§ 1202 — Number of directors; independent directors and committees of the board of directors; duty of directors

§ 1202. Number of directors; independent directors and committees of\nthe board of directors; duty of directors. (a) (1) Subject to item (v)\nof subparagraph (B) of paragraph five of subsection (a) of section one\nthousand two hundred one of this article, and subject to any provision\nof the corporate charter of a domestic insurance company, the number of\ndirectors shall be fixed by the by-laws, or if not so fixed, by action\nof the directors.\n (2) If not otherwise fixed under this article, the number shall be\nseven but it may be increased or decreased by amendment of the by-laws,\nor by action of the board, subject to the following limitations: (i) if\nthe board is authorized by the by-laws to increase or decrease the\nnumber of directors, the amendment shall require the vote of a majority\nof the entire board; (ii) no decrease shall shorten the term of any\nincumbent director; and (iii) no decrease shall reduce the number of\ndirectors to fewer than seven.\n (3) The charters of all domestic insurance companies approved before\nJanuary first, nineteen hundred forty which fail to comply with item (v)\nof subparagraph (B) of paragraph five of subsection (a) of section one\nthousand two hundred one of this article but which were validated by\nsection forty-eight-a of the former insurance law in effect prior to\nthis chapter remain so validated and shall not be affected by such item\nor paragraph one or two of this subsection in respect of the minimum\nnumber of directors.\n (b) (1) Subject to item (v) of subparagraph (B) of paragraph five of\nsubsection (a) of section one thousand two hundred one of this article,\nnot less than one-third of the directors of a domestic stock life\ninsurance company and not less than one-third of the members of each\ncommittee of the board of directors of any domestic life insurance\ncompany shall be persons who are not officers or employees of such\ncompany or of any entity controlling, controlled by, or under common\ncontrol with such company and who are not beneficial owners of a\ncontrolling interest in the voting stock of such company or any such\nentity. At least one such person shall be included in any quorum for the\ntransaction of business at any meeting of the board of directors or any\ncommittee thereof.\n (2) The board of directors of a domestic life insurance company shall\nestablish one or more committees comprised solely of directors who are\nnot officers or employees of the company or of any entity controlling,\ncontrolled by, or under common control with the company and who are not\nbeneficial owners of a controlling interest in the voting stock of the\ncompany or any such entity. Such committee or committees shall have\nresponsibility for recommending the selection of independent certified\npublic accountants, reviewing the company's financial condition, the\nscope and results of the independent audit and any internal audit,\nnominating candidates for director for election by shareholders or\npolicyholders, evaluating the performance of officers deemed by such\ncommittee or committees to be principal officers of the company, and\nrecommending to the board of directors the selection and compensation of\nsuch principal officers and in the case of a domestic stock life\ninsurance company, recommending to its board of directors any plan to\nissue options to its officers and employees for the purchase of shares\nof stock, pursuant to section one thousand two hundred seven of this\narticle.\n (3) The provisions of this subsection shall not apply to a domestic\nlife insurance company if the holding company or parent corporation is a\nforeign or domestic insurance company, a mutual insurance holding\ncompany established pursuant to the laws of the United States, or a\npublicly held corporation incorporated in the United States, having a\nboard of directors and committees thereof that meet the same\nrequirements as have been established for a domestic stock life\ninsurance company pursuant to paragraphs one and two of this subsection.\nIn such a case, the directors of the holding company or parent\ncorporation shall be subject to this chapter in the same manner as the\ndirectors of a domestic stock life insurance company.\n (c) A director of a domestic life insurance company shall perform his\nduties as a director, including his duties as a member of any committee\nof the board upon which he may serve, in accordance with the provisions\nof section seven hundred seventeen of the business corporation law and\nthe provisions of this chapter.\n