§ 58-34-15. Grounds for disapproval.
§ 58‑34‑15. Grounds for disapproval.
(a) The Commissionermust disapprove any management contract or custodial agreement filed under G.S.58‑34‑10 if, at any time, the Commissioner finds:
(1) That the service ormanagement charges are based upon criteria unrelated either to the managedinsurer's profits or to the reasonable customary and usual charges for theservices or are based on factors unrelated to the value of the services to theinsurer; or
(2) That managementpersonnel or other employees of the insurer are to be performing managementfunctions and receiving any remuneration for those functions through themanagement or service contract in addition to the compensation by way of salaryreceived directly from the insurer for their services; or
(3) That the contractwould transfer substantial control of the insurer or any of the powers vestedin the board of directors, by statute, articles of incorporation, or bylaws, orsubstantially all of the basic functions of the insurance company management;or
(4) That the contractcontains provisions that would be clearly detrimental to the best interest ofpolicyholders, stockholders, or members of the insurer; or
(5) That the officersand directors of the management or custodial firm are of known bad character orhave been affiliated, directly or indirectly, through ownership, control,management, reinsurance transactions, or other insurance or business relationswith any person known to have been involved in the improper manipulation ofassets, accounts, or reinsurance.
(6) That the custodialagreement is not substantially the same as the form adopted by theCommissioner.
(b) If the Commissionerdisapproves any management contract or custodial agreement, notice of thedisapproval shall be given to the insurer stating the reasons for thedisapproval in writing. The Commissioner shall grant any party to the contracta hearing if the party requests a hearing. (1987, c. 752, s. 8; 1991, c. 681, s. 54; 1993, c.452, s. 50; 2001‑223, s. 20.4.)