(215 ILCS 5/147.1) (from Ch. 73, par. 759.1)
    Sec. 147.1. Sale of insurance company shares. (1) No shares of the capital stock of a domestic stock company shall be sold or offered for sale to the public in this State by an issuer, underwriter, dealer or controlling person in respect of such shares without first procuring from the Director a permit so to do.
    (2) Unless the context otherwise indicates the following terms as used in this Section shall have the following meanings:
    (a) The word "issuer" shall mean every company which shall have issued or proposes to issue any such shares of capital stock,
    (b) The word "underwriter" shall mean any person who has purchased such shares of capital stock from an issuer or controlling person with a view to, or sells such shares of capital stock for an issuer or a controlling person in connection with, the distribution thereof, or participates or has a participation in the direct or indirect underwriting of such distribution; but such term shall not include a person whose interest is limited to a commission or discount from an underwriter or dealer not in excess of the usual and customary distributer's or seller's commission or discount or not in excess of any applicable statutory maximum commission or discount. An underwriter shall be deemed to be no longer an underwriter of an issue of shares of capital stock after he has completely disposed of his allotment of such shares or, if he did not purchase the shares, after he has ceased to sell such shares for the issuer or controlling person.
    (c) The word "dealer" shall mean any person other than an issuer, a controlling person, a bank organized under the banking laws of this State or of the United States, a trust company organized under the laws of this State, an insurance company or a salesman, who engages in this State, either for all or part of his time, directly or indirectly, as agent, broker or principal, in the business of offering, selling, buying and selling, or otherwise dealing or trading in shares of capital stock of insurance companies.
    (d) The words "controlling person" shall mean any person selling such shares of capital stock, or group of persons acting in concert in the sale of such shares, owning beneficially (and in the absence of knowledge, or reasonable grounds of belief, to the contrary, record ownership shall for the purposes hereof be presumed to be beneficial ownership) either
    (i) 25% Or more of the outstanding voting shares of the issuer of such shares where no other person owns or controls a greater percentage of such shares, or
    (ii) Such number of outstanding number of shares of the issuer as would enable such person, or group of persons, to elect a majority of the Board of Directors of such issuer.
    (e) The word "salesman" shall mean an individual, other than an issuer, an underwriter, a dealer or a controlling person, employed or appointed or authorized by an issuer, an underwriter, a dealer or a controlling person to sell such shares in this State. The partners or officers of an issuer, an underwriter, a dealer or a controlling person shall not be deemed to be a salesman within the meaning of this definition.
    (3) The provisions of this Section shall not apply to any of the following transactions:
    (a) The sale in good faith, whether through a dealer or otherwise, of such shares by a vendor who is not an issuer, underwriter, dealer or controlling person in respect of such shares, and who, being the bona fide owner of such shares deposes thereof for his own account; provided, that such sale is not made directly or indirectly for the benefit of the issuer or of an underwriter or controlling person.
    (b) The sale, issuance or exchange by an issuer of its shares to or with its own shareholders, if no commission or other remuneration is paid or given directly or indirectly for or on account of the procuring or soliciting of such sale or exchange (other than a fee paid to underwriters based on their undertaking to purchase any shares not purchased by shareholders in connection with such sale or exchange), or the issuance by an issuer of its shares to a holder of convertible securities pursuant to a conversion provision granted at the time of issuance of such convertible securities, provided that no commission or other remuneration is paid or given directly or indirectly thereon on account of the procuring or soliciting of such conversion and no consideration from the holder in addition to the surrender or cancellation of the convertible security is required to effect the conversion.
    (c) The sale of such shares to any corporation, bank, savings institution, trust company, insurance company, building and loan association, dealer, pension fund or pension trust, employees profit sharing trust or to any association engaged as a substantial part of its business or operations in purchasing or holding securities, or to any trust in respect of which a bank or trust company is trustee or co-trustee.
    (d) The sale of such shares by an executor, administrator, guardian, receiver or trustee in insolvency or bankruptcy or at any judicial sale or at a public sale by auction held at an advertised time and place or the sale of such shares in good faith and not for the purpose of avoiding the provisions of this Section by a pledgee of such shares pledged for a bona fide debt.
    (e) Such other transaction as may be declared by ruling of the Director to be exempt from the provisions of this Section.
    (4) Prior to the issuance of any permit under this Section, there shall be delivered to the Director two copies of the following:
    (a) the prospectus which is to be used in connection with the sale of such shares;
    (b) the underwriting and selling agreements, if any;
    (c) the subscription agreement;
    (d) the depository agreement under which the subscription proceeds are to be held;
    (e) any and all other documents, agreements, contracts and other papers of whatever nature which are to be used in connection with or relative to the sale of such shares, which may be required by the Director.
    (5) The Director shall within a reasonable time examine the documents submitted to him and unless he finds from said documents that the sale of said shares is inequitable or would work or tend to work a fraud or deceit upon the purchasers thereof, he shall issue a permit authorizing the sale of said shares.
    (6) The Director shall have the power to prescribe such rules and regulations relating to the sale, issuance, and offering of said shares as will effectuate the purpose of this section to the end that no inequity, fraud or deceit will be perpetrated upon the purchasers thereof.
    (7) If the Director finds that any of the provisions of this Section or of the rules and regulations adopted pursuant hereto have been violated or that the sale, issuance or offering of any such shares is inequitable or works or tends to work a fraud or deceit upon the purchasers thereof he may refuse to issue a permit to sell, issue or offer such shares or may, after notice and hearing, revoke such permit. The action of the Director in refusing, after due application therefor in form prescribed by the Director, or revoking, any such permit shall be subject to judicial review in the manner prescribed by the insurance laws of this State.
    (8) Any person who violates any of the provisions of this Section shall be guilty of a business offense and, upon conviction thereof shall be fined not less than $1,000 nor more than the greater of either $5,000 or twice the whole amount, received upon the sale of shares in violation of this Section and may in addition, if a natural person, be convicted of a Class A misdemeanor.
(Source: P.A. 84-502.)