Requirements on Declaration of Dividends

(a)In accordance to rules and regulations promulgated by the Commissioner pursuant to the Administrative Adjudication Law found in Chapter 9, Title 5 Guam Code Annotated, no domestic company may pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until:

(1)thirty

(30)days after the Commissioner has received notice of the declaration thereof and has not within such period disapproved the payment; or

(2)the Commissioner approves such payment within the thirty (30)-day period.

(b)For purposes of this Section, an extraordinary dividend or distribution is any dividend or distribution of cash or other property whose fair market value, together with that of other dividends or distributions, made within the period of twelve

(12)consecutive months ending on the date on which the proposed dividend is scheduled for payment or distribution exceeds the lesser of:

(1)ten percent (10%) of the company's surplus as regards to policyholders as of the 31st day of December next preceding; or

(2)the net income of the company for the twelve (12)month period ending on the 31st day of December next preceding, but does not include pro rata distributions of any class of the company's own securities.

(c)Notwithstanding any other provision of law, the company may declare an extraordinary dividend or distribution which is conditional upon the Commissioner's approval, and such a declaration confers no rights upon security holders until:

(1)the Commissioner has approved the payment of the dividend or distribution; or

(2)the Commissioner has not disapproved the payment within the thirty (30)-day period referred to in this Section.