Indiana Code
Chapter 1. Exchange of Securities
27-3-1-3. Manner of Adoption of Plan of Exchange; Approvals; Compensation of Dissenting Shareholders

Sec. 3. (a) Subject to section 2 of this chapter, any domestic company may adopt a plan of exchange with any acquiring corporation providing for the exchange of the outstanding stock of the domestic company for shares of stock or other securities issued by the acquiring corporation or cash or other consideration, or any combination, in the following manner. The boards of directors of the domestic company and of the acquiring corporation by resolutions approved by a majority of the whole of each board shall adopt a plan of exchange that sets forth the terms and conditions of the exchange and the mode of carrying the terms and conditions into effect and other provisions with respect to the exchange as may be deemed necessary or desirable.
(b) The domestic company and the acquiring corporation shall submit to the insurance commissioner three (3) copies of the plan of exchange certified by an officer of each as having been adopted in accordance with subsection (a). The copies of the plan of exchange shall be accompanied by financial statements of the domestic company for its last preceding fiscal year prepared pursuant to IC 27-1-20-21, pro forma financial statements of each corporation based on the assumption that the plan of exchange was effective as proposed at the end of the last preceding fiscal year of the domestic company, an estimate of expenses already incurred and of expenses expected to be incurred in connection with the proposed plan of exchange, and a written statement that sets forth for each corporation the proposed changes, if any, in management policies and in the identity of officers and directors of the domestic company and of the acquiring corporation that are initially contemplated if the plan of exchange is effected as proposed. The insurance commissioner shall hold a hearing upon the fairness of the terms, conditions, and provisions of the plan of exchange and the proposed exchange of stock or other securities of the acquiring corporation or cash or other consideration or any combination thereof for the stock of the domestic company at which the policyholders and the shareholders of both the domestic company and the acquiring corporation and any other interested party may appear and to become party to the proceeding. The commissioner shall require the domestic company and the acquiring corporation to produce evidence as the commissioner considers necessary to establish the foregoing, including evidence concerning the valuation of the respective companies and the method utilized by the management of each corporation to accomplish the valuation, inclusive of the value established with respect to the stock of the domestic company that is proposed to be exchanged as well as the value of the stock, securities, and consideration other than cash to be offered by the acquiring corporation in the exchange. The hearing shall be commenced not less than twenty (20) days after the date on which the plan of exchange is presented to the commissioner. The hearing shall be held in Indianapolis, Indiana, at a place, date, and time specified by the insurance commissioner. Notice of the hearing shall be published in a newspaper of general circulation in the city where the principal office of the domestic company and of the acquiring corporation are located and Indianapolis once a week for two (2) successive weeks. Written notice of the hearing shall be mailed at least ten (10) days before the hearing by the domestic company and by the acquiring corporation to all of their respective shareholders. All expenses of publication shall be borne by the domestic company or the acquiring corporation, or both, as specified in the plan of exchange. Except as otherwise provided in this section, the hearing and the determination are subject to IC 4-21.5-3. The commissioner shall issue an order approving the plan of exchange as delivered to the commissioner by the domestic company and the acquiring corporation and the modifications approved by a majority of the whole board of directors of each corporation if the commissioner finds:
(1) that the plan, including all modifications, if effected, will not tend adversely to affect the financial stability or management of the domestic company or the general capacity or intention to continue the safe and prudent transaction of the insurance business of the domestic company, or of the acquiring corporation, if it is a domestic insurance company;
(2) that the interests of the policyholders and shareholders of the domestic company, and, if the acquiring corporation is a domestic insurance company, the policyholders of the acquiring corporation are protected;
(3) that the fulfillment of the plan will not affect either the contractual obligations of the domestic company and of the acquiring corporation, if it is a domestic insurance company, to its policyholders or the ability and tendency of either to render service to its policyholders in the future; and
(4) that the terms and conditions of the plan of exchange and the proposed issuance and exchange are fair and reasonable.
The order of the commissioner approving or disapproving the plan of exchange shall be filed in the department within sixty (60) days after the date the plan of exchange is presented to the commissioner. The department shall give notice of the order in the manner prescribed in IC 4-21.5-3 to all parties to the proceeding, and the department shall endorse the commissioner's approval or disapproval on the plan of exchange in the manner provided in IC 27-1-6-8 and shall deliver copies to the domestic company and to the acquiring corporation. Any party to the proceeding aggrieved by the order are entitled to a judicial review of the order in accordance with IC 4-21.5-5.
(c) The plan of exchange as approved by the insurance commissioner shall then be submitted to a vote of the shareholders of the domestic company at an annual or special meeting of the shareholders. Notice of the submission of the plan to the shareholders shall be included in the notice of the annual or special meeting. The shareholders entitled to vote in respect of the plan may vote in person or by proxy, and each shareholder has one (1) vote for each share of voting stock held by the shareholder. Jointly owned shares may only be voted jointly. The plan shall be approved by the shareholders of the domestic company upon receiving the affirmative votes representing two thirds (2/3) of the outstanding capital stock of the domestic company or a larger proportion as may be specified in the plan of exchange. Notwithstanding shareholder adoption of the plan of exchange and at any time before the filing of the certificate setting forth the plan of exchange by the department, pursuant to section 4 of this chapter, the plan of exchange may be abandoned pursuant to a provision for abandonment, if any, contained in the plan of exchange.
(d) Within ten (10) days after the plan of exchange is adopted by the shareholders of the domestic company, a written notice of the adoption of the plan of exchange shall be mailed or delivered personally to each shareholder of record of the company who was entitled to vote on the plan. The domestic company shall file with the department an affidavit of the secretary or an assistant secretary of the company or of an officer of the transfer agent of the company that the notice was given.
(e) Any shareholder of the domestic company owning shares not voted in favor of the plan at the meeting at which the plan was approved by the shareholders of the domestic company may object in writing to the plan and demand payment, should the plan become effective, of the fair value of any shares as of the day on which the plan of exchange was approved by the shareholders of the domestic company pursuant to subsection (c). The objection and demand must be received, together with the certificate or certificates representing the shares with respect to which objection and demand have been made for notation that the objection and demand have been made, by the domestic company or its transfer agent within thirty (30) days after the date of the meeting of shareholders. The objection and demand may not pertain to any shares that were voted in favor of the plan. Objection and demand can only be made jointly by the holders of any share jointly held. The objection and demand may not be withdrawn unless the domestic company, by an authorized officer, consents in writing. Upon the plan of exchange becoming effective, the holder of any shares, with respect to which the objection and demand have been made and certificates for which have been delivered to the domestic company or its transfer agent for notation, or any transferee, ceases to be a shareholder of the domestic company with respect to the shares and does not have rights with respect to the shares except the right to receive payment for the shares under this subsection. Every shareholder failing to make objection and demand accompanied by certificates representing the shares with respect to which the objection and demand have been made or withdrawing the objection and demand as provided in this subsection are conclusively presumed to have assented to, and to have agreed to be bound by, the plan of exchange in accordance with its terms. Within forty-five (45) days after the date of the meeting of shareholders of the domestic company at which the plan of exchange was approved by the shareholders, the domestic company, or, if the plan of exchange specifies, the acquiring corporation, shall mail a written offer to each holder of record of shares with respect to which an objection and demand have been made, as provided in this subsection, to pay for the shares a price per share considered by the corporation to be the fair value of the shares as of the date of the meeting. The form of written offer to be used, including the price per share, shall first be submitted to and approved by the insurance commissioner. If the offer is accepted in writing by the holder, the corporation shall pay the holder, within forty-five (45) days after the date of the plan of exchange becoming effective, the price upon the surrender of the certificate or certificates representing the shares. If, within thirty (30) days after the date of the mailing of the written offer, the domestic company or the acquiring corporation, as the case may be, and a shareholder do not agree, the corporation or the shareholder may, within ninety (90) days after the date of the mailing of the written offer, petition the circuit or the superior court of the county in which the principal office of the domestic company is located to appraise the fair value of the shares as of the date of the meeting of shareholders of the domestic company at which the plan of exchange was approved by the shareholders and payment of the appraised value of the shares shall be made by the domestic company or, if the plan of exchange so specifies, the acquiring corporation within sixty (60) days after the entry of the judgment or order finding the appraised value upon the surrender of the certificate or certificates representing the shares. The practice, procedure, and judgment in the circuit or superior court upon the petition is the same, so far as practical, as that under IC 32-24. The judgment of the circuit or superior court is final. All shares acquired by the domestic company upon payment of the value of the shares shall be canceled by the board of directors of the domestic company upon the plan of exchange becoming effective or at any time after the plan becomes effective and the capital stock of the domestic company shall be decreased in accordance with IC 27-1-8-12. If the plan of exchange does not become effective, the right of shareholders or transferees to be paid the fair value of their shares under this subsection shall cease, and their status shall be the same as that of shareholders who voted in favor of the plan. If a shareholder or the shareholder's transferee with respect to any share or shares for which objection and demand has been made:
(1) withdraws the objection and demand in the manner provided by this subsection;
(2) fails to submit a certificate or certificates at the time and in the manner required by this subsection;
(3) does not file a petition for the determination of fair value within the time and in the manner provided in this subsection and neither the domestic company nor the acquiring corporation files a petition for such determination; or
(4) is adjudged by a court of competent jurisdiction not to be entitled to the relief provided by this subsection;
the right of the shareholder or the shareholder's transferee to be paid the fair value of the share or shares under this subsection shall cease, and the shareholder's status with respect to the share or shares is the same as that of a shareholder who voted in favor of the plan.
Formerly: Acts 1967, c.61, s.3. As amended by P.L.252-1985, SEC.140; P.L.7-1987, SEC.143; P.L.2-2002, SEC.82.

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