Title 20 : HOLDING COMPANIES

Sec. 282. As used in this title, the following terms shall have the respective meanings hereinafter set forth unless the context shall otherwise require:

(a) "Person" means an individual, partnership, firm, association, corporation, trust, any similar entity or any combination of the foregoing acting in concert;

(b) "Control", including the terms "controlling", "controlled by" and "under common control with", means the possession directly or indirectly of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities by a contract other than a commercial contract for goods or non-management services or otherwise. Subject to section two hundred eight-four, control shall be presumed to exist if any person directly or indirectly owns, controls or holds with the power to vote forty per centum or more of the voting securities of any other person: Provided, That no person shall be deemed to control another person solely by reason of his being an officer or director of such other person;

(c) "Holding company" means any person who directly or indirectly controls any authorized insurer;

(d) "Controlled insurer" means an authorized insurer controlled directly or indirectly by a holding company;

(e) "Controlled person" means any person, other than a controlled insurer, who is controlled directly or indirectly by a holding company;

(f) "Holding company system" means a holding company together with its controlled insurers and controlled persons.

Sec. 283. Notwithstanding paragraph (b) of section two hundred eighty-two, the Commissioner may determine after notice and opportunity to be heard, that a person exercises directly or indirectly either alone or pursuant to an agreement with one or more other persons such a controlling influence over the management or policies of an authorized insurer as to make it necessary or appropriate in the public interest or for the protection of policyholders or stockholders of the insurer that the person be deemed to control the insurer.

Sec. 284. The Commissioner may determine upon application that any person, either alone or pursuant to agreement with one or more other persons, does not or will not upon the taking of some proposed action control another person. The filing of an application hereunder in good faith by any person shall relieve the applicant from any obligation or liability imposed by this title with respect to the subject of the application, except as contained in section two hundred ninety-four, until the Commissioner has acted upon the application. Within thirty days or such further period as he may prescribe, the Commissioner may prospectively revoke or modify his determination, after notice and opportunity to be heard, whenever in his judgment revocation or modification is consistent with his title.

Sec. 285. Notwithstanding any other provisions of this title, the following shall not be deemed holding companies:

(a) authorized insurers or reinsurers or their subsidiaries;

(b) the Government of the Philippines, or any political subdivision, agency or instrumentality thereof, or any corporation which is wholly owned directly or indirectly by one or more of the foregoing.

The Commissioner may conditionally or unconditionally exempt any specified person or class of persons from any of the obligations or liabilities imposed under this title, if and to the extent he finds the exemption necessary to appropriate in the public interest or not adverse to the interests of policyholders or stockholders and consistent with the purposes of this title.

Sec. 286. (1) Every person who on the date this Code takes effect is a controlled insurer and every person who thereafter becomes a controlled insurer, shall, within sixty days thereafter, or within thirty days after becoming a controlled insurer, whichever is later, register with the Commissioner. Such registration shall be amended within thirty days following any change in the identity of its holding company. The Commissioner may grant one or more reasonable extensions of the time to register.

(2) Every registrant shall furnish the Commissioner with the following information concerning its holding company: (a) a copy of its charter or articles of incorporation and its by-laws, (b) the identities of its principal shareholders, officers, directors and controlled persons, and (c) information as to its capital structure and financial condition, and a description of its principal business activities.

Sec. 287. Every controlled insurer shall file with the Commissioner such reports or material as he may direct for the purpose of disclosing information concerning the operations of persons within the holding company system which may materially affect the operations, management or financial condition of the insurer.

Sec. 288. Every holding company and every controlled person within a holding company system shall be subject to examination by order of the Commissioner if he has cause to believe that the operations of such persons may materially affect the operations, management or financial condition of any controlled insurer with the system and that he is unable to obtain relevant information from such controlled insurer. The grounds relied upon by the Commissioner for such examination shall be stated in his order, which order shall be subject to judicial review only at the instance of the person sought to be examined. Such examination shall be confined to matters specified in the order. The cost of such examination shall be assessed against the person examined and no portion thereof shall thereafter be reimbursed to it directly or indirectly by the controlled insurer.

Sec. 289. The Commissioner shall keep the contents of each report made pursuant to this title and any information obtained by him in connection therewith confidential and shall not make the same public without the prior written consent of the controlled insurer to which it pertains unless the Commissioner after notice and an opportunity to be heard shall determine that the interests of policyholders, stockholders or the public will be served by the publication thereof. In any action or proceeding by the Commissioner against the person examined or any other person within the same holding company system a report of such examination published by him shall be admissible as evidence of the facts stated therein.

Sec. 290. Transactions within a holding company system to which a controlled insurer is a party shall be subject to the following:

(a) The terms shall be fair and equitable;

(b) charges or fees for services performed shall be reasonable;

(c) expenses incurred and payments received shall be allocated to the insurer on an equitable basis in conformity with customary insurance accounting practices consistently applied.

The books, accounts and records of each party to all such transactions shall be maintained as to clearly and accurately disclose the nature and details of the transactions including such accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties.

Sec. 291. The prior written approval of the Commissioner shall be required for the following transactions between a controlled insurer and any person in its holding company system: sales, purchases, exchanges, loans or extensions of credit, or investments, involving five per centum or more of the insurer's admitted assets as of the thirty-first day of December next preceding.

Sec. 292. The following transactions between a controlled insurer and any person in its holding company system may not be entered into unless the insurer has notified the Commissioner in writing of its intention to enter into any such transaction at least thirty days prior thereto, or such shorter period as he may permit, and he has not disapproved it within such period:

(a) sales, purchases, exchanges, loans or extensions of credit, or investments, involving more than one-half of one per centum but less than five per centum of the insurer's admitted assets as of the thirty-first day of December next preceding;

(b) reinsurance treaties or agreements;

(c) rendering of services on a regular or systematic basis; or

(d) any material transaction, specified by regulation, which the Commissioner determines may adversely affect the interest of the insurer's policyholders or stockholders or of the public.

Nothing herein contained shall be deemed to authorize or permit any transaction which, in the case of a non-controlled insurer, would be otherwise contrary to law.

Sec. 293. The Commissioner, in reviewing transactions pursuant to sections two hundred ninety-one and two hundred ninety-two, shall consider whether the transactions comply with the standard set forth in section two hundred ninety and whether they may adversely affect the interests of policyholders. This section shall not apply to transactions subject to other sections of this Code which impose notice or approval requirements greater than those prescribed by this title.

Sec. 294. (1) No person, other than an authorized insurer, shall acquire control of any domestic insurer, whether by purchase of its securities or otherwise, except (a) after twenty days written notice to its insurer or such shorter period as the Commissioner may permit, of its intention to acquire control, and (b) with the prior written approval of the Commissioner.

(2) The Commissioner shall disapprove the acquisition of control of a domestic insurer if he determines, after notice and an opportunity to be heard, that such action is reasonably necessary to protect the interest of the people of this country. The following shall be the only factors to be considered by him in reaching the foregoing determination:

(a) the financial condition of the acquiring person or and the insurer;

(b) the trustworthiness of the acquiring person or any of its officers or directors;

(c) a plan for the proper and effective conduct of the insurer's operations;

(d) the source of the funds or assets for the acquisition;

(e) the fairness of any exchange of stock, assets, cash or other consideration for the stock or assets to be received;

(f) whether the effect of the acquisition may be substantially to lessen competition in any line of commerce in insurance or to tend to create a monopoly therein; and

(g) whether the acquisition is likely to be hazardous or prejudicial to the insurer's policyholders or stockholders.

(3) The following conditions affecting any controlled insurer, regardless of when such control has been acquired, are violations of this title: (a) the controlling person or any of its officers or directors have demonstrated untrustworthiness; and (b) the effect of retention of control may be substantially to lessen competition in any line of commerce in insurance in this country or to tend to create a monopoly therein. If, after notice and an opportunity to be heard, the Commissioner determines that any of the foregoing violations exists, he shall reduce his findings to writing and shall issue an order based thereon and cause the same to be served upon the insurer and upon all persons affected thereby directing any person found to be in violation thereof to take appropriate action to cure such violation. Upon the failure of any such person to comply with such order, section two hundred ninety-eight shall become applicable.

(4) The Commissioner may require the submission of such information as he deems necessary to determine whether any acquisition or retention of control complies with this title and may require, as a condition of approval of such acquisition or retention of control, that all or any portion of such information be disclosed to the insurer's stockholders.

(5) Unless subject to registration under section two hundred eighty-six or unless acquisition of its control is subject to paragraphs one and two hereof, every authorized insurer shall, on or before the first day of July, nineteen hundred seventy-five, or within thirty days after any event requiring notice hereunder, whichever is later, notify the Commissioner in writing of the identity of any person whom the insurer then knows or has reason to believe controls or has taken any action, other than preliminary negotiations or discussion, to acquire control of the insurer.

Sec. 295. (1) Notwithstanding the control of an authorized insurer by any person, the officers and directors of the insurer shall not thereby be relieved of any obligation or liability to which they would otherwise be subject by law, and the insurer shall be managed so as to assure its separate operating identity consistent with this title.

(2) Nothing herein shall preclude an authorized insurer from having or sharing a common management or cooperative or joint use of personnel, property or services with one or more other persons under arrangements meeting the standards of section two hundred ninety.

Sec. 296. To the extent that any information or material is set forth in forms or other matter on file with any government agency or in a registration form filed with the Commissioner by another person within the same holding company system, the controlled insurer may comply with the registration or reporting requirements of this title by referring in its registration form or report to such other filed matter and attaching a copy thereof certified by the insurer as a true and complete copy, to such registration form or report or, if such other filed matter is on file with the Commissioner, incorporating such matter by reference.

Sec. 297. No holding company or controlled person shall directly or indirectly or through another person do or cause to be done for or in behalf of the controlled insurer any act intended to affect the insurance operations of the insurer which, if done by the insurer, would violate any provision of this Code.

Sec. 298. In addition to any other penalty provided by law, the Commissioner may, upon the willful failure of any person within a holding company system to comply with this title or any regulation or order promulgated hereunder:

(a) proceed under title fourteen or title fifteen, Chapter III, of this Code with respect to insurer within the holding company system; or

(b) revoke or refuse to renew the authority to do business in this country of an insurer within the holding company system or refuse to issue such authority to any other insurer in the system; or

(c) direct that, in addition to any other penalty provided by law, such person forfeit to the people of this country a sum not exceeding five hundred pesos for a first violation and two thousand five hundred pesos for any subsequent violation. An additional sum not exceeding two thousand five hundred pesos shall be imposed for each month during which any such violation shall continue.