Kansas Statutes

Chapter 40: Insurance

Article 3: Organization, Merger Or Consolidation Of Stock Companies

Statutes:

• 40-301: Definition of insurance company.
• 40-302: Minimum capital; par value of stock.
• 40-303: Powers of board of directors.
• 40-304: Subscription of stock.
• 40-305: Directors; numbers; election; oath.
• 40-306: Officers and agents; signatures to contracts.
• 40-307: Amendment of charter; increase or decrease of capital.
• 40-308: Transfer of stock; application of dividends on notes or obligations of stockholders.
• 40-309: Union, merger or consolidation; reinsurance.
• 40-310: Additional kinds of insurance authorized; surplus and deposit requirements.

• 40-301: Definition of insurance company. For the purpose of this article the term "insurance company" shall apply to domestic insurance companies having a capital stock; and may include foreign insurance companies having a capital stock when reference is made to the union, merger, consolidation and re-insurance of insurance companies.

        History:   L. 1927, ch. 231, 40-301; L. 1933, ch. 200, § 1; June 5.

• 40-302: Minimum capital; par value of stock. Every insurance company organized under the provisions of this article shall have a minimum capital as provided by the articles of this code relative to the particular purpose or purposes for which such company is organized, and the shares of capital stock shall have a par value which shall be fixed by the articles of incorporation.

        History:   L. 1927, ch. 231, 40-302; June 1.

• 40-303: Powers of board of directors. The board of directors of any insurance company organized under this article shall have power to adopt a seal, and make such bylaws and amendments thereto, not inconsistent with the constitution and laws of this state, as may be deemed necessary for the regulation and management of its affairs.

        History:   L. 1927, ch. 231, 40-303; June 1.

• 40-304: Subscription of stock. After filing a copy of its charter with the commissioner of insurance, and receiving a certificate of authority for the sale of stock as provided in this code, the persons named in the charter shall be commissioners to open books for the subscription of stock in the company, at such times and places as they shall deem convenient and proper, and shall keep the same open until the full amount specified in the certificate of incorporation is subscribed.

        History:   L. 1927, ch. 231, 40-304; June 1.

• 40-305: Directors; numbers; election; oath. The affairs of any such insurance company, now existing or hereafter organized under the laws of this state, shall be managed by a board of directors. The board of directors shall consist of one or more members, the number of which shall be fixed by the bylaws, unless the articles of incorporation establish the number of directors, in which case a change in the number of directors shall be made only by amendment of the articles.

        The directors shall be elected by ballot, and each full-paid share of stock shall be entitled to one vote. Shares may be voted by proxy, signed by the person legally entitled to vote the same. Each stockholder shall have the right to cast as many votes in the aggregate as shall equal the number of shares of stock held by him, multiplied by the number of directors to be elected, and each stockholder may cast the whole number of votes for one candidate, or may divide his votes among two or more candidates. A majority of the total number of directors shall constitute a quorum for the transaction of business, unless the articles of incorporation or the bylaws require a greater number.

        History:   L. 1927, ch. 231, 40-305; L. 1971, ch. 164, § 1; L. 1997, ch. 102, § 1; L. 2005, ch. 41, § 1; July 1.

• 40-306: Officers and agents; signatures to contracts. (a) Every insurance company having capital stock, now existing or hereafter organized under the laws of this state, shall have such officers with such titles and duties as shall be stated in the bylaws or in a resolution of the board of directors which is not inconsistent with the bylaws.

        (b)   Officers shall be chosen in such manner and shall hold their offices for such terms as are prescribed by the bylaws or determined by the board of directors or other governing body.

        (c)   The board of directors shall have power to appoint any agents necessary for transacting the business of the company, pay such salaries and require such bonds as they may deem reasonable; and it shall be their duty to keep full and correct entries of their transactions, which shall at all times be open to the inspection of the stockholders.

        History:   L. 1927, ch. 231, 40-306; L. 1973, ch. 192, § 1; L. 2004, ch. 128, § 4; L. 2005, ch. 41, § 2; July 1.

• 40-307: Amendment of charter; increase or decrease of capital. Any such insurance company may by a two-thirds vote of its paid-up stockholders amend its charter. The amendment shall be filed with the secretary of state and a certified copy thereof filed with the commissioner of insurance. No amendment to increase or decrease the capital stock shall be approved by the secretary of state until there has been filed with the secretary of state a certificate from the commissioner of insurance showing that the interests of all policyholders and all liabilities and obligations of the company have been properly safeguarded. Such increase or decrease in the capital stock may be carried out as provided under the general corporation laws of this state: Provided, however, That the decrease herein provided for shall not be construed to permit any such company to decrease its capital stock to an amount less than the minimum capital required for such a company by this code.

        History:   L. 1927, ch. 231, 40-307; L. 1949, ch. 280, § 1; June 30.

• 40-308: Transfer of stock; application of dividends on notes or obligations of stockholders. The shares of stock of any insurance company shall be deemed personal property and shall be transferred on the books of the company in such manner as the bylaws thereof may direct; but no transfer of stock shall be valid against an insurance company so long as the registered holder thereof shall be liable as principal debtor, surety or otherwise to the insurance company for any debt which shall be due or unpaid, nor in such case shall any dividend, interest or profit be paid on such stock so long as such liability continues, and such dividends, interest or profit shall be retained by the insurance company and applied to the discharge of such liabilities, and no stock shall be transferred on the books of any insurance company without the consent of the board of directors where the registered holder thereof is indebted to the insurance company.

        History:   L. 1927, ch. 231, 40-308; June 1.

• 40-309: Union, merger or consolidation; reinsurance. (a) (1) Any insurance company and any health maintenance organization of this state may unite, merge or consolidate with any other company or companies of this or any other state engaged in like business and having similar corporate powers, upon such terms and conditions, including the reinsurance of the business in force, as may be approved at a meeting of the stockholders of any such company or companies of this state, called for that purpose, such approval to be by vote of stockholders owning not less than two-thirds of the shares of stock of any such company or companies of this state. The agreement for such union, merger, consolidation and reinsurance shall be subject to the approval of the commissioner of insurance. There shall be filed with the commissioner of insurance a verified schedule by the actuaries of the companies or health maintenance organizations interested showing that the legal reserve for the policyholders of each of the several companies is of the amount required by law.

        (2)   Where companies of other states are uniting, consolidating, merging and reinsuring with a company or health maintenance organization of this state the commissioner of insurance also shall approve in the same manner such amendments to the articles of incorporation of such companies of this state as may be necessary and proper. Such agreement shall provide for payment in cash to any dissenting stockholder of an amount equal to the fair value of the stock if the stockholder shall refuse to assent to the union, merger or consolidation.

        (3)   When a company or health maintenance organization of this state shall be merged, consolidated or united with a company organized under the laws of any other state, the commissioner of insurance in the commissioner's order of approval shall direct that the assets of the domestic company or health maintenance organization be delivered to the company with which the domestic company is united, merged or consolidated.

        (b)   For the purposes of this section the term "health maintenance organization" shall have the meaning ascribed to it in K.S.A. 40-3202, and amendments thereto.

        History:   L. 1927, ch. 231, 40-309; L. 1933, ch. 200, § 2; L. 1972, ch. 53, § 5; L. 1978, ch. 173, § 1; L. 1996, ch. 25, § 4; L. 2007, ch. 122, § 2; July 1.

• 40-310: Additional kinds of insurance authorized; surplus and deposit requirements. (a) Any insurance company organized under article 3 of chapter 40 of the Kansas Statutes Annotated and amendments thereto, may make and issue contracts of insurance, in addition to those specified in subsections (a) through (g) of K.S.A. 40-901 and amendments thereto, which include such amount and kind of insurance against legal liability for injury, damage or loss to the person or property of others, and for medical, hospital and surgical expense related to such injury, as the commissioner of insurance deems to be reasonably incidental to insurance of real or personal property against fire or other perils under policies covering residential properties involving not more than two families with or without incidental office, professional, private school or studio occupancy by an insured, whether or not the premium or rate charged for certain perils so covered is specified in the policy. Any provision of K.S.A. 40-901 or 40-902 and amendments thereto, to the contrary notwithstanding: (1) No insurer having paid-up capital stock of at least $600,000 and a bona fide net surplus of at least $400,000 but less than $1,500,000 paid-up capital and surplus combined authorized as to property insurance only shall, pursuant to this subsection (a), retain risk as to any one subject of insurance as to hazards other than property insurance hazards in an amount exceeding 3% of its surplus to policyholders; and (2) no insurer having at least paid-up capital stock of $450,000 and a bona fide net surplus of at least $300,000 but less than $1,000,000 paid-up capital stock and surplus combined authorized as to property insurance only shall, pursuant to subsection (a), retain any risk other than property insurance hazards, and all such companies shall reinsure all such risks as to hazards other than property insurance hazards.

        (b)   It is required when a company is acting under this section that its board of directors authorize such action by the affirmative vote of at least 2/3 of its membership. Any company which has acted under this section shall certify such action to the commissioner of insurance, together with a statement showing its financial status and a net surplus sufficient to warrant such action.

        (c)   Any company operating under this section shall maintain unearned premium reserves equal to a pro rata amount of the premiums received on all unexpired risks and such unearned premium reserves shall be held and regarded as an absolute liability of the company.

        History:   L. 1994, ch. 87, § 2; April 7.