Authority: IC 27-1-3-7
Affected: IC 27-2-10
Sec. 14.
Exemption from Section 2 [IC 27-2-10-2]of
Acquisitions of Shares of Stock and Stock Options under Certain Stock Bonus,
Stock Option or Similar Plans. Any acquisition of shares of stock (other than
stock acquired upon the exercise of an option, warrant or right) pursuant to a
stock bonus, profit sharing, retirement, incentive, thrift, savings or similar
plan, or any acquisition of a qualified or a restricted stock option pursuant
to a qualified or a restricted stock option plan, or a stock option pursuant to
an employee stock purchase plan, by a director or officer of an insurer issuing
such stock or stock option shall be exempt from the operation of Section 2
[IC 27-2-10-2]of the Act if the plan meets the following
conditions:
(a) The plan has been
approved, directly or indirectly, (1) by the affirmative votes of the holders
of a majority of the securities of such insurer present, or represented, and
entitled to vote at a meeting duly held in accordance with the applicable laws
of the State of Indiana, or (2) by the written consent of the holders of a
majority of the securities of such insurer entitled to vote: provided, however,
that if such vote or written consent was not solicited substantially in
accordance with the proxy rules and regulations prescribed by the National
Association of Insurance Commissioners, if any, in effect at the time of such
vote or written consent, the insurer shall furnish in writing to the holders of
record of the securities entitled to vote for the plan substantially the same
information concerning the plan which would be required by any such rules and
regulations so prescribed and in effect at the time such information is
furnished, if proxies to be voted with respect to the approval or disapproval
of the plan were then being solicited, on or prior to the date of the first
annual meeting of security holders held subsequent to the later of (i) the date
the Act first applies to such insurer, or (ii) the acquisition of an equity
security for which exemption is claimed. Such written information may be
furnished by mail to the last known address of the security holders of record
within 30 days prior to the date of mailing. Four copies of such written
information shall be filed with, or mailed for filing to, the Commissioner not
later than the date on which it is first sent or given to security holders of
the insurer. For the purposes of this paragraph, the term "insurer" includes a
predecessor corporation if the plan or obligations to participate thereunder
were assumed by the insurer in connection with the succession.
(b) If the selection of any director or
officer of the insurer to whom stock may be allocated or to whom qualified,
restricted or employee stock purchase plan stock options may be granted
pursuant to the plan, or the determination of the number or maximum number of
shares of stock which may be allocated to any such director or officer or which
may be covered by qualified, restricted or employee stock purchase plan stock
options granted to any such director or officer, is subject to the discretion
of any person, then such discretion shall be exercised only as follows:
(1) With respect to the participation of
directors-
(A) by the board of directors of
the insurer, a majority of which board and a majority of the directors acting
in the matter are disinterested persons;
(B) by, or only in accordance with the
recommendations of, a committee of three or more persons having full authority
to act in the matter, all of the members of which committee are disinterested
persons; or
(C) otherwise in
accordance with the plan, if the plan (i) specifies the number or maximum
number of shares of stock which directors may acquire or which may be subject
to qualified, restricted or employee stock purchase plan stock options granted
to directors and the terms upon which, and the times at which, or the periods
within which, such stock may be acquired or such options may be acquired and
exercised; or (ii) sets forth, by formula or otherwise, effective and
determinable limitations with respect to the foregoing based upon earnings of
the insurer, dividends paid, compensation received by participants, options
prices, market value of shares, outstanding shares or percentages thereof
outstanding from time to time, or similar factors.
(2) With respect to the participation of
officers who are not directors-
(A) by the
board of directors of the insurer or a committee of three or more directors;
or
(B) by, or only in accordance
with the recommendations of, a committee of three or more persons having full
authority to act in the matter, all of the members of which committee are
disinterested persons.
For the purpose of this paragraph, a director or committee
member shall be deemed to be a disinterested person only if such person is not
at the time such discretion is exercised eligible and has not at any time
within one year prior thereto been eligible for selection as a person to whom
stock may be allocated or to whom qualified, restricted or employee stock
purchase plan stock options may be granted pursuant to the plan or any other
plan of the insurer or any of its affiliates entitling the participants therein
to acquire stock or qualified, restricted or employee stock purchase plan stock
options of the insurer or any of its affiliates.
(3) The provisions of this paragraph shall
not apply with respect to any option granted, or other equity security
acquired, prior to the date that Sections 1, 2 and 3 [IC 27-2-10-1 - IC
27-2-10-3]of the Act first become applicable with respect to any class
of equity securities of any insurer.
(c) As to each participant or as to all
participants the plan effectively limits the aggregate dollar amount or the
aggregate number of shares of stock which may be allocated, or which may be
subject to qualified, restricted, or employee stock purchase plan stock options
granted, pursuant to the plan. The limitations may be established on an annual
basis, or for the duration of the plan, whether or not the plan has a fixed
termination date; and may be determined either by fixed or maximum dollar
amounts or fixed or maximum numbers of shares or by formulas based upon
earnings of the insurer, dividends paid, compensation received by participants,
option prices, market value of shares, outstanding shares or percentages
thereof outstanding from time to time, or similar factors which will result in
an effective and determinable limitation. Such limitations may be subject to
any provisions for adjustment of the plan or of stock allocable or options
outstanding thereunder to prevent dilution or enlargement of rights.
(d) Unless the context otherwise requires,
all terms used in this section shall have the same meaning as in the Act
[IC 27-2-10]and in Section 1
[
760 IAC 1-12-2 ]
of these regulations. In addition, the following definitions apply:
(1) The term "plan" includes any plan,
whether or not set forth in any formal written document or documents and
whether or not approved in its entirety at one time.
(2) The definition of the terms "qualified
stock option" and "employee stock purchase plan" that are set forth in Sections
422 and 423 of the Internal Revenue Code of 1954, as amended, are to be applied
to those terms where used in this section. The term "restricted stock option"
as defined in Section 424(b) of the Internal Revenue Code of 1954, as amended,
shall be applied to that term as used in this section, provided however, that
for the purposes of this section an option which meets all of the conditions of
that Section, other than the date of issuance shall be deemed to be a
"restricted stock option."
(3) The
term "exercise of an option, warrant or right" contained in the parenthetical
clause of the first paragraph of this section shall not include (i) the making
of any election to receive under any plan and award of compensation in the form
of stock or credits therefore, provided, that such election is made prior to
the making of the award; and provided further that such election is irrevocable
until at least six months after termination of employment; (ii) the subsequent
crediting of such stock; (iii) the making of any election as to a time for
delivery of such stock after termination of employment, provided that such
election is made at least six months prior to any such delivery; (iv) the
fulfillment of any condition to the absolute right to receive such stock; or
(v) the acceptance of certificates for shares of such stock.
Notes
760 IAC
1-12-14
Department of Insurance;
Reg 12,IV,Sec 2-2; filed Jun 7, 1966, 9:00 am: Rules and Regs. 1967, p. 106;
filed Jan 6, 1970, 8:40 am: Rules and Regs. 1971, p. 173; readopted filed Sep
14, 2001, 12:22 p.m.: 25 IR 531; readopted filed Nov 27, 2007, 4:01 p.m.:
20071226-IR-760070717RFA; readopted filed November 26, 2013, 3:43 p.m.:
20131225-IR-760130479RFA
Readopted
filed 11/19/2019, 9:18 a.m.:
20191218-IR-760190497RFA
Renumbered Reg 12, III, Sec 2-2 by 1971
amendment.