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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
(4)
(5)
(6)
(7)
mutual 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.
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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