16. a. An association captive insurance company or industrial insured captive insurance company formed as a stock or mutual corporation may be converted to or merged with and into a reciprocal insurer in accordance with a plan of conversion or merger and the provisions of this section.

b. A plan for conversion or merger shall provide a fair and equitable plan for purchasing, retiring or otherwise extinguishing the interests of the stockholders and policyholders of a stock insurer, and the members and policyholders of a mutual insurer, including a fair and equitable provision for the rights and remedies of dissenting stockholders, members or policyholders.

c. In the case of a conversion authorized under subsection a. of this section:

(1) the conversion shall be accomplished under a reasonable plan and procedure as approved by the commissioner, except that the commissioner shall not approve a plan of conversion unless the plan:

(a) satisfies the provisions of subsection b. of this section;

(b) provides for a hearing, of which notice is given to the captive insurance company, its directors, officers and policyholders, and, in the case of a stock insurer, its stockholders, and in the case of a mutual insurer, its members, all of which persons shall be entitled to attend and appear at the hearing if notice of a hearing is given and no director, officer, policyholder, member or stockholder requests a hearing, the commissioner may cancel the hearing;

(c) provides a fair and equitable plan for the conversion of stockholder, member or policyholder interests into subscriber interests in the resulting reciprocal insurer, substantially proportionate to the corresponding interests in the stock or mutual insurer. This requirement shall not preclude the resulting reciprocal insurer from applying underwriting criteria that could affect ongoing ownership interests; and

(d) is approved:

(i) in the case of a stock insurer, by a majority of the shareholders entitled to vote represented in person or by proxy at a duly called regular or special meeting at which a quorum is present; and

(ii) in the case of a mutual insurer, by a majority of the voting interests of policyholders represented in person or by proxy at a duly called regular or special meeting thereof at which a quorum is present;

(2) the commissioner shall approve the plan of conversion if the commissioner finds that the conversion will promote the general good of the State in conformity with those standards set forth in paragraph (2) of subsection d. of section 5 of this act;

(3) if the commissioner approves the plan, the commissioner shall amend the converting insurer’s certificate of authority to reflect conversion to a reciprocal insurer and issue the amended certificate of authority to the company’s attorney-in-fact;

(4) the conversion shall be effective upon the issuance of an amended certificate of authority of a reciprocal insurer by the commissioner; and

(5) the corporate existence of the converting insurer shall cease and the resulting reciprocal insurer shall notify the Secretary of State of the conversion upon the conversion becoming effective.

d. A merger authorized under subsection a. of this section shall be accomplished substantially in accordance with the procedures to be prescribed by the commissioner, except that, solely for purposes of the merger:

(1) the plan of merger shall satisfy the provisions of subsection b. of this section;

(2) the subscribers’ advisory committee of a reciprocal insurer shall be equivalent to the board of directors of a stock or mutual insurance company;

(3) the subscribers of a reciprocal insurer shall be the equivalent of the policyholders of a mutual insurance company;

(4) if a subscribers’ advisory committee does not have a president or secretary, the officers of the committee having substantially equivalent duties shall be deemed the president or secretary of the committee;

(5) the commissioner shall approve the articles of merger if the commissioner finds that the merger will promote the general good of the State in conformity with those standards set forth in paragraph (2) of subsection d. of section 5 of this act. If the commissioner approves the articles of merger, the commissioner shall indorse the commissioner’s approval thereon and the surviving insurer shall present the same to the Secretary of State;

(6) notwithstanding section 3 of this act, the commissioner may permit the formation, without surplus, of a captive insurance company organized as a reciprocal insurer, into which an existing captive insurance company may be merged for the purpose of facilitating a transaction under this section, except that there shall be no more than one authorized insurance company surviving the merger; and

(7) an alien captive insurance company may be a party to a merger authorized under subsection a. of this section in accordance with procedures to be prescribed by the commissioner by regulation.

L.2011, c.25, s.16.