Section 207: Acquisition of stock of subsidiary insurer; approval of plan by commissioner; objections of shareholders
Section 207. (a) As used in this section, the following words shall, unless the context clearly requires otherwise, have the following meanings:—
''Parent corporation'', a corporation organized for any purpose under the law of the commonwealth or any other jurisdiction, owning directly or indirectly at least ninety percent of the aggregate issued and outstanding shares of all classes of capital stock of an incorporated domestic stock company.
''Subsidiary insurer'', an incorporated domestic stock company so owned by a parent corporation.
(b) Any parent corporation may, in the manner hereinafter prescribed, acquire all of the issued and outstanding shares of any class or classes of capital stock of its subsidiary insurer not owned by the parent corporation. The method authorized by this section for acquiring shares of a subsidiary insurer is not exclusive, but is in addition to any other lawful method for the acquisition of such shares.
(c) The board of directors of the parent corporation which seeks to acquire minority interests in its subsidiary insurer shall adopt a plan for such acquisition, which plan shall set forth: (1) the name of the subsidiary insurer; (2) the total number of issued and outstanding shares of each class of stock of the subsidiary insurer, the number of its shares owned by the parent corporation and, if either of the foregoing is subject to change prior to the effective date of acquisition the manner in which any change may occur; (3) the terms and conditions of the plan, including the manner and basis of exchanging the shares to be acquired for shares or other securities of the parent corporation, for cash, other consideration, or any combination of the foregoing, and the proposed effective date of acquisition; (4) if the parent corporation is not authorized to do business in the commonwealth, its consent to the enforcement against it in the commonwealth of the rights of shareholders pursuant to the plan or the rights of shareholders objecting to the plan, and a designation of the commissioner as the agent upon whom process may be served against the parent corporation in any action or proceeding to enforce any such rights; and (5) such other provisions with respect to the plan as the board of directors of the parent corporation deems necessary or desirable, or as the commissioner may prescribe.
(d) Upon the adoption of the plan of acquisition, it shall be executed by the parent corporation under its corporate seal and submitted to the commissioner who shall, within sixty days from the date of such submission, endorse thereon his approval or disapproval and notify the parent corporation thereof. The commissioner in reviewing such plan of acquisition may employ such experts or consultants as he shall deem necessary. The reasonable costs of such experts and consultants are to be paid for by the parent corporation. The commissioner shall approve the plan if he is satisfied that it complies with this section and is not inconsistent with law. If the commissioner disapproves the plan he shall advise the parent corporation in writing of the reasons for such disapproval. No such plan shall take effect unless the approval of the commissioner has been obtained. Any refusal by the commissioner to give any approval required by this section shall be subject to judicial review.
(e) If the commissioner approves the plan, the parent corporation shall deliver a copy of the plan or a summary thereof approved by the commissioner, together with a statement of the rights of objecting shareholders in accordance with this section, to each person who, as of the date of delivery, is a holder of record of stock to be acquired pursuant to the plan. Such delivery shall be made either in person or by depositing a copy of the plan or the approved summary and statement of rights of objecting shareholders in the United States mail, postage prepaid, addressed to the shareholder at his address of record. On or before the date of acquisition proposed in the plan, the parent corporation shall file with the commissioner a certificate executed by its president or vice-president and attested by its secretary or assistant secretary under the seal of the parent corporation, attesting to compliance with the provisions of this section by the parent corporation. Upon compliance with the foregoing requirements, ownership of the shares to be acquired pursuant to the plan shall vest in the parent corporation on the date of acquisition proposed in the plan, whether or not the certificates for such shares have been surrendered for exchange, and the parent corporation shall be entitled to have new certificates therefore registered in its name. The holders of all such shares shall surrender the certificates for such shares to the parent corporation for exchange pursuant to the plan. Whether or not a shareholder so surrenders his certificate or certificates, all of his rights, powers, and privileges as such shareholder shall nevertheless terminate and be extinguished as of such date, excepting only his right to receive payment for his stock as provided in the plan, or to object to the plan and receive payment for his stock in accordance with the provisions hereinafter set forth.
(f) The statement of rights of objecting shareholders may be in such form as the directors of the parent corporation deem advisable, but the following form of notice shall be sufficient to comply with this section:
Any shareholder who objects to the plan shall have the right to demand in writing from the parent corporation, within thirty days after the date of mailing of this statement, payment for his shares and an appraisal of the value thereof. Such corporation and any such shareholder shall, in such cases, have the rights and duties and shall follow the procedures set forth in this section.
If any shareholder whose stock is to be acquired pursuant to the plan shall in writing within thirty days after the date of mailing of such statement object to the plan and demand payment for his stock from the parent corporation, such corporation shall pay to him the fair value of his stock within thirty days after the expiration of the period during which such demand may be made.
(g) If during the thirty day period for payment, the parent corporation and any such objecting shareholder fail to agree as to the value of such stock, such corporation or any such shareholder may within four months of the expiration of such thirty day period for payment demand a determination of the value of the stock of all such objecting shareholders by filing a bill in equity in the superior court department of the trial court in the county where the corporation in which objecting shareholders held stock has its principal office within the commonwealth. In the event sections ninety-one to ninety-five, inclusive, of chapter one hundred and fifty-six B shall be applicable; provided, however, that a shareholder who makes demand as provided in this section shall be deemed to have consented to the provisions of section ninety-one of said chapter one hundred and fifty-six B relating to notice; and provided, further, that the words ''proposed corporate action'' for purposes of sections ninety-two and ninety-five of said chapter one hundred and fifty-six B the words shall mean adoption of the plan of acquisition by the parent corporation.
(h) The enforcement by a shareholder of his right to receive payment for his shares in the manner provided in this section shall be an exclusive remedy except that this section shall not exclude the right of such shareholder to bring or maintain an appropriate proceeding to obtain relief on the grounds that the adoption of the plan will be or is illegal or fraudulent as to him.
(i) The superior court department of the trial court of Suffolk county and the superior court department of the trial court for the county in which the subsidiary insurer has its principal place of business are hereby vested with jurisdiction over any parent corporation which files a plan of acquisition with the commissioner under this section, and over all actions involving such parent corporation arising out of this section, including such review as provided herein, and each such parent corporation shall be deemed to have performed an act equivalent to and constituting an appointment by such parent corporation of the commissioner to be its true and lawful attorney upon whom may be served all lawful process in any action, suit or proceeding arising out of violations of this section. Copies of all such lawful process shall be served on the commissioner and transmitted by registered or certified mail by the commissioner to such parent corporation at its last known address.