A plan of conversion adopted by a domestic reciprocal insurer for the establishment of a reciprocal holding company shall provide that the domestic reciprocal insurer will become a stock insurer, that the subscribers of the domestic reciprocal insurer will become subscribers of a reciprocal holding company, that the reciprocal holding company will acquire at least 51 percent of the voting stock of the stock holding company, and that the stock holding company will acquire all of the voting stock of the converted insurer. The plan of conversion shall include appropriate proceedings for amending the domestic reciprocal insurer’s rules and regulations and other charter documents to give effect to the conversion from a domestic reciprocal insurer into a stock corporation. The plan shall be:
(a) As approved by a resolution of two-thirds of the governing board. The resolution shall specify the reasons for and the purposes of the proposed conversion of the domestic reciprocal insurer and the manner in which the conversion is expected to benefit and serve the best interests of the policyholders.
Terms Used In California Insurance Code 1560.03
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Commissioner: means the Insurance Commissioner of this State. See California Education Code 25022.5
- Converted insurer: means the incorporated stock insurer into which a domestic reciprocal insurer has been converted in accordance with the provisions of this article. See California Insurance Code 1560.02
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Domestic: means organized under the laws of this State, whether or not admitted. See California Education Code 32031
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- plan: means a plan adopted by a domestic reciprocal insurer in compliance with this article. See California Insurance Code 1560.02
- Reciprocal holding company: means a corporation organized under the laws of this state subject to the General Corporation Law as set forth in the Corporations Code. See California Insurance Code 1560.02
- Stock holding company: means a corporation authorized to issue one or more classes of capital stock, the corporate purposes of which include holding all of the voting stock in an insurer that has been converted from a domestic reciprocal insurer into a stock insurer in proceedings under this article in which a reciprocal holding company is formed. See California Insurance Code 1560.02
- Voting stock: means securities of any class or any ownership interest having voting power for the election of directors, trustees, or management of a person, other than securities having voting power only because of the occurrence of a contingency. See California Insurance Code 1560.02
(b) Submitted to the commissioner for consent in writing, subject to the provisions of Section 1560.05, by an application executed by an authorized officer of the domestic reciprocal insurer and accompanied by the following documents, or true and correct copies of the following documents:
(1) The proposed plan of conversion.
(2) The proposed articles of incorporation of each corporation that is a constituent corporation of the conversion.
(3) The proposed bylaws of each corporation that is a constituent corporation of the conversion.
(4) A list of the officers and directors, together with their biographies in the form customarily required by the commissioner, of each corporation that is a constituent corporation of the conversion.
(5) The resolution of the governing board of the domestic reciprocal insurer, certified by the secretary of the domestic reciprocal insurer, authorizing the conversion under this article, and a report of the percentage of directors approving the resolution.
(6) Financial statements, which may be prepared on a pro forma basis, in the form required by the commissioner.
(7) A plan of operations for the converted insurer.
(8) A summary of the plan of conversion and drafts of written materials to be mailed to subscribers seeking their approval of the plan, including an information statement containing, at a minimum, the information required under Section 1560.06.
(9) A description of any plans for an initial public offering, including a description of the maximum percentage of stock to be sold, the process to be used in offering the stock and setting the initial sale price for the stock, and how policyholders would be treated in an initial public offering.
(10) A description of any plans for the transfer of assets and liabilities, including any subsidiaries, to the reciprocal holding company.
(11) Any final rulings relating to the plan of reorganization obtained from any federal government agency, and all supporting documents submitted to the agency in connection with the rulings.
(12) A copy of the proposed form of notice of special meeting to be sent to members pursuant to Section 1560.06.
(13) Other relevant information that the commissioner may require.
(c) Approved by two-thirds vote of the subscribers of the domestic reciprocal insurer voting at a meeting of the subscribers called for that purpose, subject to the provisions of Section 1560.06.
(d) Filed in the office of the commissioner after receipt of the commissioner’s consent, and after having been approved as provided in Sections 1560.05 and 1560.06.
(Added by Stats. 1998, Ch. 421, Sec. 2. Effective January 1, 1999.)