(215 ILCS 5/28.1) (from Ch. 73, par. 640.1)
(Section scheduled to be repealed on January 1, 2027)
Sec. 28.1.
Dealing in shares of company by officers, directors and
principal stockholders.
(a) Any person who is directly or indirectly the beneficial owner of
more than 10% of any class of any equity security of a domestic stock
insurance company, or who is a director or an officer of such company,
shall file in the office of the Director by January 31, 1966 or within
10 days after he becomes such beneficial owner, director or officer, a
statement, in such form as the Director may prescribe, of the amount of
all equity securities of such company of which he is the beneficial
owner; and, within 10 days after the close of each calendar month
thereafter, if there has been a change in such ownership during such
month, shall file in the office of the Director a statement, in such
form as the Director may prescribe, indicating his ownership at the
close of the calendar month and such changes in his ownership as have
occurred during such calendar month.
(b) For the purpose of preventing the unfair use of information
which may have been obtained by such beneficial owner, director or
officer by reason of his relationship to such company, any profit
realized by such beneficial owner, officer or director from any purchase
and sale, or any sale and purchase, of any equity security of such
company within any period of less than 6 months, unless such security
was acquired in good faith in connection with a debt previously
contracted, shall inure to and be recoverable by the company,
irrespective of any intention on the part of such beneficial owner,
director or officer in entering into such transaction of holding the
security purchased or of not repurchasing the security sold for a period
exceeding 6 months. Suit to recover such profit may be instituted at law
or in equity by the company, or if the company shall fail or refuse to
bring such suit within 60 days after request or shall fail diligently to
prosecute such a suit, a suit may be instituted by the owner of any
security of the company in the name and in behalf of the company, but no
such suit shall be brought more than 2 years after the date such profit
was realized. This subsection shall not be construed to cover any
transaction where such beneficial owner was not such both at the time of
the purchase and sale, or the sale and purchase, of the security
involved, or any transaction or transactions which the Director by rules
and regulations may exempt as not comprehended within the purpose of
this subsection.
(c) It is unlawful for any such beneficial owner, director or
officer, directly or indirectly, to sell any equity security of such
company if the person selling the security or his principal (i) does not
own the security sold, or (ii) if owning the security, does not deliver
it against such sale within 20 days thereafter, or does not within 5
days after such sale deposit it in the mails or other usual channels of
transportation; provided, however, that this provision does not apply if
such person proves that notwithstanding the exercise of good faith he
was unable to make such delivery or deposit within such time, or that to
do so would cause undue inconvenience or expense.
(d) The provisions of paragraph b of this Section do not apply to
any purchase and sale, or sale and purchase, and the provisions of
paragraph c of this Section do not apply to any sale, of an equity
security of a domestic stock insurance company not then or theretofore
held by such beneficial owner, director or officer in an investment
account, by a dealer in the ordinary course of his business and incident
to the establishment or maintenance by him of a primary or secondary
market (otherwise than on an exchange as defined in the Securities
Exchange Act of 1934) for such security. The Director may, by such rules
and regulations as he finds to be necessary or appropriate in the public
interest, define and prescribe terms and conditions with respect to
securities held in an investment account and transactions made in the
ordinary course of business and incident to the establishment or
maintenance of a primary or secondary market.
(e) The provisions of paragraphs a, b and c of this Section do not
apply to foreign or domestic arbitrage transactions unless made in
contravention of such rules and regulations as the Director may adopt in
order to carry out the purposes of this Act.
(f) The term "equity security" when used in this Act means any stock
or similar security; or any security convertible, with or without
consideration, into such a security, or carrying any warrant or right to
subscribe to or purchase such a security; or any such warrant or right;
or any other security which the Director finds to be of similar nature
and considers necessary or appropriate, by such rules and regulations as
he may prescribe in the public interest or for the protection of
investors, to treat as an equity security.
(g) The provisions of paragraphs a, b and c of this Section do not
apply to equity securities of a domestic stock insurance company if (i)
such securities are registered, or are required to be registered,
pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, or if (ii) such domestic stock insurance company does not have
any class of its equity securities held of record by 100 or more persons
on the last business day of the year next preceding the year in which
equity securities of the company would be subject to the provisions of
paragraphs a, b and c of this Section except for the provisions of this
subsection (ii).
(h) The Director may make such rules and regulations as may be
necessary for the execution of the functions vested in him by this
Section, and may for such purpose classify domestic stock insurance
companies, securities, and other persons or matters within his
jurisdiction. No provision of this Section imposing any liability shall
apply to any act done or omitted in good faith in conformity with any
rule or regulation of the Director, notwithstanding that such rule or
regulation may, after such act or omission, be amended or rescinded or
determined by judicial or other authority to be invalid for any reason.
(i) The provisions of this Section do not apply to any sale made
prior to its effective date.
(Source: Laws 1965, p. 2257 .)
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