Michigan Laws 500.5903 – Conversion plan; vote to amend or withdraw; submission of documents to commissioner; time period for approval or disapproval; conditions; review by qualified expert; notice of meeting; vote; adoption;
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(1) A mutual company seeking to convert to a stock company shall adopt, by the affirmative vote of not less than 2/3 of its board of directors, a plan of conversion consistent with the requirements of section 5905 to 5915. At any time before approval of a plan by the commissioner, the mutual company, by the affirmative vote of not less than 2/3 of its board of directors, may amend or withdraw the plan.
(2) Before a mutual company’s eligible members may vote on approval of a plan, a mutual company whose board of directors has adopted a plan shall submit all of the following documents to the commissioner:
Terms Used In Michigan Laws 500.5903
- annual meeting: when applied to townships, mean the annual meeting required by law to be held on the Saturday immediately preceding the first Monday in April. See Michigan Laws 8.3d
- Commissioner: means the director. See Michigan Laws 500.102
- Converted stock company: means a Michigan domiciled stock insurance company that converted from a Michigan domiciled mutual company or a stock business corporation resulting from conversion of a mutual holding company pursuant to this chapter. See Michigan Laws 500.5901
- Eligible member: except as otherwise provided in section 5915, means a member whose policy is in force on the date the mutual company's board of directors adopts a plan of conversion. See Michigan Laws 500.5901
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Freedom of Information Act: A federal law that mandates that all the records created and kept by federal agencies in the executive branch of government must be open for public inspection and copying. The only exceptions are those records that fall into one of nine exempted categories listed in the statute. Source: OCC
- person: may extend and be applied to bodies politic and corporate, as well as to individuals. See Michigan Laws 8.3l
- plan: means a plan adopted by a Michigan domestic mutual company's or mutual holding company's board of directors pursuant to this chapter to convert the mutual company into a Michigan domiciled stock company. See Michigan Laws 500.5901
(a) The plan of conversion, including the independent evaluation of pro forma market value required by section 5905.
(b) The form of notice required by subsection (5).
(c) Any proxies to be solicited from eligible members pursuant to subsection (6).
(d) The form of notice required by section 5919(1) to persons whose policies are issued after adoption of the plan but before its effective date.
(e) The proposed articles of incorporation and bylaws of the converted stock company.
(f) A business plan for the converted company that describes anticipated changes in the postconversion business of the company, if any, and the company’s plan to deploy capital acquired in the conversion.
(3) The commissioner shall approve or disapprove the plan by not later than 90 days after the filing of the documents under subsection (2). The commissioner shall approve the plan if he or she finds all of the following:
(a) The plan complies with this chapter.
(b) The plan will not prejudice the interests of the members.
(c) The plan’s method of allocating subscription rights is fair and equitable.
(d) A substantial reason for and effect of the plan is to benefit the members of the company or additional capital is needed to implement the business plan filed pursuant to subsection (2)(f).
(4) The commissioner may retain, at the mutual company’s expense, any qualified expert not otherwise a part of the commissioner’s staff to assist in reviewing the plan and the independent evaluation of the pro forma market value required under section 5905.
(5) All eligible members shall be given notice of the members’ meeting to vote upon the plan. The notice shall briefly but fairly describe the proposed conversion plan, shall inform the member of his or her right to vote upon the plan, and shall be mailed to each member’s last known address, as shown on the mutual company’s records, at least 21 days before the time fixed for the meeting. If the meeting to vote upon the plan is held during the mutual company’s annual meeting of policyholders, only 1 combined notice of meeting is required.
(6) The plan shall be adopted upon receiving the affirmative vote of at least 2/3 of the votes cast by eligible members. Members entitled to vote upon the proposed plan may vote in person or by proxy. Any proxies to be solicited from eligible members shall be filed with and approved by the commissioner. The number of votes each eligible member may cast shall be determined by the mutual company’s bylaws. If the bylaws are silent, each eligible member may cast 1 vote.
(7) The revised articles shall be considered at the meeting of the policyholders called for the purpose of adopting the plan of conversion and shall require for adoption the affirmative vote of at least 2/3 of the votes cast by eligible members.
(8) After the eligible members have approved the plan, the converted stock company shall file both of the following documents with the commissioner:
(a) Unless the commissioner has issued a waiver pursuant to section 5927(2), the minutes of the meeting of the members at which the plan was voted upon.
(b) The revised articles of incorporation and bylaws of the converted stock company.
(9) Upon the company’s request, a business plan filed pursuant to subsection (2)(f) may be granted confidential treatment by the commissioner. A business plan granted confidential treatment is not subject to disclosure by the commissioner under the freedom of information act, Act No. 442 of the Public Acts of 1976, being section 15.231 to 15.246 of the Michigan Compiled Laws.