Insurance

Administration

Rule R590-67: Proxy, Consent, and Authorization of a Domestic Stock Insurer

Effective Date: 06/09/2023

Admin. Code Reference: R590-67

Rule Type: Current Rule

R590. Insurance, Administration.

R590-67. Proxy, Consent, and Authorization of a Domestic Stock Insurer.

R590-67-1. Authority.

This rule is promulgated by the commissioner pursuant to Section 31A-2-201.

R590-67-2. Purpose and Scope.

(1) The purpose of this rule is to establish requirements for:

(a) a proxy;

(b) a filing;

(d) information provided to a securities holder;

(e) a consent and authorization;

(f) a proposal;

(g) a false and misleading statement provision; and

(h) a provision related to an election contest.

(2)(a) This rule applies to a domestic stock insurer that has a class of equity securities held of record by 300 or more persons, directors, officers, or employees.

(b) This rule does not apply to an insurer if 95% or more of its equity securities are owned or controlled by a parent or an affiliated insurer and the remaining securities are held of record by less than 500 persons.

(c) This rule does not apply to a domestic stock insurer that files with the Securities and Exchange Commission, with respect to a class of securities, forms of proxies, consents, and authorizations complying with the requirements of the Securities Exchange Act of 1934 and its applicable regulations, with respect to that class of securities.

(d) This rule applies to a proxy, consent, or authorization of a class of equity securities of a domestic insurer solicited by or on behalf of the management of the insurer from the holders of record of the securities and its schedules before any annual or other meeting of the security holders.

R590-67-3. Definitions.

Terms used in this rule are defined in Section 31A-1-301. Additional terms are defined as follows:

(1) "Associate" means a relationship with:

(a) a corporation or organization, other than the issuer or a majority owned subsidiary of the issuer, of which the person is:

(i) an officer or partner; or

(ii) directly or indirectly the beneficial owner of 10% or more of any class of equity securities;

(b) a trust or other estate in which the person:

(i) has a substantial beneficial interest; or

(ii) serves as a trustee or in a similar fiduciary capacity; or

(c) a relative or spouse of the person, or any relative of the spouse, who has the same home as the person or who is a director or officer of the issuer or any of its parents or subsidiaries.

(2) "Beneficial owner" means a person who, directly or indirectly, through a contract, arrangement, understanding, relationship, or otherwise, has or shares:

(a) voting power, including the power to vote, or the power to direct voting of, a security; or

(b) investment power that includes the power to dispose of, or to direct the disposition of, a security.

(3) "Issuer" means the issuer of the security for which a proxy is solicited.

(4) "Last fiscal year" means the issuer's last fiscal year ending before the date of the meeting for which a proxy is solicited.

(5) "Officer" means a:

(a) president;

(b) secretary;

(d) vice president in charge of a principal business function; or

(e) person who performs a similar policy-making function for an insurer.

(6) "Parent" means an affiliate controlling a person directly or indirectly through one or more intermediaries.

(7) "Proxy statement" means a statement required by Section R590-67-7, whether or not contained in a single document.

(8)(a) "Solicitation" or "solicit" means:

(i) a request for a proxy, whether or not accompanied by or included in a proxy form;

(ii) a request to execute, to not execute, or to revoke, a proxy; or

(iii) furnishing a proxy form or other communication to a security holder under a circumstance reasonably calculated to result in the procurement, withholding, or revocation of a proxy.

(b) "Solicitation" or "solicit" does not mean:

(i) furnishing a proxy form to a security holder upon the unsolicited request of the security holder;

(ii) the performance by the issuer of an act required by Section R590-67-11; or

(iii) the performance by any person of a ministerial act on behalf of a person soliciting a proxy.

R590-67-4. Required Schedules.

(1) The following schedules shall be used by an insurer complying with this rule:

(a) Schedule A, Required Proxy Form Information;

(b) Schedule B, Required Solicitation Information; and

(2) The schedules listed in Subsection (1) are available on the department's website, https://insurance.utah.gov.

(3) A solicitation may not be made unless each person solicited is furnished with a written proxy statement containing the information specified in Schedule A.

(4) A solicitation may not be made by any person other than the issuer unless, at least five business days before, or a shorter period authorized by the commissioner, a statement, on behalf of each participant, is filed with the commissioner, in duplicate, containing the information specified by Schedule B.

(5) For any solicitation, a domestic insurer shall file with the commissioner, and transmit to each security holder who is entitled to vote, a written information statement containing the information specified in Schedule C.

R590-67-5. False or Misleading Statements.

A proxy statement, proxy form, notice of meeting, information statement, or other communication, written or oral, may not contain a statement that, at the time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits a material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the same meeting or subject matter that has become false or misleading.

R590-67-6. Solicitation.

(1) Sections R590-67-6 through R590-67-13 apply to any solicitation, except for a solicitation:

(a) not made on behalf of an insurer where the total number of persons solicited is ten or fewer;

(b) by a person regarding a security carried in the person's name or in the name of the person's nominee, other than as a voting trustee, or held in the person's custody, if the person:

(i) does not receive commission or remuneration for the solicitation, directly or indirectly, other than reimbursement of reasonable expenses;

(ii) furnishes promptly to the solicited person a copy of all soliciting material with respect to the same subject matter or meeting received from all persons who furnish copies thereof for that purpose and who shall, if requested, defray the reasonable expenses to be incurred in forwarding the material; and

(iii) does no more than impartially instruct the person solicited to forward a proxy to the person, if any, to whom the person solicited desires to give a proxy, or impartially request from the person solicited instructions as to the authority to be conferred by the proxy and state that a proxy will be given if no instructions are received by a certain date;

(d) through a newspaper advertisement that informs security holders of a source where they may obtain copies of a proxy statement, proxy form, and other soliciting material, and only includes:

(i) the name of the issuer;

(ii) the reason for the advertisement; and

(iii) the proposal to be acted upon by security holders; and

(e) exempted from this rule by the commissioner.

R590-67-7. Information to be Provided to Security Holders.

(1) If a solicitation is made on behalf of the issuer and relates to an annual meeting of security holders where directors are elected, each proxy statement shall be accompanied or preceded by an annual report to security holders that meets the provisions of this subsection.

(a) The report shall contain, in comparative columnar form, financial statements for the last two fiscal years, prepared on a consistent basis, that in the opinion of the management, adequately reflect the financial position of the issuer at the end of each year and the results of its operations for each year.

(i) Consolidated financial statements of the issuer and its subsidiaries shall be included in the report if they are necessary to reflect the financial position and results of operations of the issuer and its subsidiaries, but in that case, the individual statements of the issuer may be omitted.

(ii) The commissioner may, upon the request of the issuer, permit the omission of financial statements for the earlier of the two fiscal years upon a showing of good cause.

(b) The financial statements for the last two fiscal years required by Subsection (1)(a) shall be prepared in a manner acceptable to the commissioner.

(c) The report shall include, in comparative columnar form, a summary of the issuer's operations, or the operations of the issuer and its subsidiaries consolidated, or both as appropriate, for each of the last five fiscal years of the issuer, or the life of the issuer and its predecessors, if less.

(d) The report shall contain a brief description of the business done by the issuer and its subsidiaries during the most recent fiscal year that will, in the opinion of management, indicate the general nature and scope of the business of the issuer and its subsidiaries.

(e) The report shall identify;

(i) each of the issuer's directors and officers;

(ii) the principal occupation or employment of each person; and

(iii) the name and principal business of the organization where each person is employed.

(f) The report shall identify the principal market in which securities of any class entitled to vote at the meeting are traded, stating the range of bid and asked quotations for each quarterly period during the issuer's two most recent fiscal years, and shall set forth each dividend paid during the two-year period.

(g) The report may be in any form suitable to management and the information required by Subsections (1)(c) through (1)(f) may be presented in an appendix or other separate section of the report, if the attention of security holders is called to the presentation.

(2) Subsection (1) does not apply to a solicitation made on behalf of the management before the financial statements are available if:

(a) solicitation is being made at the time in opposition to the management; and

(b) the management's proxy statement includes an undertaking, in boldface type, to furnish the annual report to all persons being solicited at least 20 days before the date of the meeting.

(3) The report sent to security holders shall be filed with the commissioner, for the commissioner's information, no later than the later of:

(a) the date on which the report was first provided to security holders; or

(b) the date on which a preliminary copy of the solicitation material is filed pursuant to Section R590-67-10.

(4)(a) If securities of any class entitled to vote at a meeting where the issuer intends to solicit proxies, consents, or authorizations are held of record by a broker, dealer, bank, or voting trustee, or their nominees, the issuer shall inquire of the record holder at least 10 days before the record date for the meeting of security holders whether other persons are the beneficial owners of the securities and, if so, the number of copies of the proxy and other soliciting material and, in the case of an annual meeting at which directors are to be elected, the number of copies of the annual report to security holders, necessary to supply these materials to beneficial owners.

(b) The issuer shall supply the record holder in a timely manner with additional copies assembled in a form and at a place the record holder may reasonably request, in order to address and send one copy to each beneficial owner of securities so held and shall, upon the request of the record holder, pay its reasonable expenses for mailing the materials to the security holders to whom the material is sent.

R590-67-8. Proxy Requirements.

(1) A proxy form shall:

(a) indicate, in boldface type, whether a proxy is solicited on behalf of the insurer's board of directors and, if not, by whom it is solicited;

(b) provide a specifically designated blank space for dating the proxy; and

(c) clearly and impartially identify each matter or group of related matters to be acted upon, whether proposed by the insurer or by a security holder.

(2) A process affording the solicited person an opportunity to specify by ballot a choice between approval, disapproval, or abstention with respect to each matter to be acted upon, other than officer elections, shall be provided in a proxy form.

(a) A proxy may confer discretionary authority regarding matters where a choice is not specified provided the proxy states, in boldface type, how it intends to vote the shares represented by the proxy in each case.

(b) A proxy that provides both for the election of directors and for action on other specified matters shall be prepared clearly to provide, by a box or otherwise, a process by which the security holder may withhold authority to vote for any nominee as a director.

(c) The executed proxy by the security holder to grant authority to vote for the election of all nominees grants authority for all nominees for which a vote is not withheld, provided the proxy so states in boldface type.

(3) A proxy may confer discretionary authority to vote with respect to the following:

(a) a matter that the person making the solicitation does not know, a reasonable time before the solicitation, will be presented at the meeting, if a specific statement to that effect is made in the proxy statement or proxy form;

(b) approval of the minutes of the prior meeting if the approval does not amount to ratification of the action taken at the meeting;

(c) the election of any person to any office for which a bona fide nominee is named in the proxy statement and the nominee is unable to serve or for good cause will not serve;

(d) a proposal omitted from the proxy statement and proxy form pursuant to Section R590-67-12; or

(e) a matter incident to the conduct of the meeting.

(4) A reference to a proposal where discretionary authority is given under Subsection (3) is not required.

(5)(a) A proxy may not confer authority to vote for the election of any person to an office for which a bona fide nominee is not named in the proxy statement, or to vote at an annual meeting, other than the next annual meeting, to be held after the date the proxy statement and proxy form are first sent or given to security holders.

(b) A person is not a bona fide nominee and may not be named as such unless the person consents to being named in the proxy statement and to serve if elected.

(6) A proxy statement or proxy form shall provide, subject to reasonable specified conditions, that the securities represented by the proxy will be voted and that where the person solicited specifies, by means of a ballot provided pursuant to Subsection (2), a choice with respect to any matter to be acted upon, the securities will be voted in accordance with the specifications made.

R590-67-9. Presentation of Information in Proxy Statement.

(1) The information included in a proxy statement shall:

(a) be clearly presented;

(b) be divided into groups according to subject matter; and

(2)(a) A proxy statement shall disclose, under an appropriate caption, the date by which proposals of security holders intended to be presented at the next annual meeting shall be received by the issuer for inclusion in the issuer's proxy statement and proxy form relating to that meeting.

(b) The date in Subsection (2)(a) shall be calculated under Subsection R590-67-12(2).

(c) If the date of the next annual meeting is subsequently advanced by more than 30 calendar days or delayed by more than 90 calendar days from the date of the annual meeting to which the proxy statement relates, the issuer shall, in a timely manner and by reasonable means, inform security holders of the change and the date by which proposals of security holders shall be received.

R590-67-10. Material Required to be Filed.

(1) A copy of the proxy statement, the proxy form, and any other soliciting material furnished to security holders with the proxy shall be filed with the commissioner at least 10 days before the date final copies of the material are first sent or given to security holders, or a shorter period authorized by the commissioner.

(2) A copy of any additional soliciting material relating to the same meeting or subject matter to be furnished to security holders after the proxy statement shall be filed with the commissioner at least two days before the date copies of the material are first sent or given to security holders, or a shorter period authorized by the commissioner.

(3) A copy of the proxy statement, the proxy form, and any other soliciting material in the form the material is furnished to security holders, shall be filed with the commissioner no later than the date the material is first sent or given to any security holder.

(4) A copy of soliciting material in the form of a speech, a press release, or a radio or television script may be filed with the commissioner before use or publication.

(a) A definitive copy shall be filed with the commissioner no later than the date the material is used or published.

(b) Subsections (1) and (2), and R590-67-14(1) apply to a reprint or reproduction of the soliciting material.

(5) An amended or revised copy of a proxy statement, proxy form, or other material shall be filed and clearly marked to indicate the changes.

R590-67-11. Mailing Communications to Security Holders.

(1) The issuer shall mail or otherwise furnish to a security holder, as promptly as practicable after the receipt of the request:

(a) a statement of the approximate number of record owners and, to the extent known to the issuer, the approximate number of beneficial owners of any class of securities, any of whom have been or are to be solicited on behalf of the management, or any group of whom the security holder shall designate; and

(b) an estimate of the cost of mailing a specified proxy statement, proxy form, or other communication to the owners.

(2)(a) Copies of a proxy statement, a proxy form, or other communication furnished by the security holder shall be provided by the issuer to all security holders specified in Subsection (1)(a) as the security holder shall designate.

(b) The issuer is not required to mail or otherwise provide any material before the first day the solicitation is made on behalf of the issuer.

(d) The issuer may furnish promptly to a security holder a reasonably current list of the names and addresses of the record owners and the beneficial owners the security holder designates.

R590-67-12. Proposals of Security Holders.

(1) "Proponent," for the purposes of this subsection, means a security holder.

(2)(a) If a proponent notifies an issuer, in writing and no less than 90 days before the issuer's annual meeting, of the security holder's intention to present a lawful proposal for action at an upcoming meeting of the issuer's security holders and the proponent is entitled to vote at least 1% of the votes entitled to be voted on the proposal, the issuer shall:

(i) set forth the proposal in its proxy statement;

(ii) identify the proposal in its proxy form; and

(iii) provide for the specification of approval or disapproval of the proposal.

(b) The proxy statement shall also include the name and address of the proponent.

(3) If an issuer opposes a proposal received from a proponent, it shall, at the request of the proponent, include in its proxy statement a statement of the proponent of not more than 200 words in support of the proposal.

(4) The issuer may omit a proposal and any statement in support thereof from its proxy statement and proxy form if:

(a) the proponent submitted more than one proposal in connection with a particular meeting;

(b) the proposal is more than 300 words long;

(c) the proposal or the supporting statement is contrary to this rule or Schedules A, B, or C, including Section R590-67-5, which prohibits false or misleading statements in proxy soliciting materials;

(d) the proposal relates to the enforcement of a personal claim or the redress of a personal grievance against the issuer, its management, or any other person;

(e) the proposal deals with:

(i) a matter not significantly related to the issuer's business;

(ii) a matter beyond the issuer's power to effectuate;

(iii) a matter relating to the conduct of the issuer's ordinary business operations; or

(iv) an election to office;

(f) the proposal is counter to a proposal submitted by the issuer at the meeting, the proposal is moot, or the proposal relates to specific amounts of cash or stock dividends;

(g) the proposal is substantially duplicative of a proposal previously submitted to the issuer by another proponent, which proposal is included in the management's proxy material for the meeting; or

(h) substantially the same proposal was submitted to security holders in the issuer's proxy statement and proxy form relating to any annual or special meeting of security holders held within the preceding five calendar years and received less than 5% of the total number of votes cast at the time of its most recent submission.

(5) If the issuer intends to omit a proposal from its proxy statement or proxy forms, or both, it shall notify the proponent in writing of its intention at least 10 days before the issuer's preliminary proxy material is filed under Subsection R590-67-10(1).

R590-67-13. Prohibition of Certain Solicitations.

A person making a solicitation may not solicit an undated or postdated proxy or a proxy that is dated as of a date subsequent to the date it is signed by the security holder.

R590-67-14. Special Provisions Applicable to Solicitations.

(1) This section applies to a solicitation by a person opposing a solicitation by another person with respect to the election or removal of directors at an annual or special meeting of security holders.

(2)(a) "Participant" or "participant in a solicitation," for purposes of this section, means:

(i) the issuer;

(ii) a director of the issuer or any nominee for whose election as a director proxies are solicited; and

(iii) a person acting alone or with one or more other persons, committees, or groups, in organizing, directing, or financing the solicitation.

(b) "Participant" and "participant in a solicitation" does not mean:

(i) a bank, broker, or dealer who, in the ordinary course of business, lends money or executes orders for the purchase or sale of securities and who is not otherwise a participant;

(ii) a person or organization retained or employed by a participant to solicit security holders or a person who merely transmits proxy soliciting material or performs ministerial or clerical duties;

(iii) a person employed in the capacity of attorney, accountant, advertising, public relations, or financial adviser, whose activities are limited to the performance of their duties in the course of employment;

(iv) a person regularly employed as an officer or employee of the issuer or any of its subsidiaries or affiliates who is not otherwise a participant; or

(v) an officer or director of, or any person regularly employed by, any other participant, if the officer, director, or employee is not otherwise a participant.

(3)(a) Within five business days after a solicitation is made by the issuer, or a longer period authorized by the commissioner, a statement, on behalf of each participant other than the issuer, shall be filed with the commissioner, in duplicate, containing the information specified by Schedule B.

(b) If any solicitation on behalf of the issuer or any other person has been made, or if proxy material is ready for distribution, before a solicitation subject to this section in opposition, a statement in duplicate containing the information specified in Schedule B shall be filed with the commissioner, by or on behalf of each participant in the prior solicitation, other than the issuer, as soon as reasonably practicable after the commencement of the solicitation in opposition.

(c) After filing the statements under Subsections (1) through (3), if additional persons become participants in a solicitation, a statement shall be filed with the commissioner, by or on behalf of each such person, in duplicate, containing the information specified in Schedule B, within three business days after the person becomes a participant, or a longer period authorized by the commissioner.

(d) If any material change occurs in the facts reported in any statement filed by or on behalf of any participant, an appropriate amendment to the statement shall be filed promptly with the commissioner.

(4) Notwithstanding Subsection R590-67-7(1), a solicitation may be made before furnishing security holders a written proxy statement containing the information specified in Schedule A with respect to the solicitation, provided that:

(a) the statements required by Subsection R590-67-14(3) are filed by or on behalf of each participant in the solicitation;

(b) a proxy form is not furnished to security holders before the time the written proxy statement under Subsection R590-67-14(5) is furnished to security holders, however, this Subsection R590-67-14(4)(b) may not apply where a proxy statement meeting the requirements of Schedule A is furnished to security holders;

(c) the information, or an appropriate summary, under Subsection R590-67-14(3) is filed by each participant and included in each communication furnished to security holders in connection with the solicitation; and

(d) a written proxy statement containing the information specified in Schedule A regarding a solicitation is furnished to security holders at the earliest practicable date.

(5) Proposed soliciting material furnished to security holders before the furnishing of the written proxy statement required by Subsection R590-67-7(1) shall be filed with the commissioner in preliminary form at least five business days before the date definitive copies of the material are first furnished, or a shorter period the commissioner may authorize.

(6) Notwithstanding Subsection R590-67-7(2), any portion of the annual report that refers to any solicitation or to any participant in any solicitation, other than the solicitation by management, shall be filed with the commissioner as proxy material, in preliminary form, at least five days before the date copies of the report are first furnished to security holders.

R590-67-15. Severability.

If any provision of this rule, Rule R590-67, or its application to any person or situation is held invalid, such invalidity does not affect any other provision or application of this rule that can be given effect without the invalid provision or application. The remainder of this rule shall be given effect without the invalid provision or application.

KEY: insurance law

Date of Last Change: June 9, 2023

Notice of Continuation: August 9, 2024

Authorizing, and Implemented or Interpreted Law: 31A-2-201