The Nevada Division of Insurance recently proposed draft language defining “affiliate” in connection with the new law governing service contract programs that insure their obligations through a contractual liability policy. Under the new law, which was effective October 1, 2011, unless the provider/obligor can demonstrate and maintain $100M in net worth, its obligations must be insured under a CLP. That CLP may not be issued by an insurer that is an “affiliate” of the provider/obligor.
The draft of language amending Chapter 690C of the Nevada Administrative Code, defines “affiliate” as:
“a person who directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with another designated person.”
In addition, the proposed language defines “control” as:
“ownership of shares of a corporation possessing 10% or more of the total voting power of all classes of shares entitled to vote or possessing 10% or more of the total value of the outstanding shares of the corporation; and ownership of 10% or more by value of the beneficial interests in a partnership, trust, or estate.”
The Division is accepting comments regarding the proposed regulation no later than November 16, 2011
