2023 New York Laws › ISC - Insurance › Article 12 - Organization and Corporate Procedure › 1201 - Incorporation of Stock or Mutual Insurance Companies.

§  1201.  Incorporation  of stock or mutual insurance companies. (a) A
corporation may be organized and licensed to do an insurance business in
this  state  by  taking  the  following  successive  steps,  subject  to
applicable requirements of this chapter:
(1)  The  proposed  incorporators,  comprising  at  least nine natural
persons (except as provided in section six thousand four hundred two  of
this  chapter),  shall  submit  to  the  superintendent, in writing, the
corporation's proposed name, the county in which  its  principal  office
will  be  located,  and  the  name  and address of a public newspaper of
general circulation in such county.
(2) If the superintendent approves the proposed  name  and  newspaper,
each  as  conforming  to the requirements of law, he shall so notify the
proposed  incorporators,  or  their  representative,  in  writing.  Such
approval  shall  become  void  if  within  six  months from its date the
declaration and charter referred to in paragraphs four and  five  hereof
are not filed pursuant to paragraph six hereof.
(3)  The proposed incorporators shall publish in such newspaper, twice
a week for three successive weeks or once  a  week  for  six  successive
weeks,  a  notice  of  intention to form such a corporation, stating its
proposed name, the kinds of insurance business  to  be  transacted,  the
names and city and state of residence of the proposed incorporators, the
location  of  its  principal  office  in  this  state,  and,  if a stock
corporation, the amount of its proposed initial capital.
(4) The proposed incorporators shall submit to the superintendent:
(A) proof of such publication by the affidavit of the publisher or  of
his foreman or clerk; and
(B)  a  declaration, signed by each incorporator and duly acknowledged
before  a  notary  public  or   other   officer   authorized   to   take
acknowledgments of conveyances of real property within this state.
(5) (A) Such declaration shall be in the English language, shall state
the proposed incorporators' intention to form a corporation to do one or
more  kinds of insurance business authorized by section one thousand one
hundred thirteen of this chapter, shall specify the paragraphs  defining
such  kinds  of  insurance  business  and  shall set forth a copy of the
corporation's proposed charter.
(B) The corporation's proposed charter shall contain:
(i) the corporation's name, which shall include a distinctive word  or
words, and, if a mutual corporation, shall contain the word "mutual";
(ii) the place where its principal office is to be located;
(iii)  the  kinds  of  insurance  to be transacted, specified as above
required;
(iv) the manner in which corporate powers are to be exercised;
(v) the number of directors, or that it  shall  be  not  less  than  a
stated  minimum  nor  more  than a stated maximum. Except as provided in
section six thousand four hundred two of  this  chapter  the  number  of
directors shall not be less than seven. As used in this item, "number of
directors"  means  the  total  number of directors which the corporation
would have if there were no vacancies;
(vi) the times and manner of  electing  directors  and  officers,  the
manner  of  filling vacancies, and provision that each director shall be
at least eighteen years of age and that at all times a majority shall be
citizens and residents of the United States, and that not less than  one
shall be a resident of this state;
(vii)  the names and city and state of residence of the directors, who
shall serve until the first annual meeting of such corporation;
(viii) the duration of its corporate existence,  which  shall  be  not
less than thirty years;
(ix) the amount of its capital, if a stock corporation; and
(x)  any  other  particulars  necessary  to  explain the corporation's
objects, purposes, management and control.
(C)  The  corporation's  proposed  charter  may authorize the use in a
foreign country where it does or proposes to do business of a  specified
translation of its name in any language commonly used in such country.
(D)  The  superintendent  may,  by  regulation,  prescribe  additional
information to be required, pursuant to this paragraph, of all companies
or of any kind of company.
(6) The superintendent  shall  transmit  such  proof  of  publication,
declaration,  and  charter  to  the attorney general. If approved by the
attorney  general,  as  conforming  to  the  requirements  of  law,  the
superintendent  shall  thereupon  file  them  in  his office and issue a
certified copy thereof to the proposed incorporators.  If  requested  by
such proposed incorporators, the superintendent shall also issue to them
a certificate of incorporation executed by him in the name of the people
of  the  state  and  thereupon  such  incorporators  shall become a body
corporate and have the powers enumerated in paragraph seven hereof,  but
such corporation shall not be authorized to do the business of insurance
until it obtains a license therefor.
(7) Every stock corporation, upon compliance with this chapter and the
business  corporation  law, may create and issue the number of shares of
capital stock stated in its charter which may be of one or more classes.
If the charter authorizes shares which are entitled to preference in the
distribution of dividends or assets it shall provide that:
(A) their dividend yield shall not exceed a rate equal to the  maximum
rate  of  interest  provided in section 5-501 of the general obligations
law, in effect at the time such shares are offered for sale; and
(B) the dividends may not be cumulative for more than three years.
(8)(A) A stock corporation shall have power to:
(i) open books to receive subscriptions to its capital shares,
(ii) keep them open until all such  shares,  or  so  many  as  may  be
necessary  to  satisfy  the minimum capital requirements, are subscribed
for,
(iii) receive payment for such subscriptions,
(iv) invest the monies as prescribed in this chapter, and
(v)  expend  money  or  incur  liabilities  necessary  or  proper   as
organization   expenses,  to  be  paid  out  of  the  proceeds  of  such
subscriptions, such expenses not to exceed the maximum amount prescribed
in its permit to solicit such subscriptions.
(B) The corporation shall not  solicit  subscriptions  to  its  shares
until  it receives a permit therefor from the superintendent which shall
be issued after the corporation submits to him an estimate of the  total
amount  to  be  expended  for organization expenses, and he approves the
estimate. Such estimate shall be recited in the permit, which shall  fix
the maximum amount, to be prescribed by the superintendent, which may be
expended for organization expenses.
(C)  Such  corporation  shall not employ, as agents or brokers to sell
its securities to the public, any persons who have not complied with the
requirements of section one thousand two hundred four of this article.
(9) (A) A mutual corporation shall have power to:
(i) receive monies necessary to comply with the requirements  of  this
chapter relative to its initial surplus fund;
(ii)  borrow  such monies in accordance with the provisions of section
one thousand three hundred seven of this chapter;
(iii) open books to receive applications for  insurance  from  persons
desiring and eligible to become members;
(iv)   keep   them  open  until  the  minimum  number  and  amount  of
applications, and the premium payments  thereon,  as  required  by  this
chapter are received;
(v) invest the monies as prescribed in this chapter for the investment
of the minimum surplus of a mutual insurance company; and
(vi)  expend  money  or  incur  liabilities  necessary  or  proper  as
organization expenses, such expenses not to exceed  the  maximum  amount
prescribed in its permit to solicit such applications.
(B)  The  corporation  shall not solicit applications for insurance or
receive premium payments thereon until it  receives  a  permit  therefor
from the superintendent. The permit shall be issued after:
(i)  the  superintendent  is  satisfied,  by  such  evidence as he may
require or by such examination  as  he  may  deem  expedient,  that  the
corporation holds in trust for prospective policyholders and creditors a
fund,  in  cash  or  securities acceptable to him, at least equal to the
amount required as its initial surplus fund,  such  trust  to  terminate
when  a license to do an insurance business of the kinds provided in the
corporate charter has been obtained, and
(ii) the corporation submits to the superintendent an estimate of  the
total  amount  to be expended for organization expenses, and he approves
the estimate. Such estimate shall be recited in the permit, which  shall
fix  the  maximum  amount, to be prescribed by the superintendent, which
may be expended for organization expenses.
(10)  The  directors  and  incorporators  of  any  stock   or   mutual
corporation  shall be jointly and severally liable for all its debts and
liabilities until it is licensed to do an insurance business of the kind
or kinds proposed.
(b) This section  shall  not  apply  to  co-operative  fire  insurance
companies,  fraternal benefit societies, or corporations organized under
article forty-three or sixty-seven of this chapter.