Statutes > Kansas Statutes > Chapter 40 INSURANCE > Article 40 CONVERSION OF DOMESTIC MUTUAL INSURER INTO DOMESTIC STOCK INSURER > 40-4006. Limitation on ownership of voting stock of converted insurer; violations; remedies.

40-4006. Limitation on ownership of voting stock of converted insurer; violations; remedies.

40-4006

Chapter 40.--INSURANCE
Article 40.--CONVERSION OF DOMESTIC MUTUAL INSURER INTO DOMESTIC STOCK INSURER

      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 affiliatedgroup of individuals, corporations or firms), other than aparent corporation, may own, directly or indirectly, morethan 5% of the voting stock (including anysecurities that may be convertible into voting stock) of theconverted insurer, unless:

      (1)   The person is a policyholder whose allocated shareof the consideration provided for in the plan ofconversion is 5% or more of the votingstock (including any securities that may be convertibleinto voting stock), and such individual may not purchasestock totaling more than the individual's allocated shareof such consideration; or

      (2)   the purchase is permitted by the commissionerand authorized by the converted company's boardof directors.

      (b)   In the event of any violation of this section, or inthe event of any action that, if consummated, wouldconstitute a violation of this section, all votingsecurities of the converted insurer (or of the personcontrolling the converted insurer) that is acquired by anyperson in excess of the maximum amount permitted to beacquired by the person pursuant to this section shall bedeemed to be nonvoting securities of the converted insurer(or of the person controlling the converted insurer). Theviolation or action may be enforced or enjoined by anappropriate proceeding commenced by the converted insurer,the person controlling the converted insurer, thecommissioner, any policyholder or stockholder of theconverted insurer on behalf of the converted insurer (or onbehalf of the person controlling the converted insurer) inthe district court in which the convertedinsurer has its home office or in any other court havingjurisdiction. The court may issue any order it findsnecessary to cure the violation or to prevent the proposedaction that would constitute a violation.

      (c)   Nothing provided in this act shall be deemed toprohibit the insurer's directors, officers, agents or employees from beingeligible to purchasestock or other securities of the insurer, subject to the provisions of subsection (a).

      History:   L. 1985, ch. 154, § 6;L. 1997, ch. 107, § 8; July 1.