2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 829 - Conversion of Reciprocal or Interinsurance Exchange to Stock Company Through Creation of a Mutual Holding Company › Subchapter B. Mutual Holding Company Structure › Section 829.053. Directors and Officers

Sec. 829.053.  DIRECTORS AND OFFICERS.  (a)  Except as otherwise provided by this section, the conversion plan must provide that a director or officer of the converting exchange, or a person acting in concert with the director or officer, may not acquire, without the permission of the commissioner, any shares of the capital stock of the resulting company, or the shares of the capital stock of another corporation that is participating in the conversion plan, before the third anniversary of the effective date of the conversion.  This subsection does not prohibit the director or officer from:
(1)  acquiring capital stock through a broker-dealer;
(2)  making purchases through the exercise of stock subscription rights received under the conversion plan; or
(3)  participating in a stock benefit plan permitted by Section 829.054 or approved by the eligible members under Section 829.107.
(b)  A conversion plan may provide that the directors and officers of the converting exchange may receive, without payment, nontransferable subscription rights to purchase shares of the capital stock of the resulting company or the shares of the capital stock of another corporation that is participating in the conversion plan.
(c)  The aggregate number of shares that may be purchased by directors and officers under Subsection (b) may not exceed:
(1)  35 percent of the total number of shares to be issued for the resulting company if the total assets of the converting exchange are less than $50 million;
(2)  25 percent of the total number of shares to be issued for the resulting company if the total assets of the converting exchange are more than $500 million;
(3)  five percent of the total number of shares to be issued for the resulting company if the total assets of the converting exchange are more than $1 billion; or
(4)  one percent of the total number of shares to be issued for the resulting company if the total assets of the converting exchange are more than $10 billion.
(d)  For a converting exchange with total assets between $50 million and $500 million, inclusive, the maximum percentage of the total number of shares that may be purchased shall be interpolated from amounts provided under Subsection (c).
(e)  A conversion plan must provide that a director or officer of the converting exchange may not sell stock purchased under the conversion plan before the first anniversary of the effective date of the conversion.
(f)  Notwithstanding Subsection (e), a conversion plan may provide for the purchase or redemption of stock in the event that a director or officer no longer serves as a director or officer of, or no longer is associated with, the resulting company during the period described by Subsection (e).
(g)  If, as part of the conversion, any director or officer of the converting exchange, the mutual holding company, or an intermediate holding company receives more than one percent of the shares of the capital stock of the resulting company, or other valuable consideration, which is paid from the surplus of the converting exchange, each eligible member also is entitled to receive an amount of the converting exchange's surplus on hand on the effective date of the conversion computed in the same manner as the amount received by the director or officer, or as otherwise provided in the conversion plan approved by the commissioner.
Added by Acts 2007, 80th Leg., R.S., Ch. 412 (S.B. 1056), Sec. 1, eff. June 15, 2007.