Section 60-2E-21 - Requirements if company is or becomes a subsidiary; investigations; restrictions on unsuitable persons; other requirements.
60-2E-21. Requirements if company is or becomes a subsidiary; investigations; restrictions on unsuitable persons; other requirements.
A. If the company applicant or licensee is or becomes a subsidiary, each nonpublicly traded holding company and intermediary company with respect to the subsidiary company shall:
(1) qualify to do business in New Mexico; and
(2) register with the board and furnish to the board the following information:
(a) a complete list of all beneficial owners of five percent or more of its equity securities, which shall be updated within thirty days after any change;
(b) the names of all company officers and directors within thirty days of their appointment or election;
(c) its organization, financial structure and nature of the business it operates;
(d) the terms, position, rights and privileges of the different classes of its outstanding securities;
(e) the terms on which its securities are to be, and during the preceding three years have been, offered;
(f) the holder of and the terms and conditions of all outstanding loans, mortgages, trust deeds, pledges or any other indebtedness or security interest pertaining to the applicant or licensee;
(g) the extent of the securities holdings or other interest in the holding company or intermediary company of all officers, directors, key executives, underwriters, partners, principals, trustees or any direct or beneficial owners, and the amount of any remuneration paid them as compensation for their services in the form of salary, wages, fees or by contract pertaining to the licensee;
(h) remuneration to persons other than directors, officers and key executives exceeding two hundred fifty thousand dollars ($250,000) per year;
(i) bonus and profit-sharing arrangements within the holding company or intermediary company, if deemed necessary by the board;
(j) management and service contracts pertaining to the licensee or applicant, if deemed necessary by the board;
(k) options existing or to be created in respect to the company's securities or other interests, if deemed necessary by the board;
(l) balance sheets and profit and loss statements, audited by independent certified public accountants or their foreign equivalents, for not more than the three preceding fiscal years, or, if the holding company or intermediary company has not been in existence more than three years, balance sheets and profit and loss statements from the time of its establishment, together with projections for three years from the time of its establishment;
(m) any further financial statements necessary or appropriate to assist the board in making its determinations; and
(n) a current annual profit and loss statement, a current annual balance sheet and a copy of the company's most recent federal income tax return or its foreign equivalent within thirty days after the return is filed.
B. The board may require all holders of five percent or more of the equity security of a holding company or intermediary company to apply for a certification of finding of suitability.
C. The board may in its discretion perform the investigations concerning the officers, directors, key executives, underwriters, security holders, partners, principals, trustees or direct or beneficial owners of any interest in any holding company or intermediary company as it deems necessary, either at the time of initial registration or at any time thereafter.
D. If at any time the board finds that any person owning, controlling or holding with power to vote all or any part of any class of securities of, or any interest in, any holding company or intermediary company is unsuitable to be connected with a licensee, it shall so notify both the unsuitable person and the holding company or intermediary company. The unsuitable person shall immediately offer the securities or other interest to the issuing company for purchase. The company shall purchase the securities or interest offered upon the terms and within the time period ordered by the board.
E. Beginning on the date when the board serves notice that a person has been found to be unsuitable pursuant to Subsection D of this section, it is unlawful for the unsuitable person to:
(1) receive any dividend or interest upon any securities held in the holding company or intermediary company, or any dividend, payment or distribution of any kind from the holding company or intermediary company;
(2) exercise, directly or indirectly or through a proxy, trustee or nominee, any voting right conferred by the securities or interest; or
(3) receive remuneration in any form from the licensee, or from any holding company or intermediary company with respect to that licensee, for services rendered or otherwise.
F. A holding company or intermediary company subject to the provisions of Subsection A of this section shall not make any public offering of any of its equity securities unless such public offering has been approved by the board.
G. This section does not apply to a holding company or intermediary company that is a publicly traded corporation, the stock of which is traded on recognized stock exchanges, which shall instead comply with the provisions of Section 60-2E-22 NMSA 1978.