31.04.10.07

.07 Exemption from Insurance Article, §3-119(e), Annotated Code of Maryland, of Certain Acquisitions and Dispositions of Securities Pursuant to Merger or Consolidations.

A. The following transactions shall be exempt from the provisions of Insurance Article, §3-119(e), Annotated Code of Maryland, as not comprehended within the purpose of that statute:

(1) The acquisition of a security of an issuer pursuant to a merger or consolidation, in exchange for a security of a company which, before the merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except in the case of consolidation the resulting company;

(2) The disposition of a security, pursuant to a merger or consolidation of an issuer which, before the merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except in the case of consolidation, the resulting company;

(3) The acquisition of a security of an issuer pursuant to a merger or consolidation, in exchange for a security of a company which, before the merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values before the merger or consolidation as determined by reference to their most recent available financial statements for a 12-month period before the merger or consolidation; or

(4) The disposition of a security, pursuant to a merger or consolidation, of an issuer which, before the merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values before the merger or consolidation, as determined by reference to their most recent available financial statements for a 12-month period before the merger or consolidation.

B. A merger within the meaning of this regulation shall include the sale or purchase of substantially all the assets of one issuer by another in exchange for stock which is then distributed to the security holders of the issuer which sold its assets.

C. Notwithstanding the foregoing, if an officer, director, or stockholder shall make any purchase (other than a purchase exempted by this chapter or any other regulation under Insurance Article, §3-119(e), Annotated Code of Maryland, of a security in any company involved in the merger or consolidation and any sale (other than a sale exempted by this chapter or any other regulation under Insurance Article, §3-119(e), Annotated Code of Maryland, of a security in any other company involved in the merger or consolidation within any period of less than 6 months during which the merger or consolidation took place, the exemption provided by this regulation shall be unavailable to the officer, director, or stockholder to the extent of the purchase and sale.