Kansas Statutes 40-4006. Limitation on ownership of voting stock of converted insurer; violations; remedies
(a) For five years from the conversion date, no person (including any individual, corporation, firm or affiliated group of individuals, corporations or firms), other than a parent corporation, may own, directly or indirectly, more than 5% of the voting stock (including any securities that may be convertible into voting stock) of the converted insurer, unless:
(1) The person is a policyholder whose allocated share of the consideration provided for in the plan of conversion is 5% or more of the voting stock (including any securities that may be convertible into voting stock), and such individual may not purchase stock totaling more than the individual’s allocated share of such consideration; or
Terms Used In Kansas Statutes 40-4006
- Commissioner: means the commissioner of insurance. See Kansas Statutes 40-4002
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Policyholder: means a policyholder of the mutual insurer on the day the plan of conversion is initially approved by the board of directors of the mutual insurer; except that, with respect to a mutual insurance company authorized to transact the business of insurance in the state of Kansas under the authority granted in article 10 or article 12 of chapter 40 of the Kansas Statutes Annotated, "policyholder" means a policyholder of the mutual insurer on the day the plan of conversion is initially approved by the board of directors of the mutual insurer, whose policy or policies have been in effect for not less than two out of three years immediately prior to the date the board of directors approved the plan, or whose policy or policies have been in effect for at least 90 days during the 365 days immediately preceding the date the board of directors approved the plan if the insured is a crop hail insurance policyholder. See Kansas Statutes 40-4002
(2) the purchase is permitted by the commissioner and authorized by the converted company’s board of directors.
(b) In the event of any violation of this section, or in the event of any action that, if consummated, would constitute a violation of this section, all voting securities of the converted insurer (or of the person controlling the converted insurer) that is acquired by any person in excess of the maximum amount permitted to be acquired by the person pursuant to this section shall be deemed to be nonvoting securities of the converted insurer (or of the person controlling the converted insurer). The violation or action may be enforced or enjoined by an appropriate proceeding commenced by the converted insurer, the person controlling the converted insurer, the commissioner, any policyholder or stockholder of the converted insurer on behalf of the converted insurer (or on behalf of the person controlling the converted insurer) in the district court 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 that would constitute a violation.
(c) Nothing provided in this act shall be deemed to prohibit the insurer’s directors, officers, agents or employees from being eligible to purchase stock or other securities of the insurer, subject to the provisions of subsection (a).