§ 56-3-103 — Officers must not be pecuniarily interested in investment or disposition of funds of domestic company

(a) No director or other officer of any domestic insurance company organized under the laws of this state, and no member of a committee having any authority in the investment or disposition of its funds, shall accept, or be the beneficiary of, either directly or remotely, any fee, brokerage, commission, gift, or other consideration for or on account of any loan, deposit, purchase, sale, payment, or exchange made by or in behalf of the company, or be pecuniarily interested in the purchase, sale, or loan, either as borrower, principal, coprincipal, agent, or beneficiary, except that if a policyholder, the person shall be entitled to all the benefits accruing under the terms of the contract; provided, that this section shall not forbid the collection by attorneys of reasonable fees for the examination of titles and investigations of loans and investments. This section shall not bar a person who is an agent of an insurance company, in the normal course of business, from serving on the board or on a committee of an insurance company because the person receives commissions on insurance sales. (b) This section shall not bar or limit the ability of a director, officer, or committee member of an insurance company from: (1) Holding or owning stock or other ownership interest, if the stock or ownership interest has been disclosed to the insurance company, in a company or entity: (A) The shares of which are publicly traded on a national stock exchange or on an over-the-counter basis; (B) That is regulated by the federal reserve board, the federal deposit insurance corporation, the office of the comptroller of the currency, or the office of thrift supervision; or (C) That does business with the insurance company in the ordinary course of business and on terms no less favorable to the insurance company than are available to ordinary customers of the entity; (2) Receiving dividends or other distributions in the ordinary course of business from the stock or ownership interest; or (3) Serving as a director, officer, committee member, employee or agency of any entity listed in this subsection (b) and receiving fees or other compensation in the ordinary course of business for the service.

Legislative History

Acts 1917, ch. 124, § 1; Shan., § 3369a148; Code 1932, § 6441; T.C.A. (orig. ed.), §§ 56-221, 56-310; Acts 1995, ch. 219, § 1; 1995, ch. 221, § 7; 2005, ch. 101, § 1.