Pennsylvania Act 1990-198 — GAA AMENDMENTS ACT OF 1990

Act text

GAA AMENDMENTS ACT OF 1990
                 Act of Dec. 19, 1990, P.L. 834, No. 198              Cl. 15
                                  AN ACT

     Amending Titles 13 (Commercial Code), 15 (Corporations and
        Unincorporated Associations), 17 (Reserved), 20 (Decedents,
        Estates and Fiduciaries), 22 (Detectives and Private Police),
        24 (Education), 42 (Judiciary and Judicial Procedure), 54
        (Names) and 69 (Savings and Validating Provisions) of the
        Pennsylvania Consolidated Statutes, relating to associations;
        codifying and correcting the law relating to credit unions;
        providing for the incorporation and regulation of insurance
        companies; making revisions, corrections and additions
        relating to other associations; further providing for the
        fees of the Department of State and certain filing officers;
        and making repeals.

        Compiler's Note:  The remaining provisions of Act 198 amended
            Titles 13, 15, 17, 20, 22, 24, 42, 54 and 69 of the
            Pennsylvania Consolidated Statutes and are therefore
            omitted.
        Compiler's Note:  Section 10(3) of Act 62 of 2008 provided
            that Act 198 is repealed insofar as it is inconsistent
            with Act 62.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

                                DIVISION I
                          AMENDMENT OF TITLE 15
     Section 101.  Short title.
        This act shall be known and may be cited as the GAA
     Amendments Act of 1990.

                               DIVISION II
                          INSURANCE CORPORATIONS
     § 201.  Definition of term "insurance corporation."
        As used in this division, the term "insurance corporation"
     means any domestic insurance company of any of the classes
     described in section 201 or 701(3) of the act of May 17, 1921
     (P.L.682, No.284), known as The Insurance Company Law of 1921,
     or incorporated under the acts of April 28, 1903 (P.L.329,
     No.259), April 20, 1927 (P.L.317, No.190), June 24, 1939
     (P.L.686, No.320), June 20, 1947 (P.L.687, No.298), June 28,
     1951 (P.L.941, No.184), July 15, 1957 (P.L.929, No.401), or any
     similar act relating to the incorporation or reincorporation of
     limited life insurance companies. The term does not include any
     of the following:
            (1)  A hospital plan corporation subject to 40 Pa.C.S.
        Ch. 61 (relating to hospital plan corporations).
            (2)  A professional health service corporation subject to
        40 Pa.C.S. Ch. 63 (relating to professional health services
        plan corporations).
            (3)  A fraternal benefit society subject to the act of
        July 29, 1977 (P.L.105, No.38), known as the Fraternal
        Benefit Society Code.
            (4)  A health maintenance organization subject to the act
        of December 29, 1972 (P.L.1701, No.364), known as the Health
        Maintenance Organization Act.
     § 202.  Corporate powers.
        (a)  General rule.--No insurance corporation shall transact
     any other business other than that specified in its original or
     amended articles of incorporation or charter or authorized by
     statute regulating the business of the corporation.
        (b)  Ancillary activities.--With the prior approval of the
     Insurance Department, an insurance corporation may,
     independently of its insurance business and in addition to
     authority conferred by any other statute regulating the business
     of the corporation, provide services of the kinds it performs in
     the normal conduct of the business for which it is incorporated,
     including, but not limited to, consultative, administrative,
     investment, actuarial, loss prevention, data processing,
     accounting, claims and collection services. The Insurance
     Department shall take into account the effect of the provision
     of such services on the insurance business of the corporation
     and the risks inherent in the provision of such services by the
     corporation.
        (c)  Subsidiaries.--Subsections (a) and (b) shall not affect
     the power of an insurance corporation to hold, own and control
     subsidiaries engaged in other businesses as authorized by law.
     § 203.  Authorization to do business.
        No insurance corporation incorporated after June 19, 1991,
     shall have power to engage in the business of insurance until it
     shall have received a certificate from the Insurance Department
     authorizing the corporation to commence business.
     § 204.  Amendment of articles.
        (a)  General rule.--Any amendment of the articles of
     incorporation or charter of any insurance corporation that may
     be effected only by action or with the approval of the
     shareholders or members (other than an amendment authorizing or
     creating a new class or series of shares or increasing the
     authorized number of any previously authorized class or series
     of shares) shall become effective only if approved by the
     Insurance Department. See 15 Pa.C.S. § 103 (relating to
     subordination of title to regulatory laws).
        (b)  Amendments not requiring approval of Insurance
     Department.--The Department of State shall forward to the
     Insurance Department a copy of any amendment of the articles of
     incorporation or charter of any insurance corporation that
     becomes effective without the approval of the Insurance
     Department.
        (c)  Reduction in capital stock.--The capital stock of an
     insurance corporation shall not be reduced below the minimum
     amount of capital stock required by law for the formation of the
     corporation.
     § 205.  Other fundamental transactions.
        (a)  General rule.--Any plan of merger, consolidation,
     exchange, asset transfer, division or conversion of any
     insurance corporation, any recapitalization or voluntary
     dissolution of any insurance corporation or any issuance of
     shares by any insurance corporation in exchange for shares of
     another insurance company shall become effective only if
     approved by the Insurance Department. See 15 Pa.C.S. § 103
     (relating to subordination of title to regulatory laws).
        (b)  Standards.--A share exchange or similar transaction
     shall be approved if it is in accordance with law and the terms
     and conditions are fair. A reduction in capital stock shall be
     approved if it is in accordance with law and consistent with the
     interests of the policyholders and creditors. A merger or
     consolidation of a title insurance company or the acquisition of
     substantially all the assets or stock of a title insurance
     company or abstract company by a title insurance company shall
     be approved if it is in accordance with law, not inequitable to
     the shareholders of any title insurance or abstract company
     involved and will not substantially reduce the security of and
     service to be rendered to policyholders of the domestic title
     insurance company in this Commonwealth or elsewhere. Any other
     transaction subject to subsection (a) shall be approved if it is
     in accordance with law and not injurious to the interests of the
     policyholders and creditors.
        (c)  Approval of compensation.--No director, officer, agent
     or employee of any title insurance company or abstract company
     party to any merger, consolidation or acquisition subject to
     subsection (a) shall receive any fee, commission, compensation
     or other valuable consideration whatsoever for in any manner
     aiding, promoting or assisting therein except as set forth in
     the terms of the transaction submitted to the Insurance
     Department for approval.
        (d)  Transactions with foreign corporations.--Any foreign
     insurance company participating in or resulting from any
     transaction subject to subsection (a) shall engage in the
     transaction only with the approval of the insurance supervising
     officials of the jurisdiction in which such foreign insurance
     company is incorporated or is to be incorporated. A change in
     domicile of an insurance corporation to another jurisdiction may
     be effected only with the consent of the Insurance Department. A
     foreign insurance company that is a surviving or resulting
     corporation in any transaction subject to subsection (a) shall
     not be deemed to hold a certificate of authority to do an
     insurance business within this Commonwealth solely by reason of
     the approval by the Insurance Department and consummation of the
     transaction.
        (e)  Mergers of stock and mutual insurance companies.--A
     mutual insurance company shall not merge or consolidate with an
     insurance corporation organized on a stock share basis.
        (f)  Dissolution of mutual companies.--Assets of mutual life
     insurance companies, derived from a health and accident
     business, other than those properly credited to the members or
     policyholders on policies covering such business, and the assets
     of mutual companies, other than mutual life companies, which may
     not be properly credited to policyholders and members, shall be
     escheated to the Commonwealth upon the dissolution of such
     companies.
        (g)  Definition.--As used in this section, the term
     "recapitalization" includes any reduction in stated capital and
     excludes any new or additional share authorization for which
     approval by the Insurance Department is not required by section
     204.
     § 206.  Increases in capital stock.
        Within 30 days after any increase in the capital stock of an
     insurance corporation, the corporation shall report the increase
     to the Insurance Department on a form for that purpose
     prescribed by regulation by the department.
     § 207.  Administrative procedure.
        (a)  General rule.--Every application for a certificate of
     authority or other approval by the Insurance Department under
     this division shall be made to the department in writing and
     shall be in such form as the procedural regulations of the
     department may require.
        (b)  Standards for approval.--A certificate of authority or
     other approval under this division shall be issued by order of
     the department only if and when the department shall find and
     determine that the application complies with the provisions of
     this division and the procedural regulations of the department
     thereunder.
        (c)  Procedure before department.--For the purpose of
     enabling the department to make the finding or determination
     required by subsection (b), the department shall afford
     reasonable notice and opportunity for hearing, which shall be
     public, and, before or after any such hearing, it may make such
     inquiries, audits and investigations, and may require the
     submission of such supplemental studies and information, as it
     may deem necessary or proper to enable it to reach a finding or
     determination. The department, in granting a certificate of
     authority or other approval, may impose such conditions as it
     may deem to be just and reasonable. In every case the department
     shall make a finding or determination in writing, stating
     whether or not the application has been approved, and, if it has
     been approved in part only, specifying the part which has been
     approved and the part which has been denied. Any holder of a
     certificate of authority or other approval, exercising the
     authority conferred thereby, shall be deemed to have waived any
     and all objections to the terms and conditions of such
     certificate or other approval.
        (d)  Judicial review.--Orders of the department upon an
     application for a certificate of authority or other approval
     under this section shall be subject to judicial review in the
     manner and within the time provided or prescribed by law.

     § 208.  Existing powers preserved.
        Nothing in this act shall impair the power of any insurance
     corporation to transact business to the same extent as if this
     act had not been enacted.

                               DIVISION IV
                         MISCELLANEOUS PROVISIONS
     Section 404.  Effective dates and applicability.
        (a)  Effective dates.--This act shall take effect
     immediately, except that:
            (1)  Subchapter C of Chapter 1 of Title 15 (relating to
        Corporation Bureau and UCC fees) shall take effect on the
        first day of the month following the month of enactment of
        this act.
            (2)  15 Pa.C.S. § 1702(c) and the amendments to 15
        Pa.C.S. §§ 1906 and 1924(b) shall be retroactive to October
        1, 1989.
            (3)  The amendments to 15 Pa.C.S § 5758(b) shall be
        retroactive to February 13, 1972.
            (4)  15 Pa.C.S. §§ 135(c)(2) and 1901(a)(2) and Chapter
        75 of Title 15 and section 401(a), insofar as it repeals the
        act of June 12, 1968 (P.L.173, No.94), known as the
        Cooperative Agricultural Association Act, shall take effect
        in four months.
            (5)  The amendments to Chapter 77 of Title 15 shall be
        retroactive to June 19, 1989.
            (6)  The amendments to 15 Pa.C.S. § 8562(b) shall take
        effect in four months and shall not apply to any certificate
        of partnership interest issued or issuable on the effective
        date of such amendments.
            (7)  Title 17 (relating to credit unions) and section
        401(d) of this act shall take effect in two months.
            (8)  The expansion of the scope of Subpart B of Part II
        of Title 15 to include insurance corporations as defined in
        section 201 and all related changes in law affecting
        insurance corporations, including the repeals provided in
        section 401(b), shall take effect in six months.
        (b)  Applicability.--The provisions of Title 15 that are
     derived from former 42 Pa.C.S. Ch. 83 Subch. F (relating to
     corporate directors' liability):
            (1)  shall not be construed to repeal or otherwise affect
        or impair 15 Pa.C.S. § 1728 (relating to interested directors
        or officers; quorum) or 2538 (relating to approval of
        transactions with interested shareholders) or 42 Pa.C.S §
        8332.2 (relating to officer, director, or trustee of
        nonprofit organization negligence standard); and
            (2)  shall not apply to:
                (i)  any actions filed prior to January 27, 1987, nor
            to any breach of performance of duty or any failure of
            performance of duty by any director or officer of a
            business corporation occurring prior to that date; or
                (ii)  any actions filed against or any breach of
            performance of duty or any failure of performance of duty
            by any director or officer of any other domestic
            corporation for profit or not-for-profit occurring prior
            to the date that such corporation first became or becomes
            subject to former 42 Pa.C.S. Ch. 83 Subch. F or 15
            Pa.C.S. Ch. 5 Subch. B (relating to indemnification and
            corporate directors' liability).