§ 31–907. Optional provisions in a plan of conversion.

(a) The following provisions may be included in the plan:

(1) The plan may provide that the directors and officers of the mutual company shall receive, without payment, nontransferable subscription rights to purchase capital stock of the converted stock company or the stock of another corporation that is participating in the conversion plan as provided in § 31-906(e). Those subscription rights shall be allocated among the directors and officers by a fair and equitable formula.

(2) The total number of shares that may be purchased under subsection (a)(1) of this section may not exceed 85% of the total number of shares to be issued in the case of a mutual company with total assets of less than $50 million, or 25% of the total shares to be issued in the case of a mutual company with total assets or more than $500 million. For mutual companies with total assets between $50 million and $500 million, the total number of shares that may be purchased shall be interpolated.

(3) Stock purchased by a director or officer under subsection (a)(1) of this section shall not be sold within one year following the effective date of the conversion.

(4) The plan may also provide that a director or officer or person acting in concert with a director or officer of the mutual company may not acquire any capital stock of the converted stock company for 3 years after the effective date of the plan, except through a broker or dealer, without the permission of the Commissioner. That provision may not apply to prohibit the directors and officers from purchasing stock through subscription rights received in the plan under subsection (a)(1) of this section.

(b) The plan may allocate to a tax-qualified employee benefit plan nontransferable subscription rights to purchase up to 10% of the capital stock of the converted stock company, or the stock of another corporation that is participating in the conversion plan as provided in § 31-906(e) and (l). The employee benefit plan shall be entitled to exercise its subscription rights regardless of the amount of shares purchased by other persons.

(May 24, 1996, D.C. Law 11-126, § 8, 43 DCR 1551; Mar. 24, 1998, D.C. Law 12-81, § 43(f), 45 DCR 745; July 17, 1999, D.C. Law 13-13, § 2(b), 46 DCR 4428.)

Prior Codifications

1981 Ed., § 35-4207.

Section References

This section is referenced in § 31-906.

Effect of Amendments

D.C. Law 13-13 in subsecs. (a) and (b) modified the statutory referents.

Emergency Legislation

For temporary amendment of section, see § 2(b) of the Insurance Demutualization Emergency Amendment Act of 1998 (D.C. Act 12-528, December 16, 1998, 45 DCR 476).

For temporary (90-day) amendment of section, see § 2(b) of the Insurance Demutualization Congressional Review Emergency Amendment Act of 1999 (D.C. Act 13-35, March 18, 1999, 46 DCR 3004).