Source: https://code.dccouncil.us/dc/council/code/sections/31-703.html
Timestamp: 2019-04-20 22:53:50+00:00

Document:
D.C. Law Library - § 31–703. Acquisition of control of or merger with domestic insurer.
↪ § 31–703. Acquisition of control of or merger with domestic insurer.
(a)(1) No person other than the issuer shall make a tender offer for or a request or invitation for tenders of, enter into any agreement to exchange securities, or seek to acquire, or acquire, in the open market or otherwise, any voting security of a domestic insurer, if, after consummation, the person would, directly or indirectly (or by conversion or by exercise of any right to acquire) be in control of the insurer.
(2) No person shall enter into an agreement to merge with or otherwise to acquire control of a domestic insurer or any person controlling a domestic insurer unless, at the time the offer, request, or invitation is made or any agreement is entered into, or prior to the acquisition of the securities if no offer or agreement is involved, the person has filed with the Mayor and has sent to the insurer, a statement containing the information required by this section and the offer, request, invitation, agreement, or acquisition has been approved by the Mayor in the manner prescribed by this subchapter.
(3) For the purposes of this section, any controlling person of a domestic insurer seeking to divest its controlling interest in the domestic insurer, in any manner, shall file with the Mayor, with a copy to the insurer, confidential notice of its proposed divestiture at least 30 days before the cessation of control. The Mayor shall determine those instances in which the party or parties seeking to divest or to acquire a controlling interest in an insurer will be required to file for and obtain approval of the transaction. The information shall remain confidential until the conclusion of the transaction unless the Mayor, in the Mayor’s discretion, determines that confidential treatment will interfere with enforcement of this subchapter. If the statement referred to in paragraph (2) of this subsection is otherwise filed, this paragraph shall not apply.
(b)(1) For purposes of this section, the term “domestic insurer” shall include any person controlling a domestic insurer unless the person, as determined by the Mayor, is either directly or through its affiliates primarily engaged in business other than the business of insurance. However, such a person shall file a preacquisition notification with the Mayor containing the information set forth in § 31-704(c) 30 days prior to the proposed effective date of the acquisition. Failure to file is subject to § 31-704(e).
(2) For the purposes of this section, the term “person” shall not include any securities broker holding, in the usual and customary brokers function, less than 20% of the voting securities of an insurance company or of any person who controls an insurance company.
(12) Any additional information as the Mayor may by rule or regulation prescribe as necessary or appropriate for the protection of policyholders of the insurer or in the public interest.
(d) If the person required to file the statement referred to in subsections (a) and (b) of this section is a partnership, limited partnership, syndicate or other group, the Mayor may require that the information called for by subsection (c)(1) through (12) of this section shall be given with respect to each partner of the partnership or limited partnership, each member of the syndicate or group, and each person who controls the partner or member. If any partner, member, or person is a corporation, or the person required to file the statement referred to in subsections (a) and (b) of this section is a corporation, the Mayor may require that the information called for by subsection (c)(1) through (12) of this section shall be given with respect to the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding voting securities of the corporation.
(e) If any material change occurs in the facts set forth in the statement filed with the Mayor and sent to the insurer pursuant to this section, an amendment setting forth the change, together with copies of all documents and other material relevant to the change, shall be filed with the Mayor and sent to the insurer within 2 business days after the person learns of the change.
(f) If any offer, request, invitation, agreement, or acquisition referred to in subsections (a) and (b) of this section is proposed to be made by means of a registration statement under the Securities Act of 1933 (15 U.S.C. § 77a et seq.), or in circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.), or under a state law requiring similar registration or disclosure, the person required to file the statement referred to in subsections (a) and (b) of this section may utilize the documents in furnishing the information called for by that statement.
(vi) The acquisition is likely to be hazardous or prejudicial to the insurance buying public.
(B)(i) If an acquiring company proposes to acquire a domestic insurer which is a nonprofit hospital plan or medical service plan, the same procedure shall apply as provided in subparagraph (A) of this paragraph; provided, that the acquiring company shall have the burden of establishing that the proposed merger or acquisition of control does not result in the existence of any of the conditions set forth in sub-subparagraphs (i) through (vi) of subparagraph (A).
(ii) The determination made by the Mayor as provided in subparagraph (A) of this paragraph shall not become effective until 90 days after the Mayor makes the determination.
(2) The public hearing referred to in paragraph (1) of this subsection shall be held within 120 days after the statement required by subsections (a) and (b) of this section is filed, and at least 20-days notice shall be given by the Mayor to the person filing the statement; provided, that the Mayor may extend the 120-day period if all parties consent to the extension. Not less than 7-days notice of the public hearing shall be given by the person filing the statement to the insurer and to any other persons designated by the Mayor. The Mayor shall make a determination within 120 days after the conclusion of the hearing; provided, that the Mayor may extend this period if all parties consent to the extension. At the hearing, the person filing the statement, the insurer, and any party shall have the right to present evidence, examine and cross-examine witnesses, and offer oral and written arguments, and shall be entitled to conduct discovery proceedings in the same manner as is presently allowed in the Superior Court of the District of Columbia. All discovery proceedings shall be concluded not later than 3 days prior to the commencement of the public hearing.
(3) The Mayor may retain, at the acquiring person’s expense, any attorneys, actuaries, accountants, and other experts not otherwise a part of the Mayor’s staff as may be reasonably necessary to assist the Mayor in reviewing the proposed acquisition of control. For this purpose, the Mayor shall be exempt from the provisions of Unit A of Chapter 3 of Title 2.
(4)(A) If the proposed acquisition of control will require the approval of more than one commissioner, the public hearing referred to in paragraph (1) of this subsection may be held on a consolidated basis upon request of the person filing the statement referred to in subsection (a) of this section. A person shall file the statement referred to in subsection (a) of this section with the National Association of Insurance Commissioners within 5 days of making the request for a public hearing.
(B) A commissioner may opt out of a consolidated hearing, and shall provide notice to the applicant of the opt-out within 10 days of the receipt of the statement referred to in subsection (a) of this section.
(C) A hearing conducted on a consolidated basis shall be public and shall be held within the United States before the commissioners of the states in which the insurers are domiciled.
(D) The commissioners shall hear and receive evidence. A commissioner may attend a hearing in person or by telecommunication.
(B) Otherwise not comprehended within the purposes of this section.
(2) The effectuation, or any attempt to effectuate, an acquisition of control of, divestiture of, or merger with, a domestic insurer unless the Mayor has given approval.
(j) Every person not resident, domiciled, or authorized to do business in the District who files a statement with the Mayor under this section shall be deemed to have performed acts equivalent to and constituting an appointment by such a person of the Mayor to be his or her 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 lawful process shall be served on the Mayor and transmitted by registered or certified mail by the Mayor to the person at his or her last known address.
This section is referenced in § 31-704, § 31-709, § 31-731, § 31-732, § 31-752, § 31-753, and § 31-755.
D.C. Law 14-236, in subsec. (g)(3), added the last sentence.
D.C. Law 15-56, in subsec. (g), rewrote par. (1), and in par. (2), substituted “The public hearing referred to in paragraph (1) of this subsection shall be held within 120 days after the statement required by subsections (a) and (b) of this section is filed, and at least 20-days notice shall be given by the Mayor to the person filing the statement; provided, that the Mayor may extend the 120-day period if all parties consent to the extension.” for “The public hearing referred to in paragraph (1) of this subsection shall be held within 30 days after the statement required by subsections (a) and (b) of this section is filed, and at least 20-days notice shall be given by the Mayor to the person filing the statement.”, substituted “The Mayor shall make a determination within 120 days after the conclusion of the hearing; provided, that the Mayor may extend this period if all parties consent to the extension.” for “The Mayor shall make a determination within 30 days after the conclusion of the hearing.”, and substituted “and any party” for “any person to whom notice of hearing was sent, and any other person whose interest may be affected”.
The 2015 amendment by D.C. Law 20-235 added (a)(3); added (c)(11A) and (c)(11B) and made related changes; added (g)(4); and added “divestiture of” in (i)(2).
For temporary (90 day) amendment of section, see § 2 of Department of Insurance and Securities Regulation Procurement Emergency Act of 2002 (D.C. Act 14-314, March 26, 2002, 49 DCR 3451).
For temporary (90 day) amendment of section, see § 2(b) of Department of Insurance and Securities Regulation Merger Review Emergency Amendment Act of 2002 (D.C. Act 14-457, July 23, 2002, 48 DCR 8132).
For temporary (90 day) amendment of section, see § 2(b) of Department of Insurance and Securities Regulation Merger Review Congressional Review Emergency Amendment Act of 2002 (D.C. Act 14-513, October 23, 2002, 49 DCR 10475).
For temporary (90 day) amendment of section, see § 2(b) of Department of Insurance and Securities Regulation Merger Congressional Review Emergency Act of 2003 (D.C. Act 15-8, January 27, 2003, 50 DCR 1473).
For temporary (90 day) amendment of section, see § 2 of Department of Insurance and Securities Regulation Procurement Congressional Review Emergency Act of 2003 (D.C. Act 15-9, January 27, 2003, 50 DCR 1478).
For temporary (90 day) amendment of section, see § 2(b) of Department of Insurance and Securities Regulation Merger Review Emergency Amendment Act of 2003 (D.C. Act 15-205, October 24, 2003, 50 DCR 9845).
For temporary (90 day) amendment of section, see § 2(b) of Department of Insurance and Securities Regulation Merger Review Second Congressional Review Emergency Amendment Act of 2003 (D.C. Act 15-257, November 25, 2003, 50 DCR 11006).
For temporary (225 day) amendment of section, see § 2 of Department of Insurance and Securities Regulation Procurement Temporary Act of 2002 (D.C. Law 14-159, June 25, 2002, law notification 49 DCR 6495).
For temporary (225 day) amendment of section, see § 2(b) of Department of Insurance and Securities Regulation Merger Review Temporary Amendment Act of 2002 (D.C. Law 14-217, March 25, 2003, law notification 50 DCR 2730).
Because of the codification of D.C. Law 11-159 as subchapter II of Chapter 37 of Title 35 [subchapter II of Chapter 7 of Title 31, 2001 Ed.], and the designation of the preexisting text as subchapter I, “subchapter” has been substituted for “chapter” in (a)(2).

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