Pennsylvania Code › Title 31 - INSURANCE › Part I - General Provisions › Subpart B - Securities and Stock Transactions › Chapter 21 - STOCK OWNERSHIP STATEMENTS › Subchapter C - EXEMPTIONS UNDER SECTION 302.1(2) OF THE ACT › Section 21.32 - Certain stock options and acquisitions

Current through Register Vol. 54, No. 28, July 13, 2024
(a)
General.
Any acquisition
					 of shares of stock (other than stock acquired upon the exercise of an option,
					 warrant, or right) under a stock bonus, profit sharing, retirement, incentive,
					 thrift, savings or similar plan, or any acquisition of a qualified or
					 restricted stock option under a qualified or a restricted stock option plan, or
					 a stock option under an employe stock purchase plan by a director or officer of
					 an insurer issuing the stock or stock option, shall be exempt from the
					 operation of section 302.1(2) of the act (40 P. S. §
												422.1(2)) if the plan
					 conforms with all of the following:
(1)
Approval.
The plan shall be approved directly or indirectly by
					 the affirmative votes of the holders of a majority of the securities of the
					 insurer present, or represented and entitled to vote at a meeting duly held in
					 accordance with the applicable laws of the Commonwealth, or by the written
					 consent of the holders of a majority of the securities of the insurer entitled
					 to vote. This method of approval shall be valid, provided that if the vote or
					 written consent was not solicited substantially in accordance with the proxy
					 rules and regulations prescribed by the National Association of Insurance
					 Commissioners, if any, in effect at the time of the vote or written consent,
					 the insurer shall furnish in writing to the holders of record of the securities
					 entitled to vote for the plan substantially the same information concerning the
					 plan which would be required by any the rules and regulations so prescribed and
					 in effect at the time the information is furnished, if proxies to be voted with
					 respect to the approval or disapproval of the plan were then being solicited,
					 on or prior to the date of the first annual meeting of security holders held
					 subsequent to the date the act first applies to the insurer, or the acquisition
					 of an equity security for which exemption is claimed, whichever is later. The
					 written information may be furnished by mail to the last known address of the
					 security holders of record within 30 days prior to the date of mailing. Four
					 copies of the written information shall be filed with, or mailed for filing to,
					 the Insurance Commissioner not later than the date on which it is first sent or
					 given to security holders of the insurer. For the purpose of this paragraph,
					 the term "insurer" includes a predecessor corporation if the plan or
					 obligations to participate thereunder were assumed by the insurer in connection
					 with the succession.
(2)
Discretion.
If the selection of any director or officer of the
					 insurer to whom stock may be allocated or to whom qualified, restricted or
					 employe stock purchase plan stock options may be granted under the plan, or the
					 determination of the number or maximum number of shares of stock which may be
					 allocated to the director or officer or which may be covered by qualified,
					 restricted or employe stock purchase plan stock options granted to the director
					 or officer, is subject to the discretion of any person, then the discretion
					 shall be exercised only as follows:
(i) With
					 respect to the participation of directors, in any of the following ways:
(A) By the board of directors of the insurer,
					 a majority of which board and a majority of the directors acting in the matter
					 are disinterested persons.
(B) By,
					 or only in accordance with the recommendations of, a committee of three or more
					 persons having full authority to act in the matter, all of the members of which
					 committee are disinterested persons.
(C) In accordance with the plan, if the plan
					 does one of the following:
(I) Specifies the
					 number or maximum number of shares of stock which directors may acquire or
					 which may be subject to qualified, restricted or employe stock purchase plan
					 stock options granted to directors and the terms upon which, and the times at
					 which, or the periods within which, the stock may be acquired or the options
					 may be acquired and exercised.
(II)
					 Sets forth, by formula or otherwise, effective and determinable limitations
					 with respect to the number of shares of stock specified in subclause (I) based
					 upon earnings of the insurer, dividends paid, compensation received by
					 participants, option prices, market value of shares, outstanding shares or
					 percentages thereof outstanding from time to time, or similar
					 factors.
(ii)
					 With respect to the participation of officers who are not directors, in any of
					 the following ways:
(A) By the board of
					 directors of the insurer or a committee of three or more directors.
(B) By, or only in accordance with the
					 recommendatios of, a committee of three or more persons having full authority
					 to act in the matter, all of the members of which committee are disinterested
					 persons.
(iii) For the
					 purpose of this paragraph, a director or committee member shall be deemed to be
					 a disinterested person only if he is not at the time he exercises his
					 discretion eligible, and has not at any time within 1 year prior thereto been
					 eligible, for selection as a person to whom stock may be allocated, or to whom
					 qualified, restricted, or employe stock purchase plan stock options may be
					 granted under the plan or any other plan of the insurer or any of its
					 affiliates entitling the participants therein to acquire stock or qualified,
					 restricted, or employe stock purchase plan stock options of the insurer or any
					 of its affiliates.
(iv) The
					 provisions of this paragraph shall not apply with respect to any option
					 granted, or other equity security acquired, prior to the date that section
					 302.1(1)-(3) of
					 the act first became applicable with respect to any class of equity securities
					 of any insurer.
(3)
Limitations.
As to each participant or as to all participants,
					 the plan shall effectively limit the aggregate dollar amount or the aggregate
					 number of shares of stock which may be allocated, or which may be subject to
					 qualified, restricted or employe stock purchase plan stock options granted,
					 under the plan. The limitations may be established on an annual basis, or for
					 the duration of the plan, whether or not the plan has a fixed termination date,
					 and may be determined either by fixed or maximum dollar amounts or fixed or
					 maximum numbers of shares or by formulas based upon earnings of the insurer,
					 dividends paid, compensation received by participants, option prices, market
					 value of shares, outstanding shares or percentages thereof outstanding from
					 time to time, or similar factors which shall result in an effective and
					 determinable limitation. The limitations may be subject to any provisions for
					 adjustment of the plan or of stock allocable or options outstanding thereunder
					 to prevent dilution or enlargement of rights.