Article 64p. 64

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

as a result of such acquisition all of the shares of the

insurer shall have been acquired, be acquired in trust for

the policyholders of the class or classes for whose benefit

the plan provides that the stock of the insurer shall be

acquired as hereinafter provided. Such shares shall be

assigned and transferred on the books of such insurer

and approved by the Commissioner. Such trustees shall

hold such stock in trust until all of the outstanding shares

of capital stock of such insurer have been acquired, but

for not longer than thirty (30) years with such extensions

of not more than five (5) years each as may be granted by

the Commissioner. Such extensions may be granted by

the Commissioner if the plan so provides and if in his

opinion the plan of acquisition of all of such stock can be

completed within a reasonable period. Such trustees shall

vote such stock at all corporate meetings at which

stockholders

have

the

right

to

vote.

When

all

the

outstanding shares of capital stock of such insurer have

been acquired, all said shares shall be cancelled, the

certificate of amendment of the insurer's articles of

incorporation

giving

effect

thereto

shall

be filed in

accordance with the provisions of the Corporation Code,

and the insurer shall become a nonstock corporation for

the profit of its members and such trust shall thereupon

terminate.

Thereafter

such

corporation

shall

be

conducted

for

the

mutual

benefit,

ratably,

of

its

policyholders of the class or classes for whose benefit the

stock

was

acquired

and

shall

have

power to issue

non-assessable policies on a reserve basis subject to all

provisions of law applicable to incorporated life insurers

issuing non-assessable policies on a reserve basis. Policies

so issued may be upon the basis of full or partial

participation therein as agreed between the insurer and

the insured.

Upon the termination of any such voting trust, either

in accordance with its terms or as hereinabove provided,

such

plan

of

mutualization

shall

terminate,

unless

theretofore completed. Upon such termination, unless

the plan of mutualization provides for the disposition of

the shares acquired by the insurer under such plan or for

the disposition of the proceeds thereof, the shares held

by such trustees shall be disposed of in accordance with

an order of the court of competent jurisdiction in the

judicial district in which is located the principal office of

such

insurer,

made

upon a verified petition of the

Commissioner.

SECTION 273. Any such plan of mutualization may

provide for the creation of a voting trust under a trust

agreement for the holding and voting by three (3) or

more trustees of any portion or all of the shares of the

insurer not required upon the adoption of such plan. The

voting trustees shall be named in accordance with such

plan or, if no provision is made therein for the naming of

such trustees, then by the insurer. The voting trust

agreement and voting trustees shall be subject to the

approval of the Commissioner. Any or all of the trustees

under such voting trust agreement may be the same

person or persons as any or all of the trustees referred to

in Section 272. Such voting trust agreement shall provide

that in the event of acquisition by the insurer of any of the

shares of stock held thereunder in accordance with the

provisions of the plan, such shares so acquired together

with the voting rights thereof shall be transferred by the

trustees named under the provisions of this section to the

trustees named under the provisions of Section 272. Any

voting

trust

agreement

created

pursuant

to

the

provisions of this section may be made irrevocable for not

longer than thirty (30) years and thereafter until the

termination of the trust provided for in Section 272. The

trust created pursuant to the provisions of this section

shall terminate in any event upon termination of the trust

provided for in Section 272. Upon the termination of the

trust created pursuant to the provisions of this section,

any shares held in such trust shall revert to the persons

entitled thereto by law.

SECTION 274. Every payment for the acquisition of

any shares of the capital stock of such insurer, the

purchase price of which is not fixed by such plan, shall be

subject

to

the

prior

approval

of the Commissioner.

Neither

such

plan, nor any such payment, may be

approved by the Commissioner unless he finds that the

rights and interests of the insurer, its policyholders, and

shareholders are protected.

SECTION 275. The trustees referred to in Section 272

shall file with such insurer and with the Commissioner a

verified acceptance of their appointments and verified

declarations that they will faithfully discharge their duties

as such trustees. All dividends and other sums received

by said trustees on the shares held by them, after paying

the necessary expenses of executing their trust, shall be

immediately repaid to such insurer for the benefit of all

who are, or may become, policyholders of such insurance

of the class or classes for whose benefit the stock of such

insurer was acquired and entitled to participate in the

profits thereof and shall be added to and become part of

the assets of such insurer.

SECTION

276.

If,

at

any time within the period

provided

in

the

plan

for

the

acquisition

of

the

outstanding shares of stock of the insurer, ninety percent

(90%) thereof has already been acquired and transferred

to the trustees under the plan, the insurer by a vote of a

majority of the directors may determine to make an offer,

with the permission of the Commissioner and subject to

such requirement as he may specify, to acquire by

purchase all of the shares not theretofore acquired under

the plan, at a specified price which the insurer considers

to be their fair value as of the date of making such offer.

If

the

offer

to

acquire

is

permitted

by

the

Commissioner, the insurer shall make a written offer by

registered mail to each shareholder whose shares have

not

theretofore

been

acquired

under

the

plan

or

otherwise, offering to acquire all his shares at such price if

accepted in writing within thirty (30) days after the

mailing of such offer. Any shareholder accepting such

offer within the time therefor shall, within sixty (60) days

after

his

acceptance,

transfer

to

the

insurer

the

certificates representing such shares and, upon doing so,

shall be paid by the insurer the amount of such offer for

his shares. Any share so acquired shall be assigned and

transferred to the trustees under the plan and held by

them as shares acquired pursuant to the plan.

Each shareholder who does not accept such offer to

acquire his shares within the time stated in such offer for

acceptance thereof shall within fifteen (15) days after the

expiration of such offer apply to the Secretary of Finance

for a determination of the fair value of his shares as of the

date of making such offer. The Secretary of Finance may

himself, after due notice and hearing, determine upon

the evidence received the fair value of the shares as of the

date of making such offer, or appoint three (3) impartial

and disinterested persons to appraise the fair value of

such shares with such direction as he shall deem proper

and

necessary

to

expedite

the

proceedings.

Upon

completion of the appraisal proceedings, the appraisers

shall file with the Secretary of Finance their report in

writing stating the fair value of such shares as of the date

of the making of such offer and setting forth their

findings in support of such statement. The appraisers

shall furnish each party to the proceedings a copy of their

appraisal report, and within ten (10) days after receipt

thereof, any such party may signify his objection, if any, to

the report or move for the approval thereof. Upon the

expiration of the period of ten (10) days referred to above,

the report shall be set for hearing, after which the

Secretary

of

Finance

shall

issue an order adopting,

modifying or rejecting the report, in whole or in part, or

he may receive further evidence or may recommit it with

instructions. Whenever the Secretary of Finance shall

determine in any manner, as aforesaid, the fair value of

such

shares,

he

may

also

determine

the

terms

of

payment thereof by the insurer. The expenses incidental

to the proceedings including charges of the appraisers, if

any,

shall

be

paid

equally

by

the

insurer

and the

shareholder.

The

findings of the Secretary of Finance on all

questions of fact raised at the hearing of the application

© Compiled by RGL

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