(a) Prior to, and for a period of five years following, the effective date of the plan of conversion, no person or group of persons acting in concert shall directly or indirectly offer to acquire or acquire in any manner the beneficial ownership of 5 percent or more of any class of voting securities of a converted insurer or of a person that controls, as defined by subdivision (c) of Section 1215, the converted insurer, without the prior consent of the commissioner. Any application for that approval shall contain information as the commissioner may require and shall be accompanied by a filing fee in an amount equal to the filing fee specified in Section 1215.2.
(b) In the event of any violation of this section, or of any action that, if consummated, would constitute a violation, all voting securities of the converted insurer or of the person acquired by any person in excess of the maximum amount permitted to be acquired by the person pursuant to this subdivision shall be deemed to be nonvoting securities of the converted insurer or of that person. The violation or action may be enforced or enjoined by an appropriate proceeding commenced by the converted insurer, a person, the commissioner, any policyholder or stockholder of the converted insurer, or the person on behalf of the converted insurer or the person in the superior court in the judicial district in which the converted insurer has its home office or in any other court having jurisdiction. The court may issue any order it finds necessary to cure the violation or to prevent the proposed action. In addition to the foregoing, whenever it appears to the commissioner that any person has committed a violation of this section, the commissioner may proceed as provided in Article 14 (commencing with Section 1010) of Chapter 1 to take possession of the property of the converted insurer and to conduct the business thereof.
Terms Used In California Insurance Code 1560.12
- Converted insurer: means the incorporated stock insurer into which a domestic reciprocal insurer has been converted in accordance with the provisions of this article. See California Insurance Code 1560.02
- Effective date: means the date upon which the conversion of a domestic reciprocal insurer is effective, as specified in the amended articles of incorporation of the reciprocal holding company filed with the Secretary of State, as a result of conversion proceedings under this article. See California Insurance Code 1560.02
- Person: means an individual, partnership, firm, association, corporation, joint-stock company, limited liability company, trust, government or governmental agency, state or political subdivision of a state, public or private corporation, board, association, estate, trustee, or fiduciary, or any similar entity. See California Insurance Code 1560.02
- plan: means a plan adopted by a domestic reciprocal insurer in compliance with this article. See California Insurance Code 1560.02
- Policyholder: means the holder of a policy other than a reinsurance contract or a person covered solely under a reporting endorsement to a claims-made policy. See California Insurance Code 1560.02
- Voting stock: means securities of any class or any ownership interest having voting power for the election of directors, trustees, or management of a person, other than securities having voting power only because of the occurrence of a contingency. See California Insurance Code 1560.02
(c) For the purposes of this section, “beneficial ownership,” with respect to voting securities, means the sole or shared power to vote, or direct the voting of, voting securities or the sole or shared power to dispose, or direct the disposition, of voting securities.
(d) For the purposes of this section, “voting security” includes voting stock as defined in Section 1560.02, any preorganization certificate or subscription, including subscription rights issued pursuant to a plan of conversion, or any security convertible, with or without consideration, into voting security, or carrying any warrant or right to subscribe for, or purchase any, voting security, or any such warrant or right.
(e) For the purposes of this section, “offer” includes an 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.
(Amended by Stats. 2017, Ch. 417, Sec. 10. (AB 1696) Effective January 1, 2018.)