Florida Senate - 2011 SB 1800 By Senator Ring 32-02083-11 20111800__ 1 A bill to be entitled 2 An act relating to public records; amending s. 3 628.461, F.S.; providing an exemption from public 4 records requirements for notice of a proposed 5 divestiture in a domestic insurer provided to the 6 Commissioner of Insurance pursuant to the acquisition 7 of a domestic stock insurer; specifying duration of 8 the exemption; providing an exemption from public 9 records requirements for the identity of a lender 10 pursuant to a merger or other acquisition of control 11 of a domestic stock insurer where a source of 12 consideration is a loan made in the lender’s ordinary 13 course of business, upon request of the lender; 14 providing for future legislative review and repeal of 15 the exemptions; providing a statement of public 16 necessity; providing a conditional effective date. 17 18 Be It Enacted by the Legislature of the State of Florida: 19 20 Section 1. Paragraph (a) of subsection (2) and paragraph 21 (a) of subsection (3) of section 628.461, Florida Statutes, as 22 amended by SB ___, 2011 Regular Session, are amended to read: 23 628.461 Acquisition of controlling stock.— 24 (2) FILING REQUIREMENTS; PUBLIC-RECORDS EXEMPTION.—A person 25 may not, individually or in conjunction with any affiliated 26 person of such person, acquire directly or indirectly, conclude 27 a tender offer or exchange offer for, enter into any agreement 28 to exchange securities for, or otherwise finally acquire 10 29 percent or more of the outstanding voting securities of a 30 domestic stock insurer or of a controlling company, unless at 31 the time the offer, request, or invitation is made or the 32 agreement is entered into, or prior to the acquisition of the 33 securities if no offer or agreement is involved, such person has 34 filed with the commissioner and has sent to the insurer, a 35 statement containing the information required by this section 36 and the offer, request, invitation, agreement, or acquisition 37 has been approved by the commissioner in the manner prescribed 38 in this section. 39 (a)1. For purposes of this section, any controlling person 40 of a domestic insurer seeking to divest its controlling interest 41 in the domestic insurer in any manner shall file with the 42 commissioner, with a copy provided to the insurer, notice of its 43 proposed divestiture at least 30 days prior to the cessation of 44 control. The commissioner shall determine those instances in 45 which the party or parties seeking to divest a controlling 46 interest in an insurer will be required to file for and obtain 47 approval of the transaction. 48 2. Notice of a proposed divestiture in a domestic insurer 49 provided to the commissioner by a controlling person of a 50 domestic insurer under subparagraph 1. is confidential and 51 exempt from s. 119.07(1) and s. 24(a), Art. I of the State 52 Constitution. Information contained in the notice remains 53 confidential until the conclusion of the transaction unless the 54 commissioner, in his or her discretion, determines that 55 confidential treatment will interfere with the enforcement of 56 this section. 57 3. Subparagraph 2. is subject to the Open Government Sunset 58 Review Act in accordance with s. 119.15 and shall stand repealed 59 on October 2, 2016, unless reviewed and saved from repeal 60 through reenactment by the Legislature. 61 (3) CONTENT OF STATEMENT.— 62 (a) The statement to be filed with the office and furnished 63 to the insurer and controlling company shall be made under oath 64 and contain the following information and any additional 65 information as the office deems necessary to determine the 66 character, experience, ability, and other qualifications of the 67 person or affiliated person of such person for the protection of 68 the policyholders and shareholders of the insurer and the 69 public: 70 1. The name and address of each person by whom or on whose 71 behalf the merger or other acquisition of control referred to in 72 subsection (2) is to be effected, hereinafter referred to as the 73 “acquiring party,” the background information on each natural 74 person by whom, or on whose behalf, the acquisition is to be 75 made, and, if the acquisition is to be made by or on behalf of a 76 corporation, association, or trust, the identity of, and the 77 background information specified in this section on, each 78 director, officer, trustee, or other natural person performing 79 duties similar to those of a director, officer, or trustee for 80 the corporation, association, or trust or any person who 81 controls, either directly or indirectly, the corporation, 82 association, or trust, and: 83 a. If the person is an individual, his or her principal 84 occupation and all offices and positions held during the past 10 85 years, and any conviction of crimes other than minor traffic 86 violations during the past 10 years; 87 b. Whether, during such 10-year period, the person has been 88 the subject of any proceeding for the revocation of any license 89 and, if so, the nature of the proceeding and the disposition of 90 the proceeding. 91 c. Whether, during the 10-year period, the person has been 92 the subject of any proceeding under the Federal Bankruptcy Code 93 or whether, during the 10-year period, any corporation, 94 partnership, firm, trust, or association in which the person was 95 a director, officer, trustee, partner, or other official has 96 been subject to any such proceeding, either during the time in 97 which the person was a director, officer, trustee, partner, or 98 other official or within 12 months thereafter. 99 d. Whether, during the 10-year period, the person has been 100 enjoined, either temporarily or permanently, by a court of 101 competent jurisdiction from violating any federal or state law 102 regulating the business of insurance, securities, or banking, or 103 from carrying out any particular practice or practices in the 104 course of the business of insurance, securities, or banking, 105 together with details as to any such event. 106 e. If the person is not an individual, a report of the 107 nature of its business operations during the past 5 years or for 108 the period of time that the person and any predecessors have 109 been in existence, whichever is less, an informative description 110 of the business intended to be conducted by the person and the 111 person’s subsidiaries, and a list of all individuals who are or 112 who have been selected to become directors, trustees, or 113 executive officers of the person, or who perform or will perform 114 functions appropriate to such positions. The list must include 115 for each individual the information required under subparagraph 116 (a)1.; 117 2.a. The source, nature, and amount of the consideration 118 used or to be used in effecting the merger or other acquisition 119 of control, a description of any transaction where funds were or 120 are to be obtained for any such purpose, including any pledge of 121 the insurer’s stock or the stock of any of its subsidiaries or 122 controlling affiliates, and the identity of persons furnishing 123 consideration. 124 b. Where a source of consideration is a loan made in the 125 lender’s ordinary course of business, the identity of the lender 126 is confidential and exempt from s. 119.07(1) and s. 24(a), Art. 127 I of the State Constitution, if the lender so requests. 128 c. Sub-subparagraph b. is subject to the Open Government 129 Sunset Review Act in accordance with s. 119.15 and shall stand 130 repealed on October 2, 2016, unless reviewed and saved from 131 repeal through reenactment by the Legislature. 132 3. Fully audited financial information as to the earnings 133 and financial condition of each acquiring party for the 134 preceding 5 fiscal years of each acquiring party, or for the 135 period the acquiring party and any predecessors have been in 136 existence, whichever is less, and similar unaudited information 137 as of a date not earlier than 90 days prior to the filing of the 138 statement; 139 4. Any plans or proposals which each acquiring party may 140 have to liquidate the insurer, to sell its assets or merge or 141 consolidate it with any person, or to make any other material 142 change in its business or corporate structure or management; 143 5. The number and class of shares of any security referred 144 to in subsection (2) that each acquiring party proposes to 145 acquire, the terms of the offer, request, invitation, agreement 146 or acquisition referred to in subsection (2), and a statement as 147 to the method used to determine the fairness of the proposal; 148 6. The amount of each class of any security referred to in 149 subsection (2) which is beneficially owned or concerning which 150 there is a right to acquire beneficial ownership by each 151 acquiring party; 152 7. A full description of any contracts, arrangement, or 153 understandings with respect to any security referred to in 154 subsection (2) in which any acquiring party is involved, 155 including, but not limited to, transfer of any of the 156 securities, joint ventures, loan or option arrangements, puts or 157 calls, guarantees of loans, guarantees against loss or 158 guarantees of profits, division of losses or profits, or the 159 giving or withholding of proxies. The description must identify 160 the persons with whom the contracts, arrangements, or 161 understandings have been entered into; 162 8. A description of the purchase of any security referred 163 to in subsection (2) during the 12 calendar months preceding the 164 filing of the statement by any acquiring party, including the 165 dates of purchase, names of the purchasers, and consideration 166 paid or agreed to be paid; 167 9. A description of any recommendations to purchase any 168 security referred to in subsection (2), made during the 12 169 calendar months preceding the filing of the statement by any 170 acquiring party or by anyone based upon interviews or at the 171 suggestion of the acquiring party; 172 10. Copies of all tender offers for, requests or 173 invitations for tenders of, exchange offers for, and agreements 174 to acquire or exchange any securities referred to in subsection 175 (2), and, if distributed, copies of additional soliciting 176 material relating to them; 177 11. The term of any agreement, contract, or understanding 178 made with or proposed to be made with any broker-dealer as to 179 solicitation of securities referred to in subsection (2) for 180 tender, and the amount of any fees, commissions, or other 181 compensation to be paid to broker-dealers with regard thereto; 182 12. An agreement by the person required to file the 183 statement referred to in subsection (2) that he or she will 184 provide the annual enterprise risk report, if applicable, 185 specified in s. 628.801, for so long as control exists; 186 13. An acknowledgement by the person required to file the 187 statement referred to in subsection (2) that the person and all 188 subsidiaries within its control in the insurance holding company 189 system will provide information to the commissioner upon request 190 as necessary to evaluate enterprise risk to the insurer; and 191 14. Such additional information as the commissioner may by 192 rule or regulation prescribe as necessary or appropriate for the 193 protection of policyholders of the insurer or in the public 194 interest. 195 Section 2. It is the finding of the Legislature that notice 196 of a proposed divestiture in a domestic insurer provided to the 197 Commissioner of Insurance by a controlling person of a domestic 198 insurer who is the acquiring party in the acquisition of a 199 domestic stock insurer be made confidential and exempt from s. 200 119.07(1), Florida Statutes, and s. 24(a), Article I of the 201 State Constitution until the conclusion of the transaction, 202 unless the commissioner, in his or her discretion, determines 203 that confidential treatment will interfere with the enforcement 204 of s. 628.461, Florida Statutes. It is also the finding of the 205 Legislature that, with respect to a merger or other acquisition 206 of control of a domestic stock insurer where a source of 207 consideration is a loan made in the lender’s ordinary course of 208 business, the identity of the lender be held confidential and 209 exempt from s. 119.07(1), Florida Statutes, and s. 24(a), 210 Article I of the State Constitution if the lender requests 211 confidentiality. 212 Section 3. This act shall take effect on the same date that 213 SB ___ or similar legislation takes effect, if such legislation 214 is adopted in the same legislative session or an extension 215 thereof and becomes law.