§ 519 — Acquisition of control of investment companies

§ 519. Acquisition of control of investment companies. 1. Subject to\nsuch regulations as the superintendent may prescribe, prior to the\nacquisition of control of an investment company by means of the\nacquisition of the capital stock or equity interests in such investment\ncompany or in any company which directly or indirectly controls such\ninvestment company, the acquiring company shall make written application\nto the superintendent for permission to acquire such control. Such\napplication shall be in such form and shall contain such information as\nthe superintendent may require and such applicant, at the time of making\nsuch application, shall pay to the superintendent an investigation fee\nas prescribed pursuant to section eighteen-a of this chapter.\n The superintendent shall disapprove the proposed exercise of control\nof an investment company if, after notice to and an opportunity to be\nheard by the applicant and such investment company, he finds the\nacquisition of control therein contrary to law or determines that\ndisapproval is reasonably necessary to protect the interests of the\npeople of this state. In making such determination, the superintendent\nshall only consider (a) whether the character, responsibility and\ngeneral fitness of the company which seeks to control such investment\ncompany are such as to command confidence and warrant belief that the\nbusiness of such investment company will be honestly and efficiently\nconducted in a manner consistent with the public interest, the interests\nof depositors and creditors of such investment company, and (b) whether\nthe exercise of control may impair the safe and sound conduct of the\nbusiness of such investment company, the conservation of its assets or\npublic confidence in its business. Unless the superintendent shall have\ndenied such application in writing within ninety days of the filing\nthereof, or shall have advised the applicant in writing before the\nexpiration of ninety days of his determination to extend such period an\nadditional sixty days, such application shall be deemed approved.\n As used in this subdivision one, the term "control" means the\npossession, directly or indirectly, of the power to direct or cause the\ndirection of the management and policies of a person, whether by means\nof the ownership of the voting stock or equity interests of such person\nor of one or more persons controlling such person, by means of a\ncontractual arrangement, or otherwise. Control shall be presumed to\nexist if any company, directly or indirectly, owns, controls or holds\nwith the power to vote ten per centum or more of the voting stock of any\ninvestment company or of any company which owns, controls or holds with\npower to vote ten per centum or more of the voting stock of such\ninvestment company, but no person shall be deemed to control an\ninvestment company solely by reason of his being an officer or director\nof such investment company. The superintendent may in his discretion,\nupon the application of an investment company or any company which,\ndirectly or indirectly, owns, controls or holds with power to vote or\nseeks to own, control or hold with power to vote any voting stock of\nsuch investment company, determine whether or not the ownership, control\nor holding of such voting stock constitutes or would constitute control\nof such investment company for purposes of this section.\n The provisions of this subdivision shall not apply to (1) a company\nwhich has submitted a plan of acquisition to the superintendent pursuant\nto subdivision two of this section or (2) any action taken pursuant to\narticle thirteen of this chapter.\n 2. Any company, whether or not it is in control of the business of an\ninvestment company as provided in subdivision one of this section, which\ndesires to acquire all, or substantially all of the capital stock of an\ninvestment company shall, together with such investment company, submit\nin duplicate to the superintendent a written plan of acquisition of such\nstock together with such other information as the superintendent may\ndetermine. Such plan shall be in form satisfactory to the\nsuperintendent, shall specify each investment company the stock of which\nis to be acquired by the company and shall prescribe the terms and\nconditions of the acquisition and the mode of carrying it into effect,\nincluding the manner of exchanging the shares of the investment company\nfor shares or other securities or cash of the company. Any such plan may\nprovide for the payment of cash in lieu of the issuance of fractional\nshares of the company.\n At the time of submission to the superintendent of the written plan of\nacquisition of stock, an investigation fee as prescribed pursuant to\nsection eighteen-a of this chapter shall be paid to the superintendent.\n There shall be submitted, in duplicate, to the superintendent with the\nplan of acquisition of stock, a certificate of the president or\nsecretary of the company, certifying that such plan has been approved by\nthe board of directors or other governing body of his company by a\nmajority vote of all the members thereof, and a certificate of the\npresident, secretary or cashier of the investment company, the\nacquisition of all the capital stock of which is provided for,\ncertifying that such plan has been approved by the board of directors of\nhis corporation by a majority vote of all the members thereof, and that\nsuch plan was thereafter submitted to the stockholders of such\ncorporation at a meeting thereof held upon notice of at least fifteen\ndays, specifying the time, place and object of such meeting and\naddressed to each stockholder at the address appearing upon the books of\nthe corporation and published at least once a week for two successive\nweeks in one newspaper in the county in which such corporation has its\nprincipal place of business and that such plan has been approved at such\nmeeting by the vote of the stockholders owning at least two-thirds in\namount of the stock of such corporation.\n The superintendent shall approve or disapprove of a proposed plan of\nacquisition within one hundred twenty days after the submission of such\nplan of acquisition to him, and in determining whether or not to approve\nany such plan the superintendent shall take into consideration the\ndeclaration of policy contained in section ten of this chapter. If the\nsuperintendent shall approve such plan of acquisition, the\nsuperintendent shall file the plan, together with such certificates and\nthe original of the approval of the superintendent, in the office of the\nsuperintendent. Upon such filing in the office of the superintendent the\nplan, and the acquisitions provided for therein, shall become effective,\nunless a later date is specified in the plan, in which event the plan\nand such acquisitions shall become effective upon such later date.\n Any stockholder of any such corporation, entitled to vote on such plan\nof acquisition, who does not assent thereto shall, subject to and by\ncomplying with section six thousand twenty-two of this chapter, have the\nright to receive payment of the fair value of his shares and the other\nrights and benefits provided by such section.\n The provisions of this subdivision shall not apply to any action taken\npursuant to article thirteen of this chapter.\n 3. For a period of six months from the date of qualification thereof\nand for such additional period of time as the superintendent may\nprescribe in writing, the provisions of this section shall not apply to\na transfer of control by operation of law to the legal representative,\nas hereinafter defined, of one who has control of an investment company.\nThereafter, such legal representative shall comply with the provisions\nof subdivision one of this section. The provisions of subdivision one of\nthis section shall be applicable to an application made under such\nsection by a legal representative.\n The term "legal representative," for the purposes of this section,\nshall mean one duly appointed by a court of competent jurisdiction to\nact as executor, administrator, trustee, committee, conservator or\nreceiver, including one who succeeds a legal representative and one\nacting in an ancillary capacity thereto in accordance with the\nprovisions of such court appointment.\n 4. For purposes of this section the term "company" shall be given the\nsame meaning as is contained in its definition in section one hundred\nforty-one of this chapter.\n 5. Notwithstanding the provisions of subdivision three of section\ntwo-a of this chapter, when applying this section to limited liability\ninvestment companies, the term "capital stock" shall mean the equity\ninterest of a member as set forth in the company's articles of\norganization or, in the absence of such a provision, the equity interest\nrepresented by a member's right to a proportionate share of the profits\nof the company.\n