1201 - Incorporation of stock or mutual insurance companies.

§  1201.  Incorporation  of stock or mutual insurance companies. (a) A  corporation may be organized and licensed to do an insurance business in  this  state  by  taking  the  following  successive  steps,  subject  to  applicable requirements of this chapter:    (1)  The  proposed  incorporators,  comprising  at  least nine natural  persons (except as provided in section six thousand four hundred two  of  this  chapter),  shall  submit  to  the  superintendent, in writing, the  corporation's proposed name, the county in which  its  principal  office  will  be  located,  and  the  name  and address of a public newspaper of  general circulation in such county.    (2) If the superintendent approves the proposed  name  and  newspaper,  each  as  conforming  to the requirements of law, he shall so notify the  proposed  incorporators,  or  their  representative,  in  writing.  Such  approval  shall  become  void  if  within  six  months from its date the  declaration and charter referred to in paragraphs four and  five  hereof  are not filed pursuant to paragraph six hereof.    (3)  The proposed incorporators shall publish in such newspaper, twice  a week for three successive weeks or once  a  week  for  six  successive  weeks,  a  notice  of  intention to form such a corporation, stating its  proposed name, the kinds of insurance business  to  be  transacted,  the  names and city and state of residence of the proposed incorporators, the  location  of  its  principal  office  in  this  state,  and,  if a stock  corporation, the amount of its proposed initial capital.    (4) The proposed incorporators shall  submit  to  the  superintendent:  (A)  proof  of  such publication by the affidavit of the publisher or of  his foreman or clerk; and    (B) a declaration, signed by each incorporator and  duly  acknowledged  before   a   notary   public   or   other  officer  authorized  to  take  acknowledgments of conveyances of real property within this state.    (5) (A) Such declaration shall be in the English language, shall state  the proposed incorporators' intention to form a corporation to do one or  more kinds of insurance business authorized by section one thousand  one  hundred  thirteen of this chapter, shall specify the paragraphs defining  such kinds of insurance business and shall  set  forth  a  copy  of  the  corporation's proposed charter.    (B) The corporation's proposed charter shall contain:    (i)  the corporation's name, which shall include a distinctive word or  words, and, if a mutual corporation, shall contain the word "mutual";    (ii) the place where its principal office is to be located;    (iii) the kinds of insurance to  be  transacted,  specified  as  above  required;    (iv) the manner in which corporate powers are to be exercised;    (v)  the  number  of  directors,  or  that it shall be not less than a  stated minimum nor more than a stated maximum.  Except  as  provided  in  section  six  thousand  four  hundred  two of this chapter the number of  directors shall not be less than seven. As used in this item, "number of  directors" means the total number of  directors  which  the  corporation  would have if there were no vacancies;    (vi)  the  times  and  manner  of electing directors and officers, the  manner of filling vacancies, and provision that each director  shall  be  at least eighteen years of age and that at all times a majority shall be  citizens  and residents of the United States, and that not less than one  shall be a resident of this state;    (vii) the names and city and state of residence of the directors,  who  shall serve until the first annual meeting of such corporation;    (viii)  the  duration  of  its corporate existence, which shall be not  less than thirty years;    (ix) the amount of its capital, if a stock corporation; and(x) any other  particulars  necessary  to  explain  the  corporation's  objects, purposes, management and control.    (C)  The  corporation's  proposed  charter  may authorize the use in a  foreign country where it does or proposes to do business of a  specified  translation of its name in any language commonly used in such country.    (D)  The  superintendent  may,  by  regulation,  prescribe  additional  information to be required, pursuant to this paragraph, of all companies  or of any kind of company.    (6) The superintendent  shall  transmit  such  proof  of  publication,  declaration,  and  charter  to  the attorney general. If approved by the  attorney  general,  as  conforming  to  the  requirements  of  law,  the  superintendent  shall  thereupon  file  them  in  his office and issue a  certified copy thereof to the proposed incorporators.  If  requested  by  such proposed incorporators, the superintendent shall also issue to them  a certificate of incorporation executed by him in the name of the people  of  the  state  and  thereupon  such  incorporators  shall become a body  corporate and have the powers enumerated in paragraph seven hereof,  but  such corporation shall not be authorized to do the business of insurance  until it obtains a license therefor.    (7) Every stock corporation, upon compliance with this chapter and the  business  corporation  law, may create and issue the number of shares of  capital stock stated in its charter which may be of one or more classes.  If the charter authorizes shares which are entitled to preference in the  distribution of dividends or assets it shall provide that:    (A) their dividend yield shall not exceed a rate equal to the  maximum  rate  of  interest  provided in section 5-501 of the general obligations  law, in effect at the time such shares are offered for sale; and    (B) the dividends may not be cumulative for more than three years.    (8)(A) A stock corporation shall have power to:    (i) open books to receive subscriptions to its capital shares,    (ii) keep them open until all such  shares,  or  so  many  as  may  be  necessary  to  satisfy  the minimum capital requirements, are subscribed  for,    (iii) receive payment for such subscriptions,    (iv) invest the monies as prescribed in this chapter, and    (v)  expend  money  or  incur  liabilities  necessary  or  proper   as  organization   expenses,  to  be  paid  out  of  the  proceeds  of  such  subscriptions, such expenses not to exceed the maximum amount prescribed  in its permit to solicit such subscriptions.    (B) The corporation shall not  solicit  subscriptions  to  its  shares  until  it receives a permit therefor from the superintendent which shall  be issued after the corporation submits to him an estimate of the  total  amount  to  be  expended  for organization expenses, and he approves the  estimate. Such estimate shall be recited in the permit, which shall  fix  the maximum amount, to be prescribed by the superintendent, which may be  expended for organization expenses.    (C)  Such  corporation  shall not employ, as agents or brokers to sell  its securities to the public, any persons who have not complied with the  requirements of section one thousand two hundred four of this article.    (9) (A) A mutual corporation shall have power to:    (i) receive monies necessary to comply with the requirements  of  this  chapter relative to its initial surplus fund;    (ii)  borrow  such monies in accordance with the provisions of section  one thousand three hundred seven of this chapter;    (iii) open books to receive applications for  insurance  from  persons  desiring and eligible to become members;(iv)   keep   them  open  until  the  minimum  number  and  amount  of  applications, and the premium payments  thereon,  as  required  by  this  chapter are received;    (v) invest the monies as prescribed in this chapter for the investment  of the minimum surplus of a mutual insurance company; and    (vi)  expend  money  or  incur  liabilities  necessary  or  proper  as  organization expenses, such expenses not to exceed  the  maximum  amount  prescribed in its permit to solicit such applications.    (B)  The  corporation  shall not solicit applications for insurance or  receive premium payments thereon until it  receives  a  permit  therefor  from the superintendent. The permit shall be issued after:    (i)  the  superintendent  is  satisfied,  by  such  evidence as he may  require or by such examination  as  he  may  deem  expedient,  that  the  corporation holds in trust for prospective policyholders and creditors a  fund,  in  cash  or  securities acceptable to him, at least equal to the  amount required as its initial surplus fund,  such  trust  to  terminate  when  a license to do an insurance business of the kinds provided in the  corporate charter has been obtained, and    (ii) the corporation submits to the superintendent an estimate of  the  total  amount  to be expended for organization expenses, and he approves  the estimate. Such estimate shall be recited in the permit, which  shall  fix  the  maximum  amount, to be prescribed by the superintendent, which  may be expended for organization expenses.    (10)  The  directors  and  incorporators  of  any  stock   or   mutual  corporation  shall be jointly and severally liable for all its debts and  liabilities until it is licensed to do an insurance business of the kind  or kinds proposed.    (b) This section  shall  not  apply  to  co-operative  fire  insurance  companies,  fraternal benefit societies, or corporations organized under  article forty-three or sixty-seven of this chapter.