2013 New York Consolidated Laws
ISC - Insurance
Article 73 - (7301 - 7317) CONVERSION TO DIFFERENT TYPE OF INSURER
7312 - Reorganization of a domestic mutual life insurer into a domestic stock life insurer.

 
    §  7312.  Reorganization  of  a  domestic  mutual  life insurer into a
  domestic stock life insurer. (a) Definitions. As used in  this  section,
  the following terms shall have the following meanings:
    (1) "Mutual life insurer" means a domestic mutual life insurer.
    (2) "Policyholder"  means  a person, as determined by the records of a
  mutual life insurer, who is deemed to be the "policyholder" of a  policy
  or  annuity contract which is of a type described in paragraphs one, two
  or three of subsection (a) of section one thousand one hundred  thirteen
  of  this  chapter  for  purposes of paragraph three of subsection (a) of
  section four thousand two hundred ten of this chapter.
    (3) "Policyholders'  membership  interest"  means  and  includes   all
  policyholders' rights as members arising under the charter of the mutual
  life  insurer  or  this  chapter  or otherwise by law including, but not
  limited to, the rights to vote and to participate in any distribution of
  surplus whether or not incident to a  liquidation  of  the  mutual  life
  insurer.  The term "policyholders' membership interest" does not include
  rights, including without limitation the right  to  participate  in  the
  distribution  of  surplus, expressly conferred upon the policyholders by
  their policies or contracts other than any right to vote.
    (4) "Plan of reorganization" means a plan of conversion or  conversion
  and merger in accordance with this section.
    (5) "Reorganized  insurer"  means the domestic stock life insurer into
  which a mutual life insurer has been reorganized in accordance with this
  section.
    (6) "Statement date" means the December thirty-first immediately prior
  to the date the plan of reorganization was adopted.
    (7) "Person" means  an  individual,  partnership,  firm,  association,
  corporation,  joint-stock  company,  trust,  any  similar  entity or any
  combination of the foregoing acting in concert.
    (b) Demutualization. Any  other  provision  of  this  chapter  to  the
  contrary  notwithstanding,  upon compliance with the requirements of and
  completion of the proceedings prescribed by this section  and  with  the
  written approval of the superintendent, a mutual life insurer may either
  (1)  reorganize  into a domestic stock life insurer or (2) reorganize as
  part of a plan of reorganization in which  a  majority  or  all  of  the
  common  shares of the domestic stock life insurer is acquired by another
  institution which may be an institution organized for such  purpose.  As
  part  of  the  reorganization,  the mutual life insurer may merge with a
  domestic stock insurer, provided that the merging insurers shall  comply
  with the provisions of this chapter applicable to their participation in
  such a merger.
    (c)  Plan  of  reorganization.  A  plan  of  reorganization  must: (1)
  demonstrate  a  purpose   and   specify   reasons   for   the   proposed
  reorganization;  (2)  be in the best interest of the mutual life insurer
  and its policyholders; (3) be fair and equitable to  policyholders;  (4)
  provide  for  the  enhancement  of  the  operations  of  the reorganized
  insurer; and (5) not substantially lessen competition  in  any  line  of
  insurance business.
    (d)  Reorganization. The proposed reorganization shall be accomplished
  by a plan which must be fair and equitable to the policyholders and must
  comply with the terms and conditions set forth in paragraph one, two  or
  four  of  this  subsection  provided however, that a mutual life insurer
  which has surplus to  policyholders,  excluding  contingently  repayable
  obligations  of the mutual life insurer under section one thousand three
  hundred seven of this chapter, of less than fifty  million  dollars  and
  which  has  industrial insurance in force must comply with the terms and
  conditions set forth in paragraph  one,  two,  three  or  four  of  this
  subsection.  Nothing  herein contained shall be deemed to give any class

  of policyholders priority  with  respect  to  the  assets  of  any  such
  reorganized  insurer  in  liquidation, other than as expressly stated in
  paragraph two of this subsection.
    (1)  (A) The mutual life insurer's participating business comprised of
  its participating policies and contracts in force on the effective  date
  of  reorganization  shall  be  operated  by the reorganized insurer as a
  closed block of participating business in accordance with paragraph five
  of this subsection except  that,  at  the  option  of  the  mutual  life
  insurer,  some  or  all  classes  of group policies and contracts may be
  excluded from the closed block of participating  business  and  in  such
  event such group policies and contracts shall continue to be eligible to
  receive  dividends based on the experience of such class or classes; (B)
  subject to the provisions of subparagraph (D)  of  this  paragraph,  the
  plan  of  reorganization  provides  that  the  policyholders' membership
  interest will  be  exchanged  for  all  of  the  common  shares  of  the
  reorganized  insurer  or its parent company, if any, or for either, or a
  combination of (i) the common shares of the reorganized insurer  or  its
  parent  company, if any, and (ii) consideration equal to the proceeds of
  the public sale in the market  of  such  common  shares  by  the  issuer
  thereof or by a trust or other entity existing for the exclusive benefit
  of the policyholders and established solely for the purpose of effecting
  the  reorganization to which such common shares are issued by the issuer
  on the effective  date  of  reorganization,  such  consideration  to  be
  distributed   to   policyholders  during  a  process  of  reorganization
  specified in the plan and not to last more  than  ten  years  after  the
  effective date of reorganization or until notification of the death of a
  policyholder  or  the  death of the insured, whichever occurs first; (C)
  the consideration to be given to the policyholders  is  allocated  among
  the   policyholders   in  a  manner  which  is  fair  and  equitable  to
  policyholders  and  which  may   take   into   account   the   estimated
  proportionate  contribution  of each class of participating policies and
  contracts to the aggregate consideration being given  to  policyholders;
  (D)  unless such issuance within a shorter or longer period is disclosed
  in the plan of reorganization, the issuer of such common shares has  not
  issued  and does not issue within two years of the effective date of the
  reorganization (i)  any  of  its  common  shares,  (ii)  any  securities
  convertible,  with  or without consideration, into such common shares or
  carrying any warrant or right to subscribe  to  or  to  purchase  common
  shares, or (iii) any warrants or rights to subscribe to or purchase such
  common  shares  or  other  securities  described  in  item  (ii) of this
  subparagraph, except for the issue  of  common  shares  to  or  for  the
  benefit  of  the  policyholders  pursuant  to the reorganization and the
  issue of stock in anticipation of options for  the  purchase  of  common
  shares being granted to officers or employees of the reorganized insurer
  or  its  holding  company,  if  any, pursuant to this chapter and a plan
  approved by the superintendent;  (E)  the  issuer  shall  use  its  best
  efforts  to encourage and assist in the establishment of a public market
  for such common shares within two years of the  effective  date  of  the
  reorganization (or such longer period as may be disclosed in the plan of
  reorganization);  (F)  within one year after the offering of stock other
  than the initial distribution, but no later than  six  years  after  the
  effective  date of the reorganization the insurer, under a plan approved
  by the  superintendent,  which  he  finds  not  to  be  harmful  to  the
  reorganized  insurer, shall offer to make available to policyholders who
  received  and  retained  shares  of  stock  with   minimal   values   on
  reorganization,  a  procedure  to  dispose  of  those shares of stock at
  market value without brokerage commissions or similar fees; and (G)  the
  costs  and  expenses of the reorganization shall be borne by the insurer

  but no costs and expenses incurred in any manner in connection with  the
  reorganization shall be charged to the closed block.
    (2)  (A) The mutual life insurer's participating business comprised of
  its participating policies and contracts in force on the effective  date
  of  the reorganization shall be operated by the reorganized insurer as a
  closed block of participating business in accordance with paragraph five
  of this subsection except that, at the option of the mutual life insurer
  some or all classes of group policies and contracts may be excluded from
  the closed block of participating business and in such event such  group
  policies  and  contracts  shall  continue  to  be  eligible  to  receive
  dividends based on the experience of such  class  or  classes;  (B)  the
  reorganized  insurer  or  its  parent  corporation  is to issue and sell
  shares of one or more classes of stock having  a  total  offering  price
  equal  to  the  estimated  value in the public market of the mutual life
  insurer; (C) the policyholders' equity is equal to the excess of (i) the
  amount of the mutual insurer's assets accumulated from the operations of
  participating policies and contracts in force on the effective  date  of
  the  reorganization, over the sum of (ii) the amount of assets allocated
  to the closed block of participating business and (iii) an amount  equal
  to  the  statutory reserves and other statutory liabilities attributable
  to any group participating  policies  and  contracts  in  force  on  the
  effective date of reorganization and not included in the closed block of
  participating business, provided however, that the policyholders' equity
  cannot be less than the amount of the policyholders' preference account.
  The  amount  of  the policyholders' equity shall be determined as of the
  statement date and adjusted by the estimated percentage  change  in  the
  mutual  insurer's total assets, as reported in its statutory statements,
  between the statement date and the effective date of the reorganization.
  Any determination of policyholders' equity shall include adjustments for
  any events or matters deemed by the  superintendent  appropriate,  which
  have  a  material  effect  on  policyholders' equity and occurred within
  seven years prior to the statement date; (D) the plan of  reorganization
  provides  that  the policyholders' membership interest will be exchanged
  for  consideration  equal  to  (i)  the  policyholders'   equity,   (ii)
  nontransferable  preemptive  subscription  rights to purchase all of the
  shares of such  issuer,  (iii)  ten  percent  of  the  proceeds  net  of
  underwriting commissions and fees raised by the insurer upon the sale of
  its  initial  offering  of  shares,  and  (iv)  the  establishment  of a
  policyholders' preference  account  for  the  benefit  of  policyholders
  existing on the effective date of reorganization, and for the benefit of
  the  future  policyholders of the reorganized insurer, in the event of a
  subsequent  complete  liquidation  of  the  reorganized  insurer,   such
  policyholders'  preference  account  having the terms described below in
  this paragraph; (E) the consideration to be given to  the  policyholders
  is  allocated  among  the  policyholders  in  a manner which is fair and
  equitable to policyholders and which may take into account the estimated
  proportionate contribution of each class of participating  policies  and
  contracts  to  the aggregate consideration being given to policyholders;
  (F) at the option of the mutual life insurer, any common shares  of  the
  reorganized  insurer  or  its  parent  company,  if any, included in the
  policyholders' consideration, other than those acquired as a result of a
  policyholder exercising  any  preemptive  subscription  rights,  may  be
  placed  in a trust or other entity existing for the exclusive benefit of
  the policyholders and established solely for the  purpose  of  effecting
  the  reorganization to which such common shares are issued by the issuer
  on the effective date  of  reorganization,  such  consideration  or  the
  proceeds  of  the  sale  of  such  consideration  to  be  distributed to
  policyholders during a process specified in the plan  and  not  to  last

  more  than ten years after the effective date of reorganization or until
  notification of the death of  the  policyholder  or  the  death  of  the
  insured,  whichever  occurs  first;  (G)  the  issuer shall use its best
  efforts  to encourage and assist in the establishment of a public market
  for such common shares within two years of the  effective  date  of  the
  reorganization;  (H)  within  one year after the offering of stock other
  than the initial distribution, but no later than  six  years  after  the
  effective  date of the reorganization the insurer, under a plan approved
  by  the  superintendent  which  he  finds  not  to  be  harmful  to  the
  reorganized  insurer, shall offer to make available to policyholders who
  received  and  retained  shares  of  stock  with   minimal   values   on
  reorganization,   including  but  not  limited  to  shares  acquired  by
  policyholders  exercising  their  preemptive  subscription   rights,   a
  procedure  to  dispose  of those shares of stock at market value without
  brokerage commissions or similar fees; (I) the costs and expenses of the
  reorganization  shall  be  borne  by  the  insurer,   however   if   the
  reorganization is effected, no costs and expenses incurred in any manner
  in   connection   with  the  reorganization  shall  be  charged  to  the
  participating business in force on the effective date of reorganization.
  Costs and expenses shall include but  not  be  limited  to  legal  fees,
  appraisal  fees,  printing  and/or  mailing  costs;  (J) notwithstanding
  subparagraph (I) of  this  paragraph,  if  the  plan  of  reorganization
  provides  for  or  permits a person to directly or indirectly acquire in
  any manner the beneficial ownership of  five  percent  or  more  of  the
  voting  securities  of  such  reorganized  insurer or of any institution
  which owns a majority or all of the voting securities of the reorganized
  insurer, or if the superintendent determines that a person will control,
  as defined in paragraph sixteen of subsection (a) of section one hundred
  seven of this chapter, such reorganized insurer or any institution which
  owns a majority or all of  the  voting  securities  of  the  reorganized
  insurer  then,  unless  the  superintendent determines that it is in the
  policyholders' interest to waive all or  part  of  this  condition,  the
  mutual  life  insurer  shall not, directly or indirectly, pay for any of
  the costs or expenses of a proposed reorganization whether or  not  such
  reorganization  is  effected  and in no event shall any of the costs and
  expenses incurred in any manner in connection with the reorganization be
  charged to the participating business in force on the effective date  of
  reorganization.  Costs  and expenses shall include but not be limited to
  legal fees, appraisal fees,  printing  and/or  mailing  costs;  (K)  the
  policyholders'  preference  account  referred to above shall be equal to
  the excess of the amount of the mutual insurer's total  admitted  assets
  over  the  sum of (i) the total amount of assets allocated to the closed
  block of participating business and (ii) the policyholders'  equity  and
  (iii)  statutory  reserves  and  liabilities  attributed to policies and
  contracts not included in the closed block  of  participating  business.
  The  policyholders'  preference  account  shall  be calculated as of the
  statement date and adjusted appropriately to reflect any changes in  the
  components   used  in  determining  the  amount  of  the  policyholders'
  preference account between the statement date and the effective date  of
  reorganization; (L) a mutual life insurer whose policyholders' equity is
  paid  in  the  form  of  stock  may  show,  as  a  write-in item labeled
  "Reorganization surplus" immediately following "Capital paid up" on  the
  annual  statement of the reorganized insurer, a negative amount equal to
  the excess of the policyholders' equity which was paid in  the  form  of
  stock over its unassigned surplus on the date of reorganization; and (M)
  the  policyholders'  preference account shall be so designated and shown
  as a footnote to the surplus of the reorganized insurer in  all  of  its
  published  and  filed  statements. In the event of a subsequent complete

  liquidation of the reorganized insurer, and  only  in  such  event,  the
  policyholders'  preference  account  shall  be  allocated among the then
  policyholders in a manner found by the superintendent  to  be  fair  and
  equitable  to policyholders, first to policyholders having participating
  policies  and  contracts  in  force  on  the  effective  date   of   the
  reorganization  and  then  to all other policyholders of the reorganized
  insurer. The function of the policyholders' preference account shall  be
  solely  to  establish  a priority on liquidation and its existence shall
  not operate to restrict the use or application of  the  surplus  of  the
  reorganized insurer except that the reorganized insurer, after complying
  with  all  other  requirements  of this chapter, cannot declare or pay a
  cash dividend on, or repurchase  any  of,  its  shares  if,  after  such
  declaration  or  payment,  the  amount  of  net preference assets of the
  reorganized insurer is  less  than  the  amount  of  the  policyholders'
  preference account. For this purpose, the net preference assets shall be
  equal  to  the  insurer's  total admitted assets less the sum of (i) the
  assets in the closed block of participating business (ii) the  statutory
  reserves  and  liabilities  with  respect to business not in such closed
  block and (iii) the reorganized insurer's capital and paid in surplus.
    (3) (A) The mutual life insurer's participating business comprised  of
  its  participating policies and contracts in force on the effective date
  of the reorganization shall be operated by the reorganized insurer as  a
  closed  block  of  participating  business,  for  policyholder  dividend
  purposes only, to which shall be allocated admitted assets of the mutual
  life insurer in an amount equal to the statutory reserves and  statutory
  liabilities  of  the  mutual  life  insurer; (B) the consideration to be
  given in exchange for the policyholders' membership  interest  shall  be
  equal  to  the  statutory  surplus  of  the mutual life insurer; (C) the
  amount of statutory reserves and  statutory  liabilities  and  statutory
  surplus shall be determined as of the statement date and adjusted by the
  estimated  percentage  change  in  the  mutual  insurer's total admitted
  assets  between  the  statement  date  and   the   effective   date   of
  reorganization.  Any  determination  of  statutory surplus shall include
  adjustments for any events  or  matters  deemed  by  the  superintendent
  appropriate,   which   have   a   material   effect   on  policyholders'
  consideration and occurred within seven years  prior  to  the  statement
  date;  (D)  the consideration shall be allocated among the policyholders
  in a manner which is fair and equitable to the policyholders  and  which
  may  take  into account the estimated proportionate contribution of each
  class  of  participating  policies  and  contracts  to   the   aggregate
  consideration  being given to policyholders; (E) the reorganized insurer
  or its parent corporation is to issue and sell shares  of  one  or  more
  classes  of  stock  having a total offering price equal to the estimated
  value in the market of the  mutual  life  insurer;  (F)  the  costs  and
  expenses  of  the reorganization shall be borne by the insurer; however,
  if the plan of reorganization  provides  for  or  permits  a  person  to
  directly or indirectly acquire in any manner the beneficial ownership of
  five  percent  or  more  of  any  class  of  a  voting  security of such
  reorganized insurer or of any institution which owns a majority  or  all
  of  the  voting  securities  of  the  reorganized  insurer,  or  if  the
  superintendent determines that a person  will  control,  as  defined  in
  paragraph sixteen of subsection (a) of section one hundred seven of this
  chapter,  such  reorganized  insurer  or  any  institution  which owns a
  majority or all of the voting  securities  of  the  reorganized  insurer
  then,   unless   the   superintendent  determines  that  it  is  in  the
  policyholders' interest to waive all or  part  of  this  condition,  the
  mutual  life  insurer  shall not, directly or indirectly, pay for any of
  the costs or expenses of a proposed reorganization whether or  not  such

  reorganization  is effected. Costs and expenses shall include but not be
  limited to legal fees, appraisal fees, printing  and/or  mailing  costs;
  and  (G)  none of the assets, including the revenue therefrom, allocated
  in  accordance  with  subparagraph (A) of this paragraph shall revert to
  the benefit of the stockholders of the reorganized insurer.
    (4) (A) Any method approved by  the  superintendent  under  which  the
  policyholders'  membership  interest  is converted into or exchanged for
  consideration determined by the superintendent to be fair and  equitable
  to  policyholders  and meeting the requirements of this section; (B) the
  consideration to be given to the policyholders is  allocated  among  the
  policyholders  in  a  manner which is fair and equitable; (C) unless the
  superintendent determines that it is in the policyholders'  interest  to
  waive  all  or part of this condition, the mutual life insurer does not,
  directly or indirectly, pay for any  of  the  costs  or  expenses  of  a
  proposed  reorganization whether or not such reorganization is effected.
  Costs and expenses shall include but  not  be  limited  to  legal  fees,
  appraisal  fees,  printing  and/or mailing costs; and (D) in determining
  whether any reorganization is fair  and  equitable,  the  superintendent
  shall  be  guided  by the legitimate economic interests of participating
  policyholders as delineated in this section.
    (5)  (A)  When  the  mutual  life  insurer's  participating   business
  comprised  of  its  participating policies and contracts in force on the
  effective  date  of  the  reorganization  shall  be  operated   by   the
  reorganized  insurer  as  a  closed  block  of participating business in
  accordance with paragraphs one and two of this subsection, then it shall
  be so operated for the exclusive benefit of such policies and  contracts
  included  therein,  for policyholder dividend purposes only; (B) to such
  closed block shall be allocated assets of the mutual life insurer in  an
  amount  which  together  with  anticipated revenue from such business is
  reasonably expected to be sufficient to support such business including,
  but not limited to, provisions  for  payment  of  claims,  expenses  and
  taxes,  and  to  provide  for  continuation  of current payable dividend
  scales, if the experience  underlying  such  scales  continues  and  for
  appropriate  adjustments  in  such scales if the experience changes; (C)
  the amount of such assets shall be determined as of the  statement  date
  and  brought  forward  to the effective date of the reorganization using
  methods which would have been used had the closed block been established
  on the statement date with appropriate recognition of  new  issues;  and
  (D)  none  of  the assets, including the revenue therefrom, allocated in
  accordance with subparagraph (B) of this paragraph shall revert  to  the
  benefit of the stockholders of the reorganized insurer.
    (6)  If  any  amount  of  the policyholders' consideration for certain
  classes of policies or contracts is to be paid in the form of  increased
  annual  dividends  to the policyholders in those classes, that amount is
  to be added to  the  assets  previously  allocated  in  accordance  with
  paragraph  three  or  five  of  this subsection and is to be paid out to
  those classes in a fair and equitable manner.
    (e) Adoption of plan of reorganization.  (1)  A  mutual  life  insurer
  seeking   to   reorganize   under  this  section  shall,  by  action  of
  three-fourths of its entire board of directors, adopt a plan  consistent
  with  the  provisions  of  this  section  and  that it finds is fair and
  equitable to the policyholders. The board of  directors  of  the  mutual
  life  insurer,  in  selecting one of the methods described in subsection
  (d) of this section, shall set forth the basis for their selection.  The
  plan  of  reorganization  shall  set  forth  (A)  a demonstration of the
  purpose  for  the  proposed  reorganization;  (B)  the   form   of   the
  reorganization;  (C) the proposed charter of the reorganized insurer set
  out in accordance with section one thousand  two  hundred  one  of  this

  chapter  and its proposed by-laws which shall provide for the removal of
  the word "mutual" from the name of the company; (D) the manner and basis
  by which the reorganization shall take place; (E) the  consideration  to
  be  given  to  the  policyholders  in  exchange for their policyholders'
  membership interest or  the  manner  of  converting  the  policyholders'
  membership  interest  into  securities  or  other consideration; (F) the
  method of allocating the  consideration  among  policyholders;  (G)  the
  method  of operation of the mutual life insurer's participating business
  comprised of its participating policies and contracts in  force  on  the
  effective  date  of  the reorganization; and (H) a plan of operation for
  the reorganized insurer including actuarial projections for  a  ten-year
  period  and a statement indicating its intentions with regard to issuing
  any nonparticipating business. If the reorganized  insurer  proposes  to
  continue  to  issue for delivery in this state participating policies or
  contracts, the plan of reorganization shall so specify. In  such  event,
  upon  the  superintendent's  approval  of  the  plan  of  reorganization
  pursuant to this section, the superintendent shall, in  accordance  with
  section  four  thousand  two hundred thirty-one of this chapter, issue a
  revocable permit to the reorganized  insurer  authorizing  it  to  issue
  participating  policies  and  contracts  in  this  state.  The  plan  of
  reorganization may contain any other conditions and provisions which the
  board of directors of the mutual life  insurer  may  deem  necessary  or
  advisable in connection with the proposed reorganization.
    (2)  The  consideration to be given in exchange for the policyholders'
  membership interest or into which such  membership  interest  is  to  be
  converted  may consist of cash, securities of the reorganized insurer or
  securities of another institution  or  institutions,  a  certificate  of
  contribution,  additional  life insurance or annuity benefits, increased
  dividends or other consideration or any combination  of  such  forms  of
  consideration. The consideration, if any, given to any class or category
  of  policyholder  need not be the same as the consideration given to any
  other class or category of policyholder. The certificate of contribution
  referred to above shall be repayable  in  five  years  and  bear  annual
  interest  at  the published monthly average, as defined in section three
  thousand two hundred six of this chapter, for the calendar month  ending
  two months before the effective date of reorganization.
    (3)  The  policyholders who shall be entitled to notice of and to vote
  upon the proposal to approve the plan of reorganization and to notice of
  the public hearing required by this section shall be  the  policyholders
  whose  policies or contracts are in force on the date of adoption of the
  plan of reorganization. Each such policyholder whose policy has been  in
  force  on  such  date  shall  be  entitled to the consideration, if any,
  provided for such policyholder in the plan based on such  policyholder's
  membership  interest determined pursuant to this section but only to the
  extent that such policyholder's membership interest arose from  policies
  or contracts that shall be in force on the date of adoption of the plan.
    (4)  Upon  adoption  of  the  plan of reorganization, it shall be duly
  executed by the chairman of the board, the president or a vice president
  and attested by the secretary or an assistant secretary  of  the  mutual
  life  insurer under such insurer's corporate seal and shall be submitted
  to the superintendent with a copy of the resolutions adopting such  plan
  and  finding  that  it  is  fair  and  equitable  to  the policyholders,
  accompanied by a certificate of adoption of such resolutions  subscribed
  by such officers and affirmed by them as true under penalties of perjury
  and under the seal of the mutual life insurer.
    (f)  Amendment  or withdrawal of plan. The mutual life insurer may, by
  action of a majority of the entire  board  of  directors,  at  any  time
  before  the plan of reorganization becomes effective as provided by this

  section (1) amend the plan of reorganization; or (2) withdraw  the  plan
  of reorganization. On adoption of an amendment it shall be duly executed
  by  the  chairman  of  the  board, the president or a vice president and
  attested  by  the secretary or an assistant secretary of the mutual life
  insurer under such insurer's corporate seal and shall  be  submitted  to
  the  superintendent  with  a  copy  of  the  resolutions  adopting  such
  amendments subscribed by such officers and  affirmed  by  them  as  true
  under  penalties  of  perjury  and  under  the  seal  of the mutual life
  insurer. In case of an amendment, all references in this section to  the
  plan  of reorganization shall be deemed to refer to the plan as amended.
  No amendment made after any public hearing required by this  section  or
  after  approval  by  the policyholders as provided in this section shall
  change the plan in a  manner  which  the  superintendent  determines  is
  materially  disadvantageous to any of the policyholders unless a further
  public hearing is held on the plan as amended if the amendment  is  made
  after  the  public  hearing,  or  the  plan  as amended is submitted for
  reconsideration by the policyholders if the amendment is made after  the
  plan  has  been  approved by the policyholders, under the conditions and
  procedures determined by the  superintendent  in  accordance  with  this
  section.
    (g)  Additional  information.  Upon  submission  to him of the plan of
  reorganization, the superintendent may request any additional  documents
  or  information  and  may  examine the mutual life insurer or any of its
  affiliates, to the extent he may determine to be necessary to enable him
  to make the findings required by this section for the approval by him of
  the plan of reorganization.  If  the  reorganized  insurer  proposes  to
  continue  to  issue for delivery in this state participating policies or
  contracts, the superintendent  may  also  request  such  information  or
  agreements  relative  thereto as he may require pursuant to section four
  thousand two hundred thirty-one of this chapter.
    (h) Consultants and certifications. (1) The superintendent may appoint
  one  or  more  qualified  disinterested  persons  or   institutions   as
  consultants  to advise him on any matters related to the reorganization.
  The appointment of a consultant shall be in writing and shall set  forth
  the  duties  and  responsibilities  of  the  consultant.  Copies of such
  appointment shall be given to the consultant  and  concurrently  to  the
  mutual life insurer.
    (2)  If  the plan of reorganization satisfies the conditions set forth
  in paragraph  one  or  two  of  subsection  (d)  of  this  section,  the
  superintendent  shall  appoint  one  or more qualified and disinterested
  actuaries  for  the  purpose  specified  in  paragraph  three  of   this
  subsection.  Such  actuary  shall be a member of the American Academy of
  Actuaries, and shall be knowledgeable and experienced as to the  matters
  to be certified.
    (3)  Such  actuary shall certify in writing as to (A) in the case of a
  plan of reorganization pursuant to paragraph two of  subsection  (d)  of
  this section, the amount of the mutual insurer's assets accumulated from
  the  operations  of participating policies and contracts in force on the
  effective date of the reorganization and (B) in the case of  a  plan  of
  reorganization  pursuant  to  paragraphs one or two of subsection (d) of
  this section, the reasonableness and sufficiency of the asset allocation
  referred to in subparagraph (B) of paragraph five of subsection  (d)  of
  this  section.  Such  certification shall be in form satisfactory to the
  superintendent  and  shall  be  made  in  accordance  with  professional
  standards  and  practices generally accepted by the actuarial profession
  and such other factors as such  actuary  in  his  professional  judgment
  believes  are  reasonable and appropriate at the time such certification
  is made. Any such certification shall be accompanied by a memorandum  of

  the  actuary, in form satisfactory to the superintendent, describing the
  calculations made in support of such certification and  the  assumptions
  used in such calculations.
    (4)  The  consultant  and  the  actuary may request of the mutual life
  insurer access to its books and records and the furnishing by it of  any
  other  information in its possession, to the extent it may reasonably be
  deemed necessary to make the valuations and certifications  contemplated
  by  this  subsection,  or  to  advise  the superintendent on any matters
  related to the reorganization. The  consultant  and  the  actuary  shall
  report  to  the  superintendent  any  instance  in which the mutual life
  insurer  fails  to  provide  any  information  requested  by  them.  The
  consultant  and  the  actuary  shall  not,  under  judicial  process  or
  otherwise, be obligated or permitted to divulge to any  one  except  the
  superintendent any information not otherwise publicly available which is
  so  obtained  by  them.  The  consultant  and  the actuary shall receive
  reasonable compensation and shall be reimbursed for reasonable  expenses
  incurred in performing their duties.
    (5)  The report of the consultant and the certification of the actuary
  shall be made  to  the  superintendent.  In  making  the  determinations
  contemplated  by  this section, the superintendent shall not be bound by
  any findings, conclusions, certifications or recommendations made by the
  consultant  or  the   actuary.   All   information   obtained   by   the
  superintendent  pursuant  to  this section, including without limitation
  information obtained through examinations by  him,  the  report  of  the
  consultant,  the  certification  of  the  actuary, the memorandum of the
  actuary and other information secured by the consultant or  the  actuary
  and turned over to the superintendent, are hereby specifically exempted,
  as   contemplated  by  paragraph  (a)  of  subdivision  two  of  section
  eighty-seven  of  the  public  officers  law,  from  disclosure  by  the
  superintendent  under  said  section  eighty-seven  of  such  law.  Such
  exemption  shall  not  preclude  or  exempt  the   superintendent   from
  disclosure  of  such  information  pursuant  to  judicial  process under
  provisions of law other than said section  eighty-seven  of  the  public
  officers  law,  nor  prohibit any disclosure which in the opinion of the
  superintendent, and after an opportunity for the insurer  to  be  heard,
  the  superintendent  deems  should be made public for the benefit of the
  insurer, its policyholders or the public. If the department  intends  to
  make   any   report   or  certification  public,  then  such  report  or
  certification shall be made available to the company  at  least  fifteen
  days prior to such public disclosure.
    (6)  Nothing  contained  in this section shall be construed to exclude
  any person or employee or member of an institution from the category  of
  "disinterested  person" solely because such individual is a policyholder
  of the insurer or that such person or institution is to be  one  of  the
  underwriters  of  any  shares  to  be  sold  pursuant  to  the  plan  of
  reorganization.
    (i) Public hearing. The superintendent shall  hold  a  public  hearing
  upon   the  fairness  of  the  terms  and  conditions  of  the  plan  of
  reorganization, the reasons and purposes for the mutual life insurer  to
  demutualize,  and  whether  the reorganization is in the interest of the
  mutual life insurer and its policyholders, and not  detrimental  to  the
  public.  Notice stating the time, place and purpose of the hearing shall
  be mailed by the mutual life insurer to each  policyholder  entitled  to
  notice  of  the hearing in accordance with paragraph three of subsection
  (e) of this section, at his last known address as shown on  the  records
  of  the mutual life insurer; such notice shall be mailed at least thirty
  days before the date of the hearing. Such notice shall  be  preceded  or
  accompanied  by  a  true  and complete copy of the plan, or by a summary

  thereof approved by  the  superintendent,  and  such  other  explanatory
  information as the superintendent shall approve or require. In addition,
  the mutual life insurer shall give notice of the time, place and purpose
  of   the   hearing   by  publication  in  three  newspapers  of  general
  circulation, one in the county in which the insurer  has  its  principal
  office  and two in other cities within or without this state approved by
  the superintendent. Such newspaper publications shall be made  not  less
  than fifteen days nor more than sixty days before the hearing, and shall
  be in a form approved by the superintendent.
    (j) Approval of plan by superintendent. The superintendent shall after
  the  public  hearing  required by subsection (i) of this section approve
  the plan of reorganization if he finds that the proposed reorganization,
  in whole and in part,  does  not  violate  this  chapter,  is  fair  and
  equitable  to the policyholders and is not detrimental to the public and
  that, after giving effect to the reorganization, the reorganized insurer
  will have an amount of capital and surplus the superintendent  deems  to
  be  reasonably necessary for its future solvency. If approval is denied,
  the denial shall be in writing setting forth a statement of the  reasons
  therefor  and  the mutual life insurer shall have the right to a hearing
  before the superintendent within thirty days of the date of such denial.
  The superintendent shall not disapprove of a plan of reorganization  for
  the  reason  that  the  mutual  life insurer selected one of the methods
  provided for in subsection (d) of this section rather than another.  The
  superintendent  shall  approve  or  disapprove the plan in writing on or
  before sixty days after the conclusion of the public hearing required by
  subsection (i) of this section.
    (k) Approval by policyholders. (1) A proposal to approve the  plan  of
  reorganization  shall  be submitted to policyholders. Notice stating the
  date, time and place for voting on such proposal shall be mailed by  the
  mutual  life  insurer  to each policyholder entitled to notice of and to
  vote on the proposal in accordance with paragraph  three  of  subsection
  (e)  of  this section, at his last known address as shown on the records
  of the mutual life insurer; such notice shall be mailed at least  thirty
  days  before  the  date  of the action. Such notice may be combined with
  notice of the public hearing required by this section. Such notice shall
  be preceded or accompanied by a true and complete copy of the  plan,  or
  by  a  summary  thereof  approved  by the superintendent, and such other
  explanatory information as the superintendent shall approve or require.
    (2) Each policyholder entitled  to  vote  on  the  proposal  shall  be
  entitled  to  cast one vote, unless otherwise provided in the charter or
  by-laws of the mutual life insurer, on the proposal, either in person or
  by mail or by proxy,  irrespective  of  the  number  or  amount  of  the
  policies or contracts he holds. Any proxy shall be revocable at any time
  except  to the extent that, at the time of exercise, the power conferred
  thereby has been exercised. All votes shall be by written ballot cast in
  person or by mail by policyholders entitled to vote or by  proxy  agents
  duly  appointed  by  policyholders  entitled  to vote. The voting on the
  proposal shall be held at the home office of the  mutual  life  insurer.
  The polls shall be opened at ten o'clock in the forenoon and remain open
  until four o'clock in the afternoon of the day fixed for such voting, at
  which  time  they  shall  be closed. The proposal to approve the plan of
  reorganization may be adopted by the affirmative vote of  two-thirds  of
  all votes cast by policyholders entitled to vote.
    (3)  The  superintendent  shall have power to supervise and direct and
  prescribe rules governing the procedure for the conduct of the voting on
  the proposal to such extent, consistent  with  the  provisions  of  this
  section,  as he deems necessary to insure a fair and accurate vote. Such
  powers shall include, but not be limited  to,  power  to  supervise  and

  regulate  (A)  the  determination of policyholders entitled to notice of
  and to vote on the proposal; (B) the giving of notice of  the  proposal;
  (C)  the  receipt, custody, safeguarding, verification and tabulation of
  proxy forms and ballots; and (D) the resolution of disputes.
    (4)  The superintendent shall appoint as inspectors an adequate number
  of personnel of the department of financial services or other  competent
  and   disinterested  persons  and  may  appoint,  if  necessary,  expert
  accountants and other assistants and may authorize  the  procurement  of
  stationery  and  supplies  necessary  for  conducting  the voting on the
  proposal and canvassing the votes. The inspectors shall  have  power  to
  determine  all  questions concerning the verification of the ballots and
  proxies, the ascertainment of the validity thereof,  the  qualifications
  of  the  voters  and  the  canvass of the vote, and with respect thereto
  shall act under such rules as shall be prescribed by the superintendent.
  Any disagreement among the inspectors shall be reported to and shall  be
  resolved  by the superintendent. Any determinations by the inspectors or
  the superintendent shall be subject to judicial review.
    (5) Representatives of the policyholders, including representatives of
  policyholders favoring or opposing the approval of the  plan,  shall  be
  entitled  to  be present during the casting, verification and canvassing
  of the proxies and ballots and shall be entitled to examine  and  object
  to  any  such  proxy or ballot. The superintendent or the inspectors may
  limit the number of persons representing any interested person or  group
  and  may  specify  fair and reasonable procedures for the examination of
  and presentation of objections to the proxies  and  ballots.  Costs  and
  expenses incurred in providing such representation shall not be a charge
  upon  or  paid  from  the funds of the mutual life insurer or the person
  responsible for the costs and expenses of the reorganization.
    (6) Neither the mutual life insurer nor any officer, agent or employee
  thereof shall knowingly omit, from any list of policyholders entitled to
  notice of and to vote on the proposal,  the  name  of  any  policyholder
  required  to  be included therein, or shall, in connection with any such
  list, knowingly omit to give the name and address, as last shown on  the
  records of the mutual life insurer, of any policyholder. No person shall
  conceal  or  withhold  or  aid or abet any other person in concealing or
  withholding any proxy or ballot from the authorized  custodians  thereof
  or  from the inspectors. No policyholder shall sell or offer to sell any
  vote or proxy for any sum of money or anything of value other  than  the
  consideration  provided  for  in the plan or reorganization if such plan
  becomes effective.
    (7)  All  ballots  and  proxies  received  by  the  inspectors   shall
  immediately  upon  the  completion  of  the  canvass be placed in sealed
  packages and shall be preserved by the inspectors for a period  of  four
  years,  subject  to  the  order  of any court having jurisdiction of any
  proceedings relating thereto, and then  shall  be  turned  over  to  the
  mutual  life  insurer,  or the reorganized insurer if the reorganization
  has become effective.
    (8) The conduct of the voting on the proposal shall at all  times,  on
  petition  of the superintendent or of any person or persons whose rights
  may be affected, be subject  to  the  supervision  and  control  of  the
  supreme  court in the judicial district in which the mutual life insurer
  has its home office.
    (9) The inclusion by the mutual life insurer of the name of any person
  in any list of policyholders required  by  this  section  shall  not  be
  construed  as an admission by such insurer of the validity of any policy
  or contract and no such list shall be competent  evidence  against  such
  insurer  in  any  action  or  proceeding  in  which  the question of the
  validity of any policy or contract or of any claim under it is involved.

    (10) The provisions of section four thousand two hundred ten  of  this
  chapter  shall not apply to the action by policyholders pursuant to this
  section.
    (11)  Upon  the  conclusion of the vote, the mutual life insurer shall
  submit to the superintendent  (A)  a  certified  copy  of  the  plan  of
  reorganization,  subscribed  by the chairman of the board, the president
  or any vice president and attested by  the  secretary  or  an  assistant
  secretary  of  the mutual life insurer; (B) a certificate, subscribed by
  the chairman of the board, the  president  or  any  vice  president  and
  attested  by  the  secretary  or  assistant secretary of the mutual life
  insurer, or subscribed by the person or persons, if any,  designated  by
  the  superintendent  to  supervise  the giving of notice of the date for
  action on the proposal, to the effect that  such  notice  was  given  in
  accordance  with  this  section  to  all  policyholders entitled to such
  notice; and (C) a  certificate  subscribed  by  the  inspectors  of  the
  results  of  the vote, as evidenced by valid ballots received before the
  polls were closed. Each such certificate shall be affirmed as true under
  the penalties of perjury by the person or persons subscribing  the  same
  and,  in the case of a certificate signed by officers of the mutual life
  insurer, shall be affirmed under the corporate seal of the  mutual  life
  insurer.
    (l)  Effective  date  of  reorganization.  When the superintendent has
  given his  approval  of  the  plan  of  reorganization  as  provided  in
  subsection (j) of this section and certification of approval of the plan
  has  been  made  to  the superintendent as provided in subsection (k) of
  this  section,  a  copy  of  the  plan  of  reorganization,   with   the
  superintendent's approval endorsed thereon, shall be filed in the office
  of   the   superintendent.   A  copy  of  such  plan  certified  by  the
  superintendent shall also be filed by the mutual  life  insurer  in  the
  office  of  the  clerk  of  the county where the principal office of the
  mutual life insurer is located. The plan of  reorganization  shall  take
  effect  in  accordance  with  its  terms  on  the  date when the filings
  required by this subsection have been made or on  such  later  date,  if
  any, as may have been specified in or determined in accordance with said
  plan  or  pursuant  thereto.  The  superintendent shall issue an amended
  certificate of authority to the reorganized insurer and such license, if
  any, as may be required under section one thousand two hundred  four  of
  this  chapter for the sale of its securities as specified in its plan of
  reorganization.
    (m) Corporate existence. Upon the reorganization of  the  mutual  life
  insurer  in the manner herein provided, the reorganized insurer shall be
  deemed a continuation of the corporate  existence  of  the  mutual  life
  insurer  or,  in  the  case of a merger, of the company specified in the
  plan of reorganization as the continuing company, which  may  be  either
  the mutual life insurer or the domestic stock life insurer with which it
  is  merged.  All the rights, franchises and interests of the mutual life
  insurer and, in the case of a merger, of the domestic stock insurer,  in
  and  to  every species of property, real, personal and mixed, and things
  in action thereunto belonging, shall be deemed transferred to and vested
  in the continuing company, without  any  other  deed  or  transfer;  and
  simultaneously therewith such continuing company shall be deemed to have
  assumed  all  of  the  obligations  and  liabilities  of the mutual life
  insurer and, in the case of a merger, of  the  domestic  stock  insurer,
  other   than   obligations   and   liabilities   with   respect  to  the
  policyholders'  membership  interest   eliminated   by   the   plan   of
  reorganization.
    (n)  Actions  and  proceedings. No action or proceeding pending at the
  time of the reorganization to which the mutual life  insurer  may  be  a

  party  shall be abated or discontinued by reason of such reorganization,
  but the same may be prosecuted to final judgment in the same  manner  as
  if  the  reorganization  had not taken place, or the reorganized insurer
  may  be substituted in place of such mutual life insurer by order of the
  court in which the action or proceeding may be pending.
    (o) Directors and officers. The directors and officers of  the  mutual
  life  insurer, unless otherwise specified in the plan of reorganization,
  shall serve as directors and officers of the reorganized  insurer  until
  new directors and officers have been duly elected and qualified pursuant
  to the charter and by-laws of the reorganized insurer.
    (p)  Costs  and expenses. (1) The mutual life insurer shall deliver to
  the  superintendent  at  the  time  of  submission  of   the   plan   of
  reorganization  a written undertaking in form and substance satisfactory
  to the superintendent and signed by the mutual life insurer, and by such
  other persons as the superintendent may require, specifying  the  manner
  in  which  all  costs  and expenses incurred in any manner in connection
  with the plan of  reorganization  shall  be  paid  or  reimbursed.  Such
  undertaking  shall  provide  for  the  payment  or  reimbursement of all
  expenses incurred by the superintendent or the department in  connection
  with the plan of reorganization, other than normal operating expenses of
  the department.
    (2)   Such  undertaking,  other  than  a  reorganization  pursuant  to
  paragraph one of subsection (d) of this section, shall also provide that
  no payment of costs and expenses by  the  mutual  life  insurer  or  the
  reorganized  insurer  shall, after giving effect to any reimbursement or
  contribution received by such insurer with  respect  thereto,  have  the
  effect  of  reducing  the  consideration,  other than the policyholders'
  preference account referred to in paragraph two  of  subsection  (d)  of
  this  section,  to  be paid to the policyholders pursuant to the plan of
  reorganization. The requirements of this paragraph may be  waived  in  a
  reorganization  pursuant  to paragraphs three and four of subsection (d)
  of this section if the superintendent  determines  that  it  is  in  the
  policyholders' interest to do so.
    (3)  The  said  undertaking shall apply to costs and expenses incurred
  prior to the submission of the plan of reorganization as well  as  those
  incurred  thereafter  and  shall  be  binding whether or not the plan of
  reorganization  takes  effect.  The  consideration  to   be   given   to
  policyholders pursuant to the plan shall not be deemed a cost or expense
  of   the   reorganization   subject  to  this  subsection  nor  to  such
  undertaking.
    (q) Notice of proposed reorganization. Notice of the pendency  of  the
  proposed  reorganization and of the effect thereof shall be given by the
  mutual life insurer in a manner satisfactory to  the  superintendent  to
  all  persons  to  whom  the  mutual  life  insurer  delivers policies or
  contracts which  are  issued  after  the  date  on  which  the  plan  of
  reorganization is adopted by the mutual life insurer and before the plan
  takes  effect or is withdrawn. Such persons shall have the right, unless
  the laws of their domiciliary state gives other rights, to rescind  such
  policies  or contracts, and to be refunded any amounts paid with respect
  thereto, by written notice to such insurer or its agent given within ten
  days of their receipt of the aforesaid notice given by such insurer.
    (r) Effect of reorganization. If  the  plan  of  reorganization  takes
  effect, the rights of all policyholders thereafter shall be as specified
  in  their  policies  or  contracts,  in  the  charter of the reorganized
  insurer and in the plan of reorganization, except for the elimination of
  the right to vote, if any, and they  shall  have  no  rights  under  the
  charter  of  the  mutual  life  insurer.  The  reorganized insurer shall
  thereafter be subject to all laws, rules and regulations  applicable  to

  domestic stock life insurers and shall not be subject to any laws, rules
  or  regulations of this state applicable to domestic mutual insurers and
  not to domestic stock life insurers.
    (s)  Failure  to  give  notice.  If  the  mutual life insurer complies
  substantially and in good faith with the requirements  of  this  section
  with  respect to the giving of any required notice to policyholders, its
  failure in any case to  give  such  notice  to  any  person  or  persons
  entitled  thereto  shall  not  impair  the  validity  of the actions and
  proceedings taken under this section  or  entitle  such  person  to  any
  injunctive  or  other  equitable  relief  with respect thereto, but this
  subsection shall not impair any claim for damage such person or  persons
  would otherwise have due to such failure.
    (t)  Limitation  of  actions; security. (1) Any action challenging the
  validity of or arising out of acts taken or proposed to be  taken  under
  this  section must be commenced within one year after a copy of the plan
  of reorganization, with the superintendent's approval endorsed  thereon,
  shall  be  filed  in the office of the superintendent or six months from
  the effective date of the reorganization, whichever is later, or if  the
  plan   of  reorganization  is  withdrawn,  within  six  months  of  such
  withdrawal.
    (2) In any action arising out of acts taken or proposed  to  be  taken
  under  this  section, the mutual life insurer of the reorganized insurer
  shall be entitled at any stage of the proceedings before final  judgment
  to  petition  the  court  to  require  plaintiff  or  plaintiffs to give
  security for the reasonable expenses, including attorneys'  fees,  which
  may  be  incurred  by it in connection with such action and by any other
  parties defendant in connection therewith or for which the  mutual  life
  insurer or the reorganized insurer may become liable under this chapter,
  under  any  contract  or  otherwise by law, to which security the mutual
  life insurer or the reorganized insurer  shall  have  recourse  in  such
  amount  as  the court having jurisdiction of such action shall determine
  upon the  termination  of  such  action.  The  amount  of  security  may
  thereafter from time to time be increased or decreased in the discretion
  of  the  court  having jurisdiction of such action upon showing that the
  security provided has or may become inadequate or excessive.
    (u) Modification or exchange of existing  policies.  Nothing  in  this
  section shall preclude either the mutual life insurer or the reorganized
  insurer, on compliance with all applicable requirements of this chapter,
  from  offering at any time or from time to time to any class or category
  of policyholders to modify their policies or contracts  or  to  exchange
  their  policies  or  contracts  for  other  policies or contracts in the
  manner set forth in the offer.
    (v) Prohibitions on certain offers  to  acquire  and  acquisitions  of
  shares. Prior to, and for a period of five years following the date when
  the  distribution  of consideration to the policyholders in exchange for
  their membership  interests  is  completed  pursuant  to  such  plan  of
  reorganization,  no  person,  other  than  the reorganized insurer or an
  institution referred to in subsection (b) of this section that is a part
  of the plan of reorganization as provided by said subsection (b)  or  an
  institution  that  is  formed,  with the approval of the superintendent,
  subsequent to the effective date  of  the  reorganization  in  order  to
  acquire  all  of  the  common  shares  of  the  reorganized insurer in a
  transaction where holders of common shares of  the  reorganized  insurer
  receive  all of the common shares of such institution on a basis that is
  proportionate to the number of common shares of the reorganized  insurer
  held  by each such holder, shall directly or indirectly offer to acquire
  or acquire in any manner the beneficial ownership  of  five  percent  or
  more of any class of a voting security of such reorganized insurer or of

  any institution which owns a majority or all of the voting securities of
  the   reorganized   insurer,   without   the   prior   approval  of  the
  superintendent. In the event of any violation of this subsection, or  of
  any action which, if consummated, might constitute such a violation, (1)
  all  voting securities of the reorganized insurer or of such institution
  acquired by any person in excess of the maximum amount permitted  to  be
  acquired  by  such person pursuant to this subsection shall be deemed to
  be  non-voting  securities  of  the  reorganized  insurer  or  of   such
  institution, as the case may be, and (2) such violation or action may be
  enforced  or  enjoined,  as  the  case may be, by appropriate proceeding
  commenced  by  the  reorganized  insurer,  such   institution   or   the
  superintendent,  the attorney general or any policyholder or stockholder
  of the  reorganized  insurer  or  such  institution  on  behalf  of  the
  reorganized  insurer  or  such  institution  in the supreme court in the
  judicial district in which the reorganized insurer has its  home  office
  or  in any other court having jurisdiction, and such court may issue any
  order,  injunctive  or  otherwise,  it  finds  necessary  to  cure  such
  violation   or  to  prevent  such  action.  For  the  purposes  of  this
  subsection,  the  term  "beneficial  ownership",  with  respect  to  any
  security,  means  the sole or shared power to vote, or direct the voting
  of, such security and/or the sole or shared power to dispose, or  direct
  the  disposition,  of such security; the term "voting security" includes
  voting securities as defined in paragraph forty-five of  subsection  (a)
  of  section  one  hundred  seven  of  this  chapter, any preorganization
  certificate  or  subscription  (including  subscription  rights   issued
  pursuant to a plan of reorganization), or any security convertible (with
  or  without  consideration)  into  any  such  security,  or carrying any
  warrant or right to subscribe for or purchase any such security, or  any
  such  warrant  or right; the term "offer" includes every offer to buy or
  acquire, solicitation of an offer to sell, tender offer for, or  request
  or  invitation  for tenders of, a security or interest in a security for
  value;  and  the  term  "person"  means  an  individual,  group,   firm,
  corporation,  partnership,  association, joint stock company, trust, any
  similar entity or any combination of the foregoing acting in concert.
    (w) Prohibited transactions by officers, directors or  employees.  (1)
  Prior  to,  and  for  a period of five years following the date when the
  distribution of consideration to the policyholders in exchange for their
  membership  interests  is   completed   pursuant   to   such   plan   of
  reorganization,  no  officer, director or employee of the mutual insurer
  or of the  reorganized  insurer,  including  family  members  and  their
  spouses,  shall directly or indirectly offer to acquire or shall acquire
  in any  manner  the  beneficial  ownership  of  any  securities  of  the
  reorganized  insurer or of the institution referred to in subsection (b)
  of this section unless the acquisition is (A) made pursuant to  a  stock
  option  plan  approved  by  the superintendent; (B) made pursuant to the
  plan of reorganization; (C) made by employees,  including  their  family
  members  and  their spouses, from a broker or dealer registered with the
  Securities and Exchange Commission at the then quoted prices on the date
  of purchase; or (D) made  by  officers  or  directors,  including  their
  family  members  and their spouses, at least two years after the initial
  public offering from a broker or dealer registered with  the  Securities
  and  Exchange  Commission  at  the  then  quoted  prices  on the date of
  purchase.
    (2) For purposes of this subsection, the term "beneficial  ownership",
  with respect to any security, means the sole or shared power to vote, or
  direct  the  voting of, such security and/or the sole or shared power to
  dispose, or direct the disposition, of such security.

    (3) For purposes of this subsection, the term  "securities",  includes
  voting  securities  as  defined  in  section  one  hundred seven of this
  chapter, any  preorganization  certificate  or  subscription  (including
  subscription rights issued pursuant to a plan of reorganization), or any
  security  convertible  (with  or  without  consideration), into any such
  security, or carrying any warrant or right to subscribe for or  purchase
  any such security, or any such warrant or right.
    (4)  For  purposes  of  this  subsection,  the  term  "family member",
  includes a brother,  sister,  spouse,  ancestor  or  descendant  of  the
  officer,   director  or  employee  of  the  mutual  insurer  or  of  the
  reorganized insurer.
    (5) No officer, director or employee shall receive any  fee  or  other
  consideration,   other   than   regular   salary,   director   fees,  or
  consideration  as  a  policyholder  in  connection  with  any   proposed
  reorganization.  This  paragraph, however, shall not prohibit the mutual
  life insurer from compensating in cash any firm with which  one  of  its
  directors  is  associated  for  services rendered in connection with any
  proposed reorganization.
    (x) Effect on department personnel. Notwithstanding subsection (a)  of
  section two hundred four of this chapter, the superintendent, any deputy
  or  other  employee  of the department shall be permitted to receive and
  exercise any rights received as a  policyholder  in  connection  with  a
  reorganization.