SECTIONS 1140-1142 - California Statutes

INSURANCE CODE

SECTION 1140-1142

1140. Except as otherwise provided in this code, incorporated
insurers are subject to the provisions of the general corporation law
in like manner with other corporations.

1140.1. (a) A domestic incorporated life insurer may be organized
under the Nonprofit Mutual Benefit Corporation Law. With the prior
consent of the commissioner, an existing domestic incorporated life
insurer organized under the general corporation law may be converted
to a domestic incorporated life insurer under the Nonprofit Mutual
Benefit Corporation Law pursuant to Section 911 of the Corporations
Code. The consent shall be obtained by filing an application
accompanied by any information that the commissioner may require, and
by submitting a filing fee of seven thousand dollars ($7,000).
(b) Except as otherwise provided in this code, a domestic
incorporated life insurer organized under the Nonprofit Mutual
Benefit Corporation Law shall be subject to that law in the same
manner as other corporations organized under that law. In the case of
a conflict between the Insurance Code and the Nonprofit Mutual
Benefit Corporation Law, the provisions of the Insurance Code shall
prevail.
(c) A life insurer organized under the Nonprofit Mutual Benefit
Corporation Law shall have the same powers held by, and shall be
subject to all provisions of this code applicable to, a domestic
incorporated stock life insurer, except for Section 1140. An insurer
so organized shall have a surplus (in lieu of paid-in capital and
surplus) at least equal to the sum of the paid-in capital and surplus
required of a stock insurer admitted for the same classes. In
addition, an insurer so organized shall be subject to the same
premium tax obligations as a stock insurer.
(d) Officers, directors, and other managers of domestic life
insurers organized under the Nonprofit Mutual Benefit Corporation Law
shall not be entitled to any rights, preferences, or privileges that
are not allowed for the officers, directors, or managers of an
insurer of the same class organized under the general corporation
law.
(e) For a life insurer organized under the Nonprofit Mutual
Benefit Corporation Law, all references in this code to "shareholders"
shall be interpreted to mean "members," and all references to
"shares," "stocks," or "securities" shall mean "memberships," as
defined in the Nonprofit Mutual Benefit Corporation Law.
(f) The issuance of memberships to policyholders that are not
natural persons shall be subject to the provisions of Article 8
(commencing with Section 820) of Chapter 1 of Part 2 of Division 1. A
domestic incorporated life insurer organized under the Nonprofit
Mutual Benefit Corporation Law shall have at least one member. The
redemption of memberships, other than for policyholders that are not
natural persons, shall be subject to the same rules as those
applicable to the payment of dividends by a domestic incorporated
stock life insurer.

1140.5. (a) Notwithstanding any other provision of law, a copy of
every form of proxy or written consent or authorization for use at
any meeting or proceeding of shareholders or stockholders of any
domestic insurer to evidence authority to cast the vote of any
shareholder or stockholder, or to record the consent or the
authorization of any shareholder or stockholder to any action of the
insurer, and a copy of every solicitation, announcement, or
advertisement used to obtain, or to influence any shareholder or
stockholder to sign, any proxy, or written consent or authorization
shall be filed with the commissioner, accompanied by a filing fee of
fifty-eight dollars ($58), by the person intending to use, issue,
publish, or circulate the document. This document shall not be used,
issued, published, or circulated before a period of 10 days following
the date of its filing, or any shorter period that may be designated
by the commissioner, has elapsed. Within the 10-day or a shorter
period, the commissioner may disapprove of any document filed with
him or her pursuant to this section, stating his or her reasons
therefor in writing, in which case, the document shall not be used,
issued, published, or circulated.
(b) Any person who fails to make the filing required by this
section and who thereafter uses any document required to be filed,
uses the document before it has been filed with the commissioner for
the period required, or uses the document after receiving written
notice that the document has been disapproved by the commissioner is
guilty of a misdemeanor. It shall be unlawful to use any proxy or
consent obtained in violation of this section. The superior court of
the State of California in and for the county in which is located the
principal place of business of the insurer shall have jurisdiction
to enforce this section and the regulations promulgated pursuant to
this section, and to grant appropriate relief upon the verified
petition of the commissioner, the domestic insurer, or any of its
shareholders or stockholders.
(c) The purposes of this section are: to ensure that the
shareholders, stockholders, or other persons entitled to vote or give
written consents or authorizations are provided with adequate and
accurate information regarding the affairs of the insurers in which
they have interests, the interests of those soliciting proxies or
written consents or authorizations and of those upon whose behalf the
solicitations are made, and the matters as to which proxies, written
consents, or authorizations are solicited; and to prevent fraud or
deception in connection with proxies, proxy statements, or other
proxy solicitations. The commissioner may make rules and regulations
in furtherance of the purposes of this section. These rules and
regulations may differ as to different classes and types of insurers.
(d) This section shall not apply to any domestic insurer having
fewer than 100 shareholders or stockholders and shall not apply to
any domestic insurer if 95 percent or more of its stock is owned or
controlled by a parent or an affiliated insurer and the remaining
shares of stock are owned by fewer than 500 shareholders or
stockholders. Any domestic insurer that files with the federal
Securities and Exchange Commission forms of proxies, consents, and
authorizations complying with the requirements of the federal
Securities Exchange Act of 1934 (15 U.S.C. Sec. 78a et seq.) and the
amendments thereto and the applicable regulations thereunder, is
exempt from this section.

1141. No director, trustee, officer or agent of any insurer shall
be subject to personal liability by reason of any payment or any
determination not to contest or seek recovery of any payment made
subsequent to June 4, 1944, or hereafter made, by or on behalf of
such insurer on account of any tax, license, fee, deposit or other
charge paid pursuant to the terms of any statute, law or ordinance of
this or any other State, county, city or taxing authority, unless
prior to such payment or determination such statute, law or ordinance
shall have been judicially rendered invalid by action of the State
court having final appellate jurisdiction in the premises or by
action of the Supreme Court of the United States. This section is
applicable not only to directors, trustees, officers and agents of
insurers generally but also to reciprocal or interinsurance
exchanges, members of their subscribers' boards, their attorneys in
fact and any director, trustee, officer and agent thereof.

1142. In situations of hardship, financial embarrassment or where
other good cause is shown the commissioner may, in his discretion, by
written order, permit an insurer to acquire by gift, devise, bequest
or other transfer an asset, or a part thereof, not otherwise
permissible, or retain an asset, however obtained. Such order, or any
amendments thereto, shall specify the asset and the mode of
acquisition or retention which is to be permitted and shall specify
such reasonable time as the commissioner may determine in his
discretion for the retention, or further retention of such asset. At
the end of such time or earlier if he determines circumstances
warrant such action the commissioner may invoke the procedure of
Section 1202 for the purpose of requiring the insurer to dispose of
the asset, or a part thereof, so acquired or held.
This section shall not apply to any asset of an insurer which:
(1) Has been held for 25 years or more, and
(2) Consists entirely of corporate securities, and
(3) The value does not exceed more than one-tenth of 1 percent of
the total assets of the insurer.
The insurer may retain such an asset.