The Office of General Counsel issued the following informal opinion on April 10, 2002, representing the position of the New York State Insurance Department.

Re: N.Y. Ins. Law § 1201(a)(5)(B)(vi) (McKinney 2000) New York State Residence and United States Citizenship Requirements for Directors

Question Presented:

Does N.Y. Ins. Law § 1201(a)(5)(B)(vi) (McKinney 2000) require insurance companies to place, within proposed corporate charters, a provision that at least three (3) directors be both New York residents and United States citizens?

Conclusion:

No. N.Y. Ins. Law § 1201(a)(5)(B)(vi) does not require that at least three directors be both residents of New York State and citizens of the United States. It merely requires that at least three of the aggregate number of directors be New York residents.

Facts:

No facts were provided.

Analysis:

N.Y. Ins. Law § 1201(a)(5)(B)(vi) requires proposed charters to contain:

The final clause of N.Y. Ins. Law § 1201(a)(5)(B)(vi), "and that not less than three shall be residents of this state," further modifies the immediately preceding clause which expresses the requirements for the directors as a whole: "and provision that each director shall be at least eighteen years of age and that at all times a majority shall be citizens and residents of the United States." § 1201(a)(5)(B)(vi), therefore, requires proposed charters to provide that at least three directors shall be residents of New York – not necessarily both residents of New York and citizens of the United States. A review of the legislative intent behind N.Y. Ins. Law § 1201(a)(5)(B)(vi) substantiates this conclusion.

The New York State Legislature amended the precursor to N.Y. Ins. Law § 1201(a)(5)(B)(vi) in 1983 to "eliminate the requirement that a majority of the board of directors . . . be residents of New York or an adjacent state," and, to require only "that a majority of the members be United States citizens and residents and that three members be residents of New York." Memorandum of State Executive Department, 1983 N.Y. Laws 567, at 2598, 2600 (emphasis added). The amendment:

Id. at 2614 (alteration in original) (emphasis added).

The language of intent is clear – the requirement that a majority of directors be United States citizens and residents is independent of the requirement that at least three members be residents of New York.

A plain reading of N.Y. Ins. Law § 1201(a)(5)(B)(vi), coupled with the legislative intent behind its inception, confirm the statutory interpretation that N.Y. Ins. Law § 1201(a)(5)(B)(vi) only requires three of the aggregate number of directors to be New York residents. There is no requirement that these three directors be both New York residents and citizens of the United States.

For further information you may contact Attorney Kristian Earl Lynch at the New York City Office.