§ 27-3-1-3 — Manner of adoption of plan of exchange; approvals; compensation of dissenting shareholders

Indiana § 27-3-1-3

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 3: CONSOLIDATIONS AND REORGANIZATION
• Ch. 1: Exchange of Securities

Text

(a) Subject to section 2 of this chapter, any
domestic company may adopt a plan of exchange with any acquiring
corporation providing for the exchange of the outstanding stock of the
domestic company for shares of stock or other securities issued by the
acquiring corporation or cash or other consideration, or any
combination, in the following manner. The boards of directors of the
domestic company and of the acquiring corporation by resolutions
approved by a majority of the whole of each board shall adopt a plan
of exchange that sets forth the terms and conditions of the exchange
and the mode of carrying the terms and conditions into effect and other
provisions with respect to the exchange as may be deemed necessary
or desirable.
(b) The domestic company and the acquiring corporation shall
submit to the insurance commissioner three (3) copies of the plan of
exchange certified by an officer of each as having been adopted in
accordance with subsection (a). The copies of the plan of exchange
shall be accompanied by financial statements of the domestic company
for its last preceding fiscal year prepared pursuant to IC 27-1-20-21,
pro forma financial statements of each corporation based on the
assumption that the plan of exchange was effective as proposed at the
end of the last preceding fiscal year of the domestic company, an
estimate of expenses already incurred and of expenses expected to be
incurred in connection with the proposed plan of exchange, and a
written statement that sets forth for each corporation the proposed
changes, if any, in management policies and in the identity of officers
and directors of the domestic company and of the acquiring corporation
that are initially contemplated if the plan of exchange is effected as
proposed. The insurance commissioner shall hold a hearing upon the
fairness of the terms, conditions, and provisions of the plan of
exchange and the proposed exchange of stock or other securities of the
acquiring corporation or cash or other consideration or any
combination thereof for the stock of the domestic company at which the
policyholders and the shareholders of both the domestic company and
the acquiring corporation and any other interested party may appear
and to become party to the proceeding. The commissioner shall require
the domestic company and the acquiring corporation to produce
evidence as the commissioner considers necessary to establish the
foregoing, including evidence concerning the valuation of the
respective companies and the method utilized by the management of
each corporation to accomplish the valuation, inclusive of the value
established with respect to the stock of the domestic company that is
proposed to be exchanged as well as the value of the stock, securities,
and consideration other than cash to be offered by the acquiring
corporation in the exchange. The hearing shall be commenced not less
than twenty (20) days after the date on which the plan of exchange is
presented to the commissioner. The hearing shall be held in
Indianapolis, Indiana, at a place, date, and time specified by the
insurance commissioner. Notice of the hearing shall be published in a
newspaper of general circulation in the city where the principal office
of the domestic company and of the acquiring corporation are located
and Indianapolis once a week for two (2) successive weeks. Written
notice of the hearing shall be mailed at least ten (10) days before the
hearing by the domestic company and by the acquiring corporation to
all of their respective shareholders. All expenses of publication shall
be borne by the domestic company or the acquiring corporation, or
both, as specified in the plan of exchange. Except as otherwise
provided in this section, the hearing and the determination are subject
to IC 4-21.5-3. The commissioner shall issue an order approving the
plan of exchange as delivered to the commissioner by the domestic
company and the acquiring corporation and the modifications approved
by a majority of the whole board of directors of each corporation if the
commissioner finds:
(1) that the plan, including all modifications, if effected, will not
tend adversely to affect the financial stability or management of
the domestic company or the general capacity or intention to
continue the safe and prudent transaction of the insurance
business of the domestic company, or of the acquiring
corporation, if it is a domestic insurance company;
(2) that the interests of the policyholders and shareholders of the
domestic company, and, if the acquiring corporation is a domestic
insurance company, the policyholders of the acquiring corporation
are protected;
(3) that the fulfillment of the plan will not affect either the
contractual obligations of the domestic company and of the
acquiring corporation, if it is a domestic insurance company, to its
policyholders or the ability and tendency of either to render
service to its policyholders in the future; and
(4) that the terms and conditions of the plan of exchange and the
proposed issuance and exchange are fair and reasonable.
The order of the commissioner approving or disapproving the plan of
exchange shall be filed in the department within sixty (60) days after
the date the plan of exchange is presented to the commissioner. The
department shall give notice of the order in the manner prescribed in
IC 4-21.5-3 to all parties to the proceeding, and the department shall
endorse the commissioner's approval or disapproval on the plan of
exchange in the manner provided in IC 27-1-6-8 and shall deliver
copies to the domestic company and to the acquiring corporation. Any
party to the proceeding aggrieved by the order are entitled to a judicial
review of the order in accordance with IC 4-21.5-5.
(c) The plan of exchange as approved by the insurance
commissioner shall then be submitted to a vote of the shareholders of
the domestic company at an annual or special meeting of the
shareholders. Notice of the submission of the plan to the shareholders
shall be included in the notice of the annual or special meeting. The
shareholders entitled to vote in respect of the plan may vote in person
or by proxy, and each shareholder has one (1) vote for each share of
voting stock held by the shareholder. Jointly owned shares may only be
voted jointly. The plan shall be approved by the shareholders of the
domestic company upon receiving the affirmative votes representing
two thirds (2/3) of the outstanding capital stock of the domestic
company or a larger proportion as may be specified in the plan of
exchange. Notwithstanding shareholder adoption of the plan of
exchange and at any time before the filing of the certificate setting forth
the plan of exchange by the department, pursuant to section 4 of this
chapter, the plan of exchange may be abandoned pursuant to a
provision for abandonment, if any, contained in the plan of exchange.
(d) Within ten (10) days after the plan of exchange is adopted by the
shareholders of the domestic company, a written notice of the adoption
of the plan of exchange shall be mailed or delivered personally to each
shareholder of record of the company who was entitled to vote on the
plan. The domestic company shall file with the department an affidavit
of the secretary or an assistant secretary of the company or of an officer
of the transfer agent of the company that the notice was given.
(e) Any shareholder of the domestic company owning shares not
voted in favor of the plan at the meeting at which the plan was
approved by the shareholders of the domestic company may object in
writing to the plan and demand payment, should the plan become
effective, of the fair value of any shares as of the day on which the plan
of exchange was approved by the shareholders of the domestic
company pursuant to subsection (c). The objection and demand must
be received, together with the certificate or certificates representing the
shares with respect to which objection and demand have been made for
notation that the objection and demand have been made, by the
domestic company or its transfer agent within thirty (30) days after the
date of the meeting of shareholders. The objection and demand may not
pertain to any shares that were voted in favor of the plan. Objection and
demand can only be made jointly by the holders of any share jointly
held. The objection and demand may not be withdrawn unless the
domestic company, by an authorized officer, consents in writing. Upon
the plan of exchange becoming effective, the holder of any shares, with
respect to which the objection and demand have been made and
certificates for which have been delivered to the domestic company or
its transfer agent for notation, or any transferee, ceases to be a
shareholder of the domestic company with respect to the shares and
does not have rights with respect to the shares except the right to
receive payment for the shares under this subsection. Every shareholder
failing to make objection and demand accompanied by certificates
representing the shares with respect to which the objection and demand
have been made or withdrawing the objection and demand as provided
in this subsection are conclusively presumed to have assented to, and
to have agreed to be bound by, the plan of exchange in accordance with
its terms. Within forty-five (45) days after the date of the meeting of
shareholders of the domestic company at which the plan of exchange
was approved by the shareholders, the domestic company, or, if the
plan of exchange specifies, the acquiring corporation, shall mail a
written offer to each holder of record of shares with respect to which
an objection and demand have been made, as provided in this
subsection, to pay for the shares a price per share considered by the
corporation to be the fair value of the shares as of the date of the
meeting. The form of written offer to be used, including the price per
share, shall first be submitted to and approved by the insurance
commissioner. If the offer is accepted in writing by the holder, the
corporation shall pay the holder, within forty-five (45) days after the
date of the plan of exchange becoming effective, the price upon the
surrender of the certificate or certificates representing the shares. If,
within thirty (30) days after the date of the mailing of the written offer,
the domestic company or the acquiring corporation, as the case may be,
and a shareholder do not agree, the corporation or the shareholder may,
within ninety (90) days after the date of the mailing of the written offer,
petition the circuit or the superior court of the county in which the
principal office of the domestic company is located to appraise the fair
value of the shares as of the date of the meeting of shareholders of the
domestic company at which the plan of exchange was approved by the
shareholders and payment of the appraised value of the shares shall be
made by the domestic company or, if the plan of exchange so specifies,
the acquiring corporation within sixty (60) days after the entry of the
judgment or order finding the appraised value upon the surrender of the
certificate or certificates representing the shares. The practice,
procedure, and judgment in the circuit or superior court upon the
petition is the same, so far as practical, as that under IC 32-24. The
judgment of the circuit or superior court is final. All shares acquired by
the domestic company upon payment of the value of the shares shall be
canceled by the board of directors of the domestic company upon the
plan of exchange becoming effective or at any time after the plan
becomes effective and the capital stock of the domestic company shall
be decreased in accordance with IC 27-1-8-12. If the plan of exchange
does not become effective, the right of shareholders or transferees to be
paid the fair value of their shares under this subsection shall cease, and
their status shall be the same as that of shareholders who voted in favor
of the plan. If a shareholder or the shareholder's transferee with respect
to any share or shares for which objection and demand has been made:
(1) withdraws the objection and demand in the manner provided
by this subsection;
(2) fails to submit a certificate or certificates at the time and in the
manner required by this subsection;
(3) does not file a petition for the determination of fair value
within the time and in the manner provided in this subsection and
neither the domestic company nor the acquiring corporation files
a petition for such determination; or
(4) is adjudged by a court of competent jurisdiction not to be
entitled to the relief provided by this subsection;
the right of the shareholder or the shareholder's transferee to be paid
the fair value of the share or shares under this subsection shall cease,
and the shareholder's status with respect to the share or shares is the
same as that of a shareholder who voted in favor of the plan.
Formerly: Acts 1967, c.61, s.3. As amended by P.L.252-1985,
SEC.140; P.L.7-1987, SEC.143; P.L.2-2002, SEC.82.