1705 - Quantitative limitations.

§  1705.  Quantitative limitations. * (a)(1) Unless the superintendent  shall have given prior written approval, a parent corporation shall  not  make  an  investment  for  its own account in any subsidiary (not at the  time exempt from the provisions of this section) if, after giving effect  to such investment, the aggregate investment value of  all  subsidiaries  then   directly   invested  in  by  the  parent  corporation  (excluding  investments in subsidiaries at the time exempted from  this  subsection)  would  be  in excess of thirty percent (but not more than twenty percent  with respect to subsidiaries not having their  principal  operations  in  this  state,  and,  in  the  case  of  a  parent corporation of the type  described in subsection (b) of section one thousand seven hundred one of  this article, not more than ten percent)  of  the  parent  corporation's  admitted assets.    (2) Unless the superintendent shall have given prior written approval,  neither the parent corporation nor any subsidiary (other than a separate  account  subsidiary  or  any subsidiary referred to in subsection (c) of  section one thousand seven hundred four of this article)  may  make  any  investment  in  any  subsidiary  (not  at  the  time  exempt  from  this  paragraph), if, after giving effect to such investment,  the  investment  value  of such subsidiary would aggregate more than fifteen percent (but  not more than two percent in the case of a  parent  corporation  of  the  type  described  in subsection (b) of section one thousand seven hundred  one of this article) of the parent corporation's admitted assets.    * NB See other sub§ (a) (Sep. amended - cannot be put together)    * (a)(1) Unless the superintendent  shall  have  given  prior  written  approval,  a parent corporation shall not make an investment for its own  account in any subsidiary (not at the time exempt from the provisions of  this section) if, after giving effect to such investment, the  aggregate  investment  value  of  all subsidiaries then directly invested in by the  parent corporation (excluding investments in subsidiaries  at  the  time  exempted from this subsection) would be in excess of thirty percent (but  not  more  than  twenty  percent with respect to subsidiaries not having  their principal operations in this state and, in the case  of  a  parent  corporation  of  the  type  described  in  subsection (b) of section one  thousand seven hundred one of this article, not more than  ten  percent)  of the parent corporation's admitted assets.    (2) Unless the superintendent shall have given prior written approval,  neither the parent corporation nor any subsidiary (other than a separate  account  subsidiary  or  any subsidiary referred to in subsection (c) of  section one thousand seven hundred four of this article)  may  make  any  investment  in  any  subsidiary  (not  at  the  time  exempt  from  this  paragraph), if, after giving effect to such investment,  the  investment  value  of such subsidiary would aggregate more than fifteen percent (but  not more than two percent in the case of the parent corporation  of  the  type  described  in subsection (b) of section one thousand seven hundred  one of this article) of the parent corporation's admitted assets.    * NB See other sub§ (a) (Sep. amended - cannot be put together)    (b) "Admitted assets," for the  purposes  of  this  section,  has  the  meaning  ascribed  to  it  by  subparagraph  (B)  of  paragraph  one  of  subsection (b) of  section  one  thousand  four  hundred  five  of  this  chapter.    (c)  (1)  For  the  purposes  of  computations  under paragraph one of  subsection (a) of this section, the aggregate investment  value  of  all  subsidiaries  at any time directly invested in by the parent corporation  (excluding  investments  in  subsidiaries  at  the  time  exempted  from  subsection  (a)  of  this section) shall mean the sum of (i) the minimum  value of each such subsidiary  of  which  equity  securities  (including  partnership interests) are directly held by the parent corporation, (ii)indebtedness  of  such  subsidiaries  then  outstanding  to  the  extent  guaranteed by the parent corporation, and  (iii)  the  unpaid  principal  amount  of  loans  and  advances  to  such  subsidiaries  by  the parent  corporation  or  by  any investment subsidiary of the parent corporation  then outstanding (including the unpaid principal amount of bonds,  notes  or  other  evidences  of  indebtedness  of such subsidiaries held by the  parent corporation or by any such investment  subsidiary).  The  minimum  value of a subsidiary as of any date shall be the greater of (i) the net  cost  of  the  equity  investment  in  such  subsidiary  by  the  parent  corporation or (ii) the pro rata interest of the parent  corporation  in  the net worth of such subsidiary.    (2) For purposes of computations under paragraph two of subsection (a)  of  this section, the investment value of a subsidiary at any time shall  be an amount equal  to  the  sum  of  (i)  the  minimum  value  of  such  subsidiary, (ii) indebtedness of such subsidiary then outstanding to the  extent  guaranteed  by  the  parent  corporation,  and  (iii) the unpaid  principal amount of loans and advances to the subsidiary by  the  parent  corporation  or  by  any investment subsidiary of the parent corporation  then outstanding (including the unpaid principal amount of bonds,  notes  or  other evidences of indebtedness of the subsidiary held by the parent  corporation or by any such investment subsidiary). The minimum value  of  a  subsidiary as of any date shall be the greater of (i) the net cost of  the equity investment in such subsidiary by the parent  corporation  and  its subsidiaries or (ii) the pro rata interest of the parent corporation  and its subsidiaries in the net worth of such subsidiary.    (3)  For  purposes  of  this  subsection,  the "net cost of the equity  investment" by any person in a subsidiary at any  time  shall  mean  the  aggregate  amount of contributions to and purchases of equity securities  (including partnership interests) and other  equity  interests  of  such  subsidiary  (less repurchases of such equity securities and other equity  interests) by such person  at  such  time  and  the  "net  worth"  of  a  subsidiary  shall  mean  the  net  worth of the subsidiary determined in  accordance with generally accepted accounting principles, as of the  end  of  its  most  recent fiscal year. In determining the minimum value of a  holding company operating subsidiary, there shall be taken into  account  the  greater  of  the  net  cost of the equity investment of the holding  company operating subsidiary in each subsidiary or the pro rata interest  of the holding company operating subsidiary in the  net  worth  of  such  subsidiary.  The  superintendent may require, by regulation, that parent  corporations submit reports annually to the  superintendent  as  to  the  aggregate  investment  value  of  all  subsidiaries  held  by the parent  corporation  determined  in  accordance  with  paragraph  one  of   this  subsection or the investment value of any particular subsidiary or class  of  subsidiaries held by the parent corporation determined in accordance  with paragraph two of this subsection, which values may be  required  to  be  audited  by  an  independent  public  accountant  in accordance with  generally accepted auditing standards.