§ 1201 — Incorporation of stock or mutual insurance companies

§ 1201. Incorporation of stock or mutual insurance companies. (a) A\ncorporation may be organized and licensed to do an insurance business in\nthis state by taking the following successive steps, subject to\napplicable requirements of this chapter:\n (1) The proposed incorporators, comprising at least nine natural\npersons (except as provided in section six thousand four hundred two of\nthis chapter), shall submit to the superintendent, in writing, the\ncorporation's proposed name, the county in which its principal office\nwill be located, and the name and address of a public newspaper of\ngeneral circulation in such county.\n (2) If the superintendent approves the proposed name and newspaper,\neach as conforming to the requirements of law, he shall so notify the\nproposed incorporators, or their representative, in writing. Such\napproval shall become void if within six months from its date the\ndeclaration and charter referred to in paragraphs four and five hereof\nare not filed pursuant to paragraph six hereof.\n (3) The proposed incorporators shall publish in such newspaper, twice\na week for three successive weeks or once a week for six successive\nweeks, a notice of intention to form such a corporation, stating its\nproposed name, the kinds of insurance business to be transacted, the\nnames and city and state of residence of the proposed incorporators, the\nlocation of its principal office in this state, and, if a stock\ncorporation, the amount of its proposed initial capital.\n (4) The proposed incorporators shall submit to the superintendent:\n (A) proof of such publication by the affidavit of the publisher or of\nhis foreman or clerk; and\n (B) a declaration, signed by each incorporator and duly acknowledged\nbefore a notary public or other officer authorized to take\nacknowledgments of conveyances of real property within this state.\n (5) (A) Such declaration shall be in the English language, shall state\nthe proposed incorporators' intention to form a corporation to do one or\nmore kinds of insurance business authorized by section one thousand one\nhundred thirteen of this chapter, shall specify the paragraphs defining\nsuch kinds of insurance business and shall set forth a copy of the\ncorporation's proposed charter.\n (B) The corporation's proposed charter shall contain:\n (i) the corporation's name, which shall include a distinctive word or\nwords, and, if a mutual corporation, shall contain the word "mutual";\n (ii) the place where its principal office is to be located;\n (iii) the kinds of insurance to be transacted, specified as above\nrequired;\n (iv) the manner in which corporate powers are to be exercised;\n (v) the number of directors, or that it shall be not less than a\nstated minimum nor more than a stated maximum. Except as provided in\nsection six thousand four hundred two of this chapter the number of\ndirectors shall not be less than seven. As used in this item, "number of\ndirectors" means the total number of directors which the corporation\nwould have if there were no vacancies;\n (vi) the times and manner of electing directors and officers, the\nmanner of filling vacancies, and provision that each director shall be\nat least eighteen years of age and that at all times a majority shall be\ncitizens and residents of the United States, and that not less than one\nshall be a resident of this state;\n (vii) the names and city and state of residence of the directors, who\nshall serve until the first annual meeting of such corporation;\n (viii) the duration of its corporate existence, which shall be not\nless than thirty years;\n (ix) the amount of its capital, if a stock corporation; and\n (x) any other particulars necessary to explain the corporation's\nobjects, purposes, management and control.\n (C) The corporation's proposed charter may authorize the use in a\nforeign country where it does or proposes to do business of a specified\ntranslation of its name in any language commonly used in such country.\n (D) The superintendent may, by regulation, prescribe additional\ninformation to be required, pursuant to this paragraph, of all companies\nor of any kind of company.\n (6) The superintendent shall transmit such proof of publication,\ndeclaration, and charter to the attorney general. If approved by the\nattorney general, as conforming to the requirements of law, the\nsuperintendent shall thereupon file them in his office and issue a\ncertified copy thereof to the proposed incorporators. If requested by\nsuch proposed incorporators, the superintendent shall also issue to them\na certificate of incorporation executed by him in the name of the people\nof the state and thereupon such incorporators shall become a body\ncorporate and have the powers enumerated in paragraph seven hereof, but\nsuch corporation shall not be authorized to do the business of insurance\nuntil it obtains a license therefor.\n (7) Every stock corporation, upon compliance with this chapter and the\nbusiness corporation law, may create and issue the number of shares of\ncapital stock stated in its charter which may be of one or more classes.\nIf the charter authorizes shares which are entitled to preference in the\ndistribution of dividends or assets it shall provide that:\n (A) their dividend yield shall not exceed a rate equal to the maximum\nrate of interest provided in section 5-501 of the general obligations\nlaw, in effect at the time such shares are offered for sale; and\n (B) the dividends may not be cumulative for more than three years.\n (8)(A) A stock corporation shall have power to:\n (i) open books to receive subscriptions to its capital shares,\n (ii) keep them open until all such shares, or so many as may be\nnecessary to satisfy the minimum capital requirements, are subscribed\nfor,\n (iii) receive payment for such subscriptions,\n (iv) invest the monies as prescribed in this chapter, and\n (v) expend money or incur liabilities necessary or proper as\norganization expenses, to be paid out of the proceeds of such\nsubscriptions, such expenses not to exceed the maximum amount prescribed\nin its permit to solicit such subscriptions.\n (B) The corporation shall not solicit subscriptions to its shares\nuntil it receives a permit therefor from the superintendent which shall\nbe issued after the corporation submits to him an estimate of the total\namount to be expended for organization expenses, and he approves the\nestimate. Such estimate shall be recited in the permit, which shall fix\nthe maximum amount, to be prescribed by the superintendent, which may be\nexpended for organization expenses.\n (C) Such corporation shall not employ, as agents or brokers to sell\nits securities to the public, any persons who have not complied with the\nrequirements of section one thousand two hundred four of this article.\n (9) (A) A mutual corporation shall have power to:\n (i) receive monies necessary to comply with the requirements of this\nchapter relative to its initial surplus fund;\n (ii) borrow such monies in accordance with the provisions of section\none thousand three hundred seven of this chapter;\n (iii) open books to receive applications for insurance from persons\ndesiring and eligible to become members;\n (iv) keep them open until the minimum number and amount of\napplications, and the premium payments thereon, as required by this\nchapter are received;\n (v) invest the monies as prescribed in this chapter for the investment\nof the minimum surplus of a mutual insurance company; and\n (vi) expend money or incur liabilities necessary or proper as\norganization expenses, such expenses not to exceed the maximum amount\nprescribed in its permit to solicit such applications.\n (B) The corporation shall not solicit applications for insurance or\nreceive premium payments thereon until it receives a permit therefor\nfrom the superintendent. The permit shall be issued after:\n (i) the superintendent is satisfied, by such evidence as he may\nrequire or by such examination as he may deem expedient, that the\ncorporation holds in trust for prospective policyholders and creditors a\nfund, in cash or securities acceptable to him, at least equal to the\namount required as its initial surplus fund, such trust to terminate\nwhen a license to do an insurance business of the kinds provided in the\ncorporate charter has been obtained, and\n (ii) the corporation submits to the superintendent an estimate of the\ntotal amount to be expended for organization expenses, and he approves\nthe estimate. Such estimate shall be recited in the permit, which shall\nfix the maximum amount, to be prescribed by the superintendent, which\nmay be expended for organization expenses.\n (10) The directors and incorporators of any stock or mutual\ncorporation shall be jointly and severally liable for all its debts and\nliabilities until it is licensed to do an insurance business of the kind\nor kinds proposed.\n (b) This section shall not apply to co-operative fire insurance\ncompanies, fraternal benefit societies, or corporations organized under\narticle forty-three or sixty-seven of this chapter.\n