Section 2. For the purpose of assuming or ceding reinsurance of pollution liability insurance policies subject to the provisions of this chapter, there is hereby created a body politic and corporate to be known as the Pollution Liability Reinsurance Corporation. The Corporation is hereby constituted a public instrumentality of the commonwealth and the exercise by the Corporation of the powers conferred in this chapter shall be deemed and held to be the performance of an important public function. The Corporation is hereby placed under the commissioner of insurance but shall not be subject to the supervision or control of said commissioner or any board, bureau, department or other agency of the commonwealth except as specifically provided in this chapter.

The Corporation shall be governed and its corporate powers exercised by a board of directors consisting of the commissioner of insurance or his designee and the commissioner of the department of environmental protection or his designee who shall serve as ex officio non-voting members of the board and nine persons to be appointed by the governor, one of whom shall be a member representing consumer or environmental interests and five of whom shall be members representing employers, including two from nominees of the Associated Industries of Massachusetts.

Directors shall serve for a term of three years; provided, however, that in making the initial appointments the governor shall designate initial terms of one, two, and three years, respectively, so that as nearly as possible the terms of one-third of the members shall expire each year. Any member may be removed from the board of directors by the governor only for cause. The members shall annually elect a member of the board of directors to serve as chairman. Five members of the board shall constitute a quorum and the affirmative votes of five members shall be necessary for any action to be taken by the board of directors. Members of the board shall not be compensated but shall be reimbursed by the Corporation for reasonable expenses incurred by them in carrying out their duties as members of the board of directors.

The board shall appoint a qualified executive director and establish his salary. The executive director shall be the chief executive, administrative and operational officer of the Corporation and shall direct and supervise the administrative affairs and general management of the Corporation. The executive director shall attend meetings of the board and may, subject to the approval of the board, employ other employees, consultants, and agents, including legal counsel and advisors.

The board shall contract with one or more qualified persons or entities for services necessary for the operation and management of the Corporation. Such services shall be performed under the supervision of the executive director. At least annually, such contractor shall report to the board of directors regarding activities on behalf of the Corporation. The following shall be ineligible to contract for such services:

(i) any entity obtaining reinsurance of pollution liability policies from the Corporation;

(ii) any insurance company licensed or approved to provide, and actually writing, pollution liability coverage within the commonwealth; and

(iii) any company or entity whose engagement by the Corporation would, in the judgment of the board, pose the appearance or reality of a conflict of interest.

The directors shall annually elect a secretary and treasurer, and may elect or appoint such other officers as they deem necessary, none of whom, except for the chairman, need be members of the board. The secretary shall keep a record of the proceedings of the Corporation and shall be custodian of all books, documents, and papers filed with the Corporation and its official seal. The secretary shall cause copies to be made of all minutes and other records and documents of the Corporation and shall certify that such copies are true copies and all persons dealing with the Corporation may rely on such certification. The treasurer shall be the chief financial and accounting officer of the Corporation and shall be in charge of its funds, books of account and accounting records.

Directors and officers who are not regular, compensated employees of the Corporation shall, except for acts of willful dishonesty or intentional violation of the law, not be liable to the commonwealth, to the Corporation or to any other person as a result of their activities, whether ministerial or discretionary, as such directors or officers. The board of directors of the Corporation may purchase liability insurance for directors, officers, employees and agents of the Corporation and may, except in cases of willful dishonesty, indemnify said persons against the claims of others.

All directors, officers, employees and agents of the Corporation having access to cash or negotiable securities shall give bond to the Corporation at its expense, in such amount and with such surety as the board may prescribe. The persons required to give bond may be included in one or more blanket or scheduled bonds.

The board shall annually approve appropriate compensation payable to its officers if such compensation is deemed necessary.

The Pollution Liability Reinsurance Corporation shall establish and maintain a fund, which shall be known as the Pollution Liability Reinsurance Fund. Revenues collected by the Pollution Liability Reinsurance Corporation shall be deposited in the reinsurance fund and shall be available for use by the Corporation for its ordinary and necessary operating expenses; for the payment of obligations arising under reinsurance contracts issued by the Corporation pursuant to this chapter; and for any other purpose authorized by this chapter.

The Corporation shall annually submit a complete and detailed report of its activities within ninety days after the end of the calendar year to the clerk of the house of representatives, to the clerk of the senate, to the governor, and to the commissioner.

The books and records of the Corporation shall be subject to an audit by the state auditor, in accordance with generally accepted government auditing standards, as often as the state auditor determines is necessary and to periodic examination at not less than three-year intervals by the commissioner of insurance. The costs of such audits and examinations shall be paid by the Corporation. The findings of the annual audit shall be submitted to the clerk of the house of representatives, to the clerk of the senate, to the governor, and to the commissioner.

The Corporation shall be exempt from payment of all fees, premium taxes and all other taxes levied by the commonwealth or any of its subdivisions except taxes levied on real property.

The books and records of the Corporation shall be subject to an annual audit by the auditor of the commonwealth and to periodic examination at not less than three-year intervals by the commissioner of insurance. The costs of such audits and examinations shall be paid by the Corporation. The findings of the annual audit shall be submitted to the clerk of the house of representatives, to the clerk of the senate, to the governor, and to the commissioner.