CHAPTER 588w
INSURANCE AND FINANCIAL SERVICES EXPORT ZONE

      Sec. 32-530. Definitions. As used in sections 32-530 to 32-540, inclusive:

      (1) "Exempt company" means a corporation organized pursuant to the laws of this state or qualified to do business as a foreign corporation in this state and which (A) does not engage in the active conduct of a trade or business anywhere in the United States, except as provided in sections 32-530 to 32-540, inclusive, (B) elects to be an exempt company in accordance with said sections, (C) has its headquarters in and conducts all of its exempt activities in the United States, to the extent such activities are permitted under said sections, from locations within the Insurance and Financial Services Export Zone, (D) is an exempt banking company, an exempt insurer or an exempt investment company, and (E) includes the initials "IFSEZ" or the words "Insurance and Financial Services Export Zone" in its corporate name;

      (2) "Internal revenue code" means the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended;

      (3) "Exempt banking company" means an exempt company that is a majority-owned subsidiary of a bank, out-of-state bank or foreign bank, as defined in section 36a-2, whose customers are non-United-States persons and which is not authorized to make loans or borrow money in the United States and which conducts no business other than that of an exempt company;

      (4) "Exempt insurer" means an exempt company which is an alien insurer or domestic insurer, as defined in section 38a-1, whose policy holders are non-United-States persons and which only insures risks located outside of the United States and which conducts no business other than that of an exempt company;

      (5) "Exempt investment company" means (A) a mutual fund investment company that is an exempt company the principal business of which is trading in stocks or securities for its own account whose customers are non-United-States persons and which conducts no business other than that of an exempt company, or (B) a mutual fund management company that is an exempt company which develops, services and manages mutual funds for non-United-States persons or exempt mutual fund investment companies and which conducts no business other than that of an exempt company;

      (6) "Exempt activities" means activities undertaken by an exempt company from within the boundaries of the Insurance and Financial Services Export Zone with non-United-States persons, including, but not limited to, the earnings or receipt of interest on deposits with banks or on amounts held by an insurance company under an agreement to pay interest thereon, the earnings or receipt of interest or dividends from another exempt company and the realization of gain or loss from the sale or exchange or other disposition of the stock of another exempt company, activities within the state provided the activities are a required part of the business of the exempt company and includes, without limitation, the following: (A) Communicating with depositors, customers or policy holders, all of which are non-United-States persons or shareholders, including the furnishing of financial reports, providing services or managing customer accounts; (B) communicating with the general public; (C) soliciting sales of its own stock; (D) accepting the subscriptions of non-United-States persons as new stockholders; (E) maintaining its principal corporate records and books of accounts; (F) auditing its books of accounts; (G) publishing or furnishing the offering and redemption price of the shares of stock issued by it; (H) disbursing payments of dividends, legal fees, accounting fees and salaries of officers and directors; (I) conducting meetings of its shareholders and board of directors; (J) making redemptions of its own stock; and (K) engaging in what would otherwise be nonexempt activities, provided such activities are ordinary, necessary and intended to carry out exempt activities;

      (7) "Insurance and Financial Services Export Zone" means the geographic area designated pursuant to section 32-531; and

      (8) "Non-United-States person" means anyone other than a United States person, as defined in Section 957(c) of the Internal Revenue Code.

      (P.A. 96-253, S. 1, 12.)

      History: P.A. 96-253 effective July 1, 1996, and applicable to (1) income years of corporations under chapter 208 commencing on or after January 1, 1996, (2) income years of insurance companies under chapter 207 commencing on or after January 1, 1996, (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1996, or (4) sales occurring on and after January 1, 1996, as the case may be.

      Sec. 32-531. Geographic area of the Insurance and Financial Services Export Zone. (a) The geographic area of the Insurance and Financial Services Export Zone shall be all of the land and improvements within the city of Hartford and within the perimeter boundary described in subsection (b) of this section. The description of the perimeter boundary follows street lines as they exist on April 1, 1996. The zone includes both sides of the referenced streets. Any and all real properties with frontage on the referenced portions of the referenced streets shall be considered to be properties within the zone. All properties with frontage at a referenced intersection shall also be considered properties within the zone.

      (b) The zone is bordered on the east by the Connecticut River. The south perimeter comes straight out from the Connecticut River onto Masseek Street until its intersection with Van Block Avenue; then right onto Van Block Avenue; then northwest on Van Block Avenue to its intersection with Nepaquash Street; then east on Nepaquash Street until its intersection with Charter Oak Avenue; then west on Charter Oak Avenue until its intersection with Wyllys Street; then left on Wyllys Street until its intersection with Wethersfield Avenue; then right on Wethersfield Avenue at the South Green Intersection and left onto Park Street; then west on Park Street until its intersection with Park Terrace; then right onto Park Terrace until its intersection with Capitol Avenue; then left on Capitol Avenue traveling west until its intersection with Forrest Street; then right on Forrest Street. The western perimeter runs from the Capitol Avenue and Forrest Street intersection north on Forrest Street until its intersection with Farmington Avenue; then left on Farmington Avenue to the Whitney Street intersection; then right on Whitney Street and follow straight through the intersection and onto Scarborough Street to its intersection with Albany Avenue. The northern perimeter runs down Albany Avenue heading east; then left at its intersection with Center Street; then north on Center Street until its intersection with Mather Street; then right on Mather Street through its intersection with Main Street; then straight onto Canton Street and follow Canton Street to the end. The zone proceeds straight from the end of Canton Street through Riverside Park out to the Connecticut River.

      (P.A. 96-253, S. 2, 12.)

      History: P.A. 96-253 effective July 1, 1996, and applicable to (1) income years of corporations under chapter 208 commencing on or after January 1, 1996, (2) income years of insurance companies under chapter 207 commencing on or after January 1, 1996, (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1996, or (4) sales occurring on and after January 1, 1996, as the case may be.

      Sec. 32-532. Procedure for corporation to elect to become an exempt company. Certificate. Revocation of election. (a) A corporation may elect to become an exempt company, by filing with the Office of the Secretary of the State, at the time of filing the incorporation or qualification to do business as a foreign corporation documents required by title 33 a certificate stating that it shall (1) be considered an exempt company pursuant to sections 32-530 to 32-540, inclusive, (2) be headquartered and conduct substantially all of its exempt activities in the United States at a location in the Insurance and Financial Services Export Zone identified in the certificate, and (3) engage only in exempt activities unless and until it revokes its election pursuant to subsection (b) of this section. Such certificate shall be signed by the president, vice-president or managing director and attested to by the secretary or assistant secretary. An exempt insurer shall file an original or copy of the certificate with the Insurance Department and an exempt banking company or exempt investment company shall file an original or copy with the Department of Banking.

      (b) An exempt company may revoke its election under subsection (a) of this section by filing a letter or statement of such revocation with the Secretary of the State signed by its president or vice-president or managing director, attested to by its secretary or assistant secretary stating the effective date of the revocation. A copy shall be filed with the Insurance Department or the Department of Banking, as appropriate.

      (P.A. 96-253, S. 3, 12.)

      History: P.A. 96-253 effective July 1, 1996, and applicable to (1) income years of corporations under chapter 208 commencing on or after January 1, 1996, (2) income years of insurance companies under chapter 207 commencing on or after January 1, 1996, (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1996, or (4) sales occurring on and after January 1, 1996, as the case may be.

      Sec. 32-533. Exemption from regulation for exempt insurers, banking companies and investment companies. Fee and charges. (a) Exempt insurers shall not generally be subject to regulation by the Insurance Department and exempt banking companies and exempt investment companies shall not generally be subject to regulation by the Department of Banking, except that each exempt company shall, no later than March thirty-first of each year, file a certificate with the appropriate department, containing: (1) The full name and address of the company and each of the officers and directors thereof; (2) a statement that the company has a net worth which is adequate for the applicant to transact business; (3) a statement that each director and officer of the exempt company is of good character, competent to perform his functions with respect to the exempt company and collectively adequate to manage the business; (4) a statement that the company is transacting its business in a safe and sound manner and shall maintain itself in a safe and sound condition; (5) a statement that the company was engaged during the most recent fiscal year completed, and is engaging in the current fiscal year, only in exempt activities; (6) financial statements for the exempt company, including a balance sheet, a statement of income or loss, a statement of changes in capital accounts and a statement of changes in financial position, for or as of the end of such fiscal year, which have been audited by and contain an unqualified opinion from an independent certified public accountant in accordance with generally accepted accounting principles; (7) a diagram disclosing the exact ownership structure of the exempt company, including all direct, intermediate and ultimate owners of the company, whether owned individually, in partnership or through another entity, provided an exempt mutual fund investment company shall not be required to disclose its owners but shall disclose the ownership of the exempt mutual fund investment management companies who perform services for it; and (8) a statement that the exempt company has engaged, and in the future shall engage, only in exempt activities unless and until election to revoke is filed in accordance with the provisions of subsection (b) of section 32-532. Such certificate shall be in writing and certified as substantially correct by the president, vice-president or managing director, attested to by the secretary or the assistant secretary and shall be on a form prescribed by the appropriate departments.

      (b) Each exempt company shall, no later than the date on which it is required to file the annual certificate required under subsection (a) of this section, pay to the appropriate department a nonrefundable fee of one thousand dollars to be used for processing the annual certificate. The Banking Commissioner and the Insurance Commissioner, as appropriate, may retain legal, financial and examination services, the reasonable cost of which may be charged against the exempt company, upon determination of any such commissioner, in such commissioner's discretion, that such services are necessary to confirm that the exempt company is engaging only in exempt activities and complies with the "Code of Conduct for Financial Institutions to Assist in the Detection and Disclosure of Information with Respect to the Criminal Use of the Systems Operated by Financial Institutions (Money Laundering)".

      (P.A. 96-253, S. 4, 12; P.A. 03-84, S. 19.)

      History: P.A. 96-253 effective July 1, 1996, and applicable to (1) income years of corporations under chapter 208 commencing on or after January 1, 1996, (2) income years of insurance companies under chapter 207 commencing on or after January 1, 1996, (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1996, or (4) sales occurring on and after January 1, 1996, as the case may be; (Revisor's note: In Subdiv. (a)(3) the phrase "... the exempt company are of good character, competent to perform their functions with respect ..." was changed editorially by the Revisors to "... the exempt company is of good character, competent to perform his functions with respect ..."); P.A. 03-84 changed "Commissioner of Banking" to "Banking Commissioner" and made a technical change in Subsec. (b), effective June 3, 2003.

      Sec. 32-534. Regulation, investigation and examination by Insurance Commissioner to determine if exempt insurer is an exempt company and limits its activities. Judicial action for revocation of certificate. (a) An exempt insurer shall be subject to regulation, investigation and examination by the Insurance Commissioner, as reasonably necessary, to enable the commissioner to determine if the exempt insurer is an exempt company and limits its activities to exempt activities. The Insurance Commissioner may adopt regulations in accordance with the provisions of chapter 54 to implement the provisions of this section. Such regulations and all investigative and examination activities may include provisions for determination of the status of a company as an exempt company and revocation of such status. Such regulations and all examination activities shall be consistent with the confidentiality provisions of section 32-537 and shall not impose requirements on the exempt insurer except to the extent necessary to enable the commissioner to verify the company's status as an exempt company. Such regulations may provide for the assessment and collection of fees from exempt insurers sufficient, in the commissioner's judgment, to meet the expenses of the Insurance Department in carrying out its responsibilities under this section. If the commissioner finds that an exempt insurer has (1) intentionally engaged in activities that are not exempt activities or (2) engaged in a pattern of conduct demonstrating reckless indifference by engaging in activities that are not exempt activities, the commissioner may bring an action in the superior court for the judicial district of Hartford to revoke the certificate filed under section 32-532. The commissioner shall not be required to post a bond with the court.

      (b) Unless otherwise specifically provided in sections 32-530 to 32-540, inclusive, an exempt insurer shall be treated as if its exempt activities were being conducted from offices located outside of the United States.

      (P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 95-220, S. 4-6; P.A. 96-253, S. 5, 12.)

      History: P.A. 96-253 effective July 1, 1996, and applicable to (1) income years of corporations under chapter 208 commencing on or after January 1, 1996, (2) income years of insurance companies under chapter 207 commencing on or after January 1, 1996, (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1996, or (4) sales occurring on and after January 1, 1996, as the case may be (Revisor's note: P.A. 88-230, 90-98, 93-142 and 95-220 authorized substitution of "judicial district of Hartford" for "judicial district of Hartford-New Britain" in public and special acts of the 1996 session of the General Assembly, effective September 1, 1998).

      Sec. 32-535. Regulation, investigation and examination by Banking Commissioner to determine if exempt banking company or investment company is an exempt company and limits its activities. Judicial action for revocation of certificate. (a) An exempt banking company or exempt investment company shall be subject to regulation, investigation and examination by the Banking Commissioner as reasonably necessary to enable the commissioner to determine if the exempt banking company or investment company is an exempt company and limits its activities to exempt activities. In any investigation, examination or other proceeding under sections 32-530 to 32-540, inclusive, the Banking Commissioner shall have the authority provided in section 36a-17. The Banking Commissioner may adopt regulations in accordance with the provisions of chapter 54 to implement the provisions of this section. Such regulations may include provisions for determination of the status of a company as an exempt company and revocation of such status in accordance with section 32-537. Such regulations and all investigative, enforcement and examination activities shall be consistent with the confidentiality provisions of section 32-537 and shall not impose requirements on the exempt banking company or investment company except to the extent necessary to enable the commissioner to verify the company's status as an exempt company. Such regulations may further provide for the assessment and collection of fees from exempt banking companies and exempt investment companies sufficient, in the commissioner's judgment, to meet the expenses of the Department of Banking in carrying out its responsibilities under this section. If the commissioner finds that an exempt banking company or exempt investment company holding a certificate under section 32-532 has engaged in, is engaging in or is about to engage in activities that are not exempt activities or is about to violate any regulation adopted or order issued by the commissioner, the commissioner may issue a cease and desist order under section 36a-52. If the commissioner finds that an exempt company has (1) intentionally engaged in activities that are not exempt activities, or (2) engaged in a pattern of conduct demonstrating reckless indifference by engaging in activities that are not exempt activities, the commissioner may bring an action in the superior court for the judicial district of Hartford to revoke the certificate filed under section 32-532. The commissioner shall not be required to post a bond with the court.

      (b) Unless otherwise specifically provided in sections 32-530 to 32-540, inclusive, an exempt banking company or investment company shall be treated as if its exempt activities were being conducted from offices located outside of the United States.

      (P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 95-220, S. 4-6; P.A. 96-253, S. 6, 12; P.A. 03-84, S. 20.)

      History: P.A. 96-253 effective July 1, 1996, and applicable to (1) income years of corporations under chapter 208 commencing on or after January 1, 1996, (2) income years of insurance companies under chapter 207 commencing on or after January 1, 1996, (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1996, or (4) sales occurring on and after January 1, 1996, as the case may be (Revisor's note: P.A. 88-230, 90-98, 93-142 and 95-220 authorized substitution of "judicial district of Hartford" for "judicial district of Hartford-New Britain" in public and special acts of the 1996 session of the General Assembly, effective September 1, 1998); P.A. 03-84 changed "Commissioner of Banking" to "Banking Commissioner" and made a technical change in Subsec. (a), effective June 3, 2003.

      Sec. 32-536. Exempt companies required to file annual declaration with the Commissioner of Revenue Services. Commissioner's powers re exempt companies. Judicial action for revocation of exempt status. (a) Each exempt company shall annually file a declaration with the Commissioner of Revenue Services affirming its status as an exempt company and describing the exempt activities in which it engages. An exempt company shall not be required to report to the commissioner the earnings of its customers or policyholders or, in the case of an exempt mutual investment company, its owners.

      (b) The commissioner may adopt regulations in accordance with the provisions of chapter 54 as to the keeping of records and the content and form of the declaration required under subsection (a) of this section. The commissioner may require any exempt company, by regulation or notice served on such person, to make such declaration, render such statements or keep such records as the commissioner may deem sufficient to show whether or not such person is liable under the general statutes for a tax or for the collection of tax.

      (c) The commissioner or any person authorized by him may examine the books, papers, records and equipment of any exempt person liable under the provisions of sections 32-530 to 32-540, inclusive, and may investigate the activities of the exempt company in order to verify the accuracy of any declaration made, or, if no return is made by the person, to ascertain and determine the amount required to be paid.

      (d) The Department of Revenue Services may bring an action in the superior court for the judicial district of Hartford to revoke the status of an exempt company as an exempt company. Such status shall be revoked if the court finds that the exempt company has (1) intentionally engaged in activities that are not exempt activities, or (2) engaged in a pattern of conduct demonstrating reckless indifference by engaging in activities that are not exempt activities.

      (e) The Department of Revenue Services may adopt regulations which provide for monetary penalties and fines for noncompliance by exempt companies with the exempt activity provisions of sections 32-530 to 32-540, inclusive, which is other than intentional or reckless.

      (f) Any regulations adopted or examinations or investigations authorized under this section shall be consistent with the confidentiality provisions of section 32-537 and shall not impose requirements on the exempt insurer other than as minimally required for the commissioner to verify the company's status as an exempt company.

      (P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 95-220, S. 4-6; P.A. 96-253, S. 7, 12.)

      History: P.A. 96-253 effective July 1, 1996, and applicable to (1) income years of corporations under chapter 208 commencing on or after January 1, 1996, (2) income years of insurance companies under chapter 207 commencing on or after January 1, 1996, (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1996, or (4) sales occurring on and after January 1, 1996, as the case may be (Revisor's note: P.A. 88-230, 90-98, 93-142 and 95-220 authorized substitution of "judicial district of Hartford" for "judicial district of Hartford-New Britain" in public and special acts of the 1996 session of the General Assembly, effective September 1, 1998).

      Sec. 32-537. Confidentiality. Compliance by exempt companies with code of conduct. Notwithstanding any provision of sections 32-530 to 32-540, inclusive, the identity of customers and policyholders of the exempt company, and the owners of an exempt mutual fund investment company shall be kept strictly confidential and shall enjoy the same confidentiality they would otherwise enjoy if the exempt company was located and organized outside of the United States and its exempt activities were being conducted from offices located outside of the United States. Exempt companies shall be automatically deemed to have adopted the "Code of Conduct for Financial Institutions to Assist in the Detection and Disclosure of Information with Respect to the Criminal Use of the Systems Operated by Financial Institutions (Money Laundering)" and the Banking Commissioner, Insurance Commissioner or Commissioner of Revenue Services may determine, through examination, an exempt company's compliance with such code. Repeated failure to comply with the code, after notice and a hearing, shall be grounds for revocation of exempt company status. Any revocation shall take effect from the date of revocation and shall not be retroactive.

      (P.A. 96-253, S. 8, 12; P.A. 03-84, S. 21.)

      History: P.A. 96-253 effective July 1, 1996, and applicable to (1) income years of corporations under chapter 208 commencing on or after January 1, 1996, (2) income years of insurance companies under chapter 207 commencing on or after January 1, 1996, (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1996, or (4) sales occurring on and after January 1, 1996, as the case may be; P.A. 03-84 changed "Commissioner of Banking" to "Banking Commissioner", effective June 3, 2003.

      Sec. 32-538. Tax exemptions. (a) Notwithstanding the provisions of the general statutes, for the purposes of title 12 or any successor provisions to said title 12, the income of exempt companies is exempt from the corporation business tax and income to non-United-States persons shall not be deemed to be income derived from or connected with sources within this state to such persons for purposes of the income tax.

      (b) Notwithstanding the provisions of the general statutes, exempt insurance companies shall not be subject to any tax imposed on premiums.

      (c) Notwithstanding the provisions of the general statutes, exempt companies shall not be subject to the sales and use taxes imposed on the purchase of goods and services. To the extent that exempt companies make sales of goods and services to non-United-States persons the sales and use taxes shall be applicable to such transactions.

      (P.A. 96-253, S. 9, 12.)

      History: P.A. 96-253 effective July 1, 1996, and applicable to (1) income years of corporations under chapter 208 commencing on or after January 1, 1996, (2) income years of insurance companies under chapter 207 commencing on or after January 1, 1996, (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1996, or (4) sales occurring on and after January 1, 1996, as the case may be.

      Sec. 32-539. Compliance with property tax chapters. Exempt companies shall be required to comply with the provisions of chapters 203 to 205, inclusive.

      (P.A. 96-253, S. 10, 12.)

      History: P.A. 96-253 effective July 1, 1996, and applicable to (1) income years of corporations under chapter 208 commencing on or after January 1, 1996, (2) income years of insurance companies under chapter 207 commencing on or after January 1, 1996, (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1996, or (4) sales occurring on and after January 1, 1996, as the case may be.

      Sec. 32-540. Compliance with employment, labor and income tax laws. The employees of exempt companies shall be considered to be employees of a company domiciled in the United States and such exempt companies shall be required to comply with applicable federal and state employment and labor laws and laws requiring the income tax imposed under chapter 229 to be deducted and withheld from wages of employees and to be paid over to the Commissioner of Revenue Services.

      (P.A. 96-253, S. 11, 12.)

      History: P.A. 96-253 effective July 1, 1996, and applicable to (1) income years of corporations under chapter 208 commencing on or after January 1, 1996, (2) income years of insurance companies under chapter 207 commencing on or after January 1, 1996, (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1996, or (4) sales occurring on and after January 1, 1996, as the case may be.

      Secs. 32-541 to 32-599. Reserved for future use.