A risk retention group that seeks to be chartered in the State: shall be chartered and licensed as a liability insurance company in conformance with all insurance laws and regulations of the State; and except as otherwise provided in this subtitle, shall comply with: all the laws, regulations, and requirements applicable to insurers chartered and licensed in the State; and the requirements of § 25–103 of this subtitle, to the extent that those requirements are not a limitation on the laws, regulations, or requirements of the State. Before a risk retention group may offer insurance in a state, the risk retention group shall submit a plan of operation or feasibility study to the Commissioner for approval. Within 10 days after a change to an item of the plan of operation or feasibility study, the risk retention group shall submit to the Commissioner an appropriate revision of the plan of operation or feasibility study. A risk retention group may not offer additional lines of liability insurance in this State or in another state until a revision of the plan of operation or feasibility study is approved by the Commissioner. When a risk retention group files an application for charter, the risk retention group shall provide to the Commissioner the following information: the name of the risk retention group; the identity of the initial members of the risk retention group; the identity of the individuals who organized the risk retention group, or who will provide administrative services or otherwise influence or control the activities of the risk retention group; the amount and nature of initial capitalization; the coverages to be afforded; and the states in which the risk retention group intends to operate. On receipt of the information required by subsection (c) of this section, the Commissioner shall forward the information to the National Association of Insurance Commissioners. Providing notification to the National Association of Insurance Commissioners is in addition to and may not be sufficient to satisfy the other requirements of this subtitle. The board of directors of the risk retention group shall have a majority of independent directors. If the risk retention group is a reciprocal: the attorney–in–fact shall be required to adhere to the same standards regarding independence of operation and governance that are imposed on the risk retention group’s board of directors or subscribers advisory committee; and to the extent permissible under State law, service providers of a reciprocal risk retention group: shall contract with the risk retention group; and may not contract with the attorney–in–fact. A director qualifies as independent when the board of directors affirmatively determines that the director has no material relationship with the risk retention group. A person that is a direct or indirect owner of or subscriber in the risk retention group, as contemplated by 15 U.S.C. § 3901(a)(4)(e)(ii), the federal Liability Risk Retention Act, or that is an officer, a director, or an employee of the owner or insured, is considered to be independent unless some other position of the officer, director, or employee constitutes a material relationship. The risk retention group annually shall disclose the board’s determinations to the Commissioner. For purposes of this section, a person is deemed to have a material relationship with a risk retention group if any of the following receive, in any one 12–month period, compensation, payment, or any other item of value greater than or equal to the threshold value described in subparagraph (ii) of this paragraph: the person; a member of the person’s immediate family; any business with which the person is affiliated from the risk retention group; or a consultant or service provider to the risk retention group. The threshold value for determining whether receipt of compensation, payment, or any other item of value under subparagraph (i) of this paragraph demonstrates a material relationship is the greater of: 5% of the risk retention group’s gross written premium for the 12–month period; or 2% of its surplus, as measured at the end of any fiscal quarter falling in the 12–month period. In addition to the standard set under subparagraph (i) of this paragraph, the board of directors may determine that any other relationship of the person to the risk retention group is a material relationship. The person or immediate family member of the person is not independent until 1 year after the compensation, payment, or other item of value described in subparagraph (ii) of this paragraph received from the risk retention group falls below the applicable threshold. A director who is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group is not considered independent until 1 year after the end of the affiliation, employment, or auditing relationship. A director or an immediate family member of a director who is employed as an executive officer of another company where any of the risk retention group’s present executives serve on the board of directors is not considered independent until 1 year after the end of the service or the employment relationship. In this subsection, “service provider” includes: a captive manager; an auditor; an accountant; an actuary; an investment advisor; a lawyer other than defense counsel that the risk retention group retains to defend claims, unless the amount of fees paid to the lawyer is material under subsection (e)(4) of this section; and a managing general underwriter or other party responsible for underwriting, determining rates, collecting premium, adjusting and settling claims, or preparing financial statements. A material service provider contract with the risk retention group: may not have a term exceeding 5 years; shall require the issuance and renewal of the contract to be approved by a majority of the risk retention group’s independent directors; shall provide that the risk retention group’s board of directors shall have the right to terminate any service provider contract, audit contract, or actuarial contract at any time for cause after providing adequate notice as defined in the contract; and shall be deemed material if the amount to be paid for the contract is greater than or equal to the greater of: 5% of the risk retention group’s annual gross written premium; or 2% of its surplus. A risk retention group may not enter into a service provider contract that involves a relationship that is material under subsection (e)(4) of this section unless: the risk retention group notifies the Commissioner in writing of its intention to enter into the transaction at least 30 days before the transaction; and the Commissioner has not disapproved the transaction within that period. The risk retention group’s board of directors shall adopt a written policy in the plan of operation approved by the board that requires the board to: assure that all owners and insureds of the risk retention group receive evidence of ownership interest; develop a set of governance standards applicable to the risk retention group; oversee the evaluation of the risk retention group’s management, including the performance of the captive manager, managing general underwriter, or other party or parties responsible for underwriting, determining rates, collecting premium, adjusting or settling claims, or preparing financial statements; review and approve the amount to be paid for all material service providers; and review and approve, at least annually: the risk retention group’s goals and objectives relevant to the compensation of officers and service providers; the officers’ and service providers’ performance in light of those goals and objectives; and the continued engagement of the officers and material service providers. The risk retention group shall have an audit committee. The audit committee shall be composed of at least three board members who have been determined to be independent under subsection (e) of this section. The audit committee shall have a written charter that defines the committee’s purposes, including, at a minimum, to: assist board oversight of: the integrity of the financial statements; the compliance with legal and regulatory requirements; and the qualifications, independence, and performance of the independent auditor and actuary; discuss the annual audited financial statements and quarterly financial statements with management; discuss the annual audited financial statements with its independent auditor and, if advisable, discuss its quarterly financial statements with its independent auditor; discuss policies with respect to risk assessment and risk management; meet separately and periodically, either directly or through a designated representative of the committee, with management and independent auditors; review with the independent auditor any audit problems or difficulties and management’s response; set clear hiring policies of the risk retention group as to the hiring of employees or former employees of the independent auditor; require the external auditor to rotate the lead or coordinating audit partner having primary responsibility for the risk retention group’s audit as well as the audit partner responsible for reviewing that audit so that neither individual performs audit services for more than 5 consecutive fiscal years; and report regularly to the board of directors. A nonindependent board member may participate in the activities of the audit committee if invited by the members of the audit committee but may not be a member of the audit committee. Notwithstanding paragraph (1) of this subsection, the Commissioner may waive the requirement to establish an audit committee composed of independent board members if the risk retention group is able to demonstrate to the Commissioner that: it is impracticable to do so; and the risk retention group’s board of directors itself is otherwise able to accomplish the purposes of an audit committee as described in paragraph (3) of this subsection. The board of directors shall adopt governance standards. The governance standards shall include: a process by which the directors are elected by the owners or insureds; director qualification standards; director responsibilities; director access to management and, as necessary and appropriate, independent advisors; director compensation; director orientation and continuing education; the policies and procedures that are followed for management succession; and the policies and procedures that are followed for annual performance evaluation of the board. The board of directors shall disclose the governance standards: by electronic means, which may include posting on the risk retention group’s website, or other reasonable means; and on the request of members and insureds. The board of directors shall adopt a code of business conduct and ethics for directors, officers, and employees. The code of business conduct and ethics shall include provisions that address: conflicts of interest; matters covered under the corporate opportunities doctrine; confidentiality; fair dealing; protection and proper use of risk retention group assets; compliance with all applicable laws, rules, and regulations; and the reporting of any illegal or unethical behavior that affects the operation of the risk retention group. The board of directors shall disclose the code of business conduct and ethics: by electronic means, which may include posting on the risk retention group’s website, or other reasonable means; and on the request of members and insureds. Any waiver of the code of business conduct and ethics for any director or executive officer shall promptly be disclosed to the board of directors. The captive manager and the president or chief executive officer of the risk retention group shall promptly notify the Commissioner in writing if either becomes aware of any material noncompliance with any of the governance standards required under subsections (e) through (j) of this section.