board of directors of any insurance company subsidiary of a
mutual insurance holding company, any intermediate holding company
subsidiary of a mutual holding company, or the insurance company subsidiary
of an intermediate holding company shall include at least three (3) directors
who are not interested persons of the mutual insurance holding company;
Establishing, within the board of directors of the corporation offering stock, a
pricing committee consisting exclusively of directors who are not interested
persons who shall have sole responsibility for evaluating and approving the
price of any stock offering;
Establishing, within the board of directors of the mutual insurance holding
company, any insurance company subsidiary of a mutual insurance holding
company, any intermediate holding company subsidiary, and any insurance
company subsidiary of an intermediate holding company subsidiary to a
mutual insurance holding company, an executive compensation committee
consisting exclusively of directors who are not interested persons, who shall
have sole responsibility for evaluating and approving compensation for
directors, officers, and employees;
Establishing that for any committee of the mutual insurance holding company,
any insurance company subsidiary of a mutual insurance holding company,
any intermediate holding company subsidiary, and any insurance company
subsidiary of an intermediate holding company subsidiary to a mutual
insurance holding company, at least two-thirds (2/3) of any committee having
responsibility for making decisions affecting capital structure or mergers and
acquisitions shall not be interested persons;
Prohibiting officers, directors, and insiders of the mutual insurance holding
company and its subsidiaries and affiliates from the purchase or beneficial
ownership of any shares of the stock offering, or issuance of stock options to
or for the benefit of the officers, directors, and insiders for a period of at least
six (6) months following the first date the offering was publicly and regularly
traded. This paragraph shall not be construed to limit the rights of officers,
directors, and insiders from exercising subscription rights generally accorded
members of the mutual insurance holding company, except that, in accordance
with any subscription rights, the officers, directors, and insiders of the mutual
insurance holding company and its subsidiaries and affiliates may not
purchase or own, in the aggregate, more than one percent (1%) of the stock
offering for a period of at least six (6) months following the first date the
offering was publicly and regularly traded;
For a period of two (2) years after the six (6) month period referred to in
paragraph (g) of this section, the officers, directors, and insiders of the mutual
(4)
(5)
(6)
insurance holding company and its subsidiaries and affiliates may not
purchase or beneficially own, in the aggregate, more than five percent (5%) of
the stock of the insurance company subsidiary of a mutual insurance holding
company, an intermediate holding company subsidiary of a mutual insurance
company, or an insurance company subsidiary of an intermediate holding
company subsidiary to a mutual insurance holding company; and
(i) Requiring that all members of the mutual insurance holding company are
granted stock subscription rights in any initial stock offering. This requirement
may be waived by the commissioner upon a showing of good cause at public
hearing. For purposes of this paragraph, good cause may only be found where
the members of the mutual insurance holding company are given rights to
participate in the appreciation of the stock offered that are comparable to stock
subscription rights.
An insurance company subsidiary of a mutual insurance holding company, an
intermediate holding company subsidiary of a mutual insurance company, or an
insurance company subsidiary of an intermediate holding company subsidiary to a
mutual insurance holding company may issue more than one (1) class of stock if:
(a) At all times a majority of the voting stock is held by the mutual insurance
holding company or its subsidiary; and
(b) No class of common stock possesses greater dividend or other rights than the
class held by the mutual insurance holding company or its subsidiary.
The commissioner shall hire, at the applicant's expense, attorneys, actuaries,
accountants, investment bankers, and other experts as may reasonably be necessary
to assist the commissioner in reviewing the application.
The commissioner shall, in the commissioner's discretion, hold a public hearing in
accordance with KRS Chapter 13B regarding any application for approval of a stock
offering. Upon receipt of an application for approval of a stock offering which
includes an initial offering of stock, the commissioner shall hold a public hearing at
which all interested parties may appear and present evidence and argument
regarding the applicant's planned offering. The commissioner shall provide the
applicant adequate notice of the hearing so that the applicant can provide notice of
the hearing to members of the mutual insurance holding company, in a manner
approved by the commissioner, not less than twenty (20) days prior to the hearing.
Following the hearing, the commissioner may approve, conditionally approve, or
deny the application. The commissioner may approve the plan if:
(a) The offering complies with these rules and other provisions of law;
(b) The method for establishing the price of a stock offering is consistent with
generally accepted market or industry practices for establishing stock offering
prices in similar transactions; and
(c) The plan and offering will not unfairly impact the interests of members of the
mutual insurance holding company.
(7)
Nothing in this section shall be deemed to prohibit the filing of a registration
statement with the Securities and Exchange Commissioner prior to or concurrently
with the giving of notice to members.
(a) Notwithstanding subsections (1) to (6) of this section, a stock offering which
is not an initial stock offering and which offers stock regularly traded on the
New York Stock Exchange, the American Stock Exchange, or another
exchange approved by the commissioner, or designated on the national
association of securities dealers automated quotations-national market system
may be sold if a mutual insurance holding company, an insurance company
subsidiary of a mutual insurance holding company, an intermediate holding
company, or an insurance company subsidiary of an intermediate holding
company intends to make a stock offering which would be governed by the
provisions of KRS 304.37-500 to 304.37-580. The entity shall deliver to the
commissioner not less than thirty (30) days prior to the offering a notice of the
planned stock offering and information regarding the following:
1.
The total number of shares intended to be offered;
2.
The intended date of sale;
3.
Evidence that the stock is regularly traded on one (1) of the public
exchanges noted in subsection (a) of this section; and
4.
A record of the trading pace and trading volume of the stock during the
prior fifty-two (52) weeks.
(b) The commissioner shall be deemed to have approved the sale unless, within
thirty (30) days following receipt of the notice, the commissioner issues an
objection to the sale. If the commissioner issues an objection to the sale, the
procedures set forth in subsection (2) of this section shall be followed to
determine whether the commissioner approves the proposed sale;
(c) Approval of a stock offering obtained under either subsection (6) or (7) of this
section shall expire ninety (90) days following the date of the approval or
deemed approval, except as otherwise provided by the order of the
commissioner; and
(d) No prospectus, information, sales material, or sales presentation by the
applicant, or by any representative, agent, or affiliate of the applicant shall
contain a representation that the commissioner's approval of a stock offering
constitutes an endorsement of the price, price range, or any other information
relating to the stock.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1497, effective July 15, 2010. -- Created
1998 Ky. Acts ch. 546, sec. 15, effective July 15, 1998.
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