A. No director or officer of an insurer, organized under the laws of this state, and no person who is directly or indirectly the beneficial owner of more than ten percent (10%) of any class of equity security of any such insurance company, shall receive, except as permitted by this section, any money or valuable thing, either directly or indirectly or through any substantial interest in any other corporation, firm or business unit for negotiating, procuring, recommending or aiding in any purchase, sale or exchange of property or loan, made by any such company or any subsidiary thereof; nor shall he be pecuniarily interested, either as principal, coprincipal, agent or beneficiary, either directly or indirectly, or through any substantial interest in any other corporation, firm or business unit, in any such purchase, sale, exchange or loan; nor shall such company make any loan to or guarantee the financial obligation of any such director, officer or shareholder, either directly or indirectly, or through its subsidiaries, nor shall any such director, officer or shareholder accept any such loan or guarantee either directly or indirectly.

B. 1. "Person", as used herein, shall mean an individual, a corporation, a partnership, an association, a joint-stock company, a business trust or an unincorporated organization; and

2. "Subsidiary", as used herein, shall mean any corporation in which an insurance company owns fifty percent (50%) or more of any class of equity securities of such corporation, or which is managed by or is directly or indirectly controlled by or is subject to control by an insurance company.

C. Nothing in this section shall be construed as prohibiting the following:

1. Any such director, officer or shareholder from becoming a policyholder of the insurance company and enjoying the usual rights of a policyholder or from participating as beneficiary in any pension plan, deferred compensation plan, profit-sharing or bonus plan, stock option plan, or similar plan adopted by the insurance company and to which he may be eligible under the terms of such plan; or prohibit any such director, officer or shareholder from receiving salaries, bonuses and other remuneration for services rendered to the insurance company as an employee and not in violation of other provisions of the Insurance Code;

2. Professional services performed by such directors for duties not placed by law upon a director and director's fees and expense reimbursement for the performance of their duties as directors;

3. The approval and payment of lawful dividends to policyholders and shareholders;

4. Any other arms-length transaction not forbidden by other statutes between such directors, officers and shareholders and such insurance company provided such transactions are approved prior to the making thereof by the Commissioner;

5. Any transactions within an insurance holding company system by insurers with their holding companies, subsidiaries or affiliates that are not prohibited by law, that meet the test of being fair and proper, and that are regulated by other statutes; or

6. Any transactions or arrangements not prohibited by law that meet the test of being fair and proper.

Amended by Laws 1983, c. 99, § 4, emerg. eff. May 9, 1983; Laws 1987, c. 175, § 21, eff. Nov. 1, 1987.