Chap. 280.—An ACT to amend and re-enact Sections 4242 and 4243 of the Code of
Virginia, relating to the rights, powers and duties of the State Corporation

Commission upon certain conditions to take possession of the property and
conduct the business of domestic insurance companies. [H B 384]

Approved March 20, 1942

1. Be it enacted by the General Assembly of Virginia, That section
forty-two hundred and forty-two and forty-two hundred and forty-three
be amended and re-enacted so as to read, as follows:

Section 4242. When the State Corporation Commission may apply
for rule to show cause why it should not take possession of the property
of insurance companies and conduct business.—Whenever any domestic
insurance company subject to the supervision of the State Corporation
Commission (a) is insolvent; or (b) has refused to submit its books,
papers, accounts or affairs to the reasonable inspection of the said Com-
mission or its representative; or (c) has neglected or refused to observe
an order of the Commission to make good within ninety days any defi-
ciency, whenever its capital, if it be a stock company, or its reserve, if it
be a mutual company, shall have become impaired ; or (d) by contract of
reinsurance, or sale or otherwise has transferred, or attempted to transfer,
or is about to transfer substantially its entire property or business, or
entered into any transaction the effect of which is to merge substantially
its entire property or business in the property or business of any other
corporation, association, society, order or person, without first having
obtained the written approval of the Commission; or (d-1) has since
January first, nineteen hundred and forty-two removed or attempted to
remove, or is about to remove from this State substantially its entire
property or business, or any material part thereof necessary for the
continued conduct of its business, so as to endanger the interests of its
policyholders or stockholders; or (e) is found, after an examination, to
be in such condition that its further transaction of business will be
hazardous to its policyholders, or to its creditors, or to the public; or @)
has wilfully violated its charter or any law of the State; or (g) whenever
any officer thereof has refused to be examined under oath touching its
affairs, the Commission may, the Attorney-General representing it, apply
to the judge of the circuit court of the City of Richmond for an order
directing such insurance company to show cause why the Commission
should not take possession of its property and conduct its business, and
for such other relief as the nature of the case and the interest of its policy-
holders, creditors, stockholders or the public may require.
Section 4243. Power of court to grant injunction and direct Com-
mission to take possession of property; when property to be restored.—
On such application, or at any time thereafter, such court, or the judge
thereof in vacation, may, in its discretion, issue an injunction restraining
such insurance company from the transfer, disposition or removal of its
property or business until further order of the court. On the return of
such order to show cause, and after a full hearing, the court shall either
deny the application or direct the Commission forthwith to take posses-
sion of the property and conduct the business of such company, and retain
such possession and conduct such business until, on the application either
of the Commission, the Attorney-General representing it, or of such com-
pany, it shall, after a like hearing, appear to the court that the ground for
such order directing the Commission to take possession has been removed
and that the company can properly resume possession of its property and
the conduct of its business.

2. An emergency existing, this act shall be in force from its pas-
sage.