56-13-107 - Directors Terms Election Conflicts of interest in recovery of benefits.
56-13-107. Directors Terms Election Conflicts of interest in recovery of benefits.
(a) The business of each captive insurance company incorporated on or after March 14, 1978, under the laws of this state, shall be managed by a board of directors consisting of the number of directors, not less than three (3), prescribed by the articles of incorporation or bylaws. Directors of a mutual captive insurance company shall be nominated and elected in the manner prescribed by the bylaws of the company, which shall be consistent with the laws governing a nonprofit corporation in this state. The directors shall be nominated and elected in the manner prescribed by the bylaws of the company that are not inconsistent with the laws of this state. No director may serve who has been convicted of fraud involving any financial institution or of a felony. The commissioner may waive the prohibition regarding a felony if the commissioner determines that the particular felony does not jeopardize the person's ability to act as a director.
(b) Every captive insurance company shall report to the commissioner within thirty (30) days after any change in its executive officers or directors and shall include in its report a statement of the business and professional affiliations of any new executive officer or director. As used in this subsection (b), executive officer includes only the chair of the board of directors, president, executive vice president, secretary and treasurer.
(c) No director, officer or employee having any authority in the investment or disposition of the funds of a captive insurance company shall accept, except on behalf of the company, or be the beneficiary of, any fee, brokerage, gift or other emolument because of any investment, loan, deposit, purchase, sale, payment or exchange made by or for the company; but a director who is not otherwise an officer or employee of the company may receive reasonable compensation for necessary services performed for sales or purchases made to or for the company in the ordinary course of its business and in the usual private, professional or business capacity of the director.
(d) Any profit or gain received by or on behalf of any person in violation of subsection (c) shall inure to and be recoverable by the company. A suit to recover the profit may be instituted in any court of competent jurisdiction by the company, or by any stockholder of the company in its name and on its behalf, if the company fails or refuses to bring suit within sixty (60) days after request in writing or if the company fails diligently to prosecute the suit thereafter. No suit shall be brought more than two (2) years after the date the profit was realized.
[Acts 1978, ch. 616, § 8; T.C.A., § 56-4507; Acts 1981, ch. 299, § 8.]