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644.07(5m)(a) (a) That those persons who are policyholders of the converting service insurance corporation on the date of the resolution under sub. (2) and who remain policyholders on the record date established by the board for the vote under sub. (8) shall have the right to vote on the plan under sub. (8).
644.07(5m)(b) (b) That the members of the mutual holding company shall be those persons who are policyholders of the converting service insurance corporation on the effective date of the restructuring, and that thereafter membership shall be as provided in sub. (10) (d).
644.07(5m)(c) (c) Any other conditions that the commissioner may require relating to the company's conversion from a service insurance corporation to a mutual holding company.
644.07(6) (6)Hearing.
644.07(6)(a)(a) The commissioner or a hearing examiner designated by the commissioner shall hold a hearing after receipt of a mutual holding company plan.
644.07(6)(b)1.1. Notice of the hearing shall be mailed by the converting insurance company not more than 60 days and not less than 10 days before the scheduled date of the hearing to the last-known address of each person who was a policyholder of the converting insurance company on the date of the resolution under sub. (2), together with a copy of the mutual holding company plan, or a copy of a summary of the plan if the commissioner approves the summary, and any comment that the commissioner considers necessary for the adequate information of policyholders. Failure to mail notice to a policyholder does not invalidate a proceeding under this subsection if the commissioner determines that the converting insurance company has substantially complied with this subdivision and has attempted in good faith to mail notice to all policyholders entitled to notice.
644.07(6)(b)2. 2. The notice, the plan or a summary of the plan and any comments under subd. 1. shall also be mailed by the converting insurance company not more than 60 days and not less than 10 days before the scheduled date of the hearing to the commissioner of every jurisdiction in which the converting insurance company is authorized to do any business.
644.07(6)(c) (c) In accordance with such hearing procedures as the commissioner or the designated hearing examiner may prescribe, any policyholder under par. (b) 1. and any commissioner under par. (b) 2. may present written or oral statements at the hearing and may present written statements within a period after the hearing specified by the commissioner or the hearing examiner. The commissioner shall take statements presented under this paragraph into consideration in making the determination under sub. (7).
644.07(7) (7)Approval by commissioner.
644.07(7)(a)(a) The commissioner shall approve the mutual holding company plan unless he or she finds that the plan violates the law, is not fair and equitable to policyholders or is contrary to the interests of policyholders or the public.
644.07(7)(b) (b) In considering the plan, the commissioner shall consider whether the restructuring would be detrimental to the safety and soundness of the converting insurance company or the contractual rights and reasonable expectations of the persons who are policyholders on the effective date of the restructuring. The commissioner may take into consideration any conclusions and recommendations on the subject of restructuring published by recognized organizations of professional insurance actuaries. The commissioner may by rule establish standards applicable to a restructuring under this chapter.
644.07(8) (8)Approval by policyholders. After approval under sub. (7), the mutual holding company plan shall be submitted at any regular or special meeting of policyholders to a vote of the persons who were policyholders of the converting insurance company on the date of the resolution under sub. (2), and who remain policyholders on the record date established for the vote by the board. Voting shall be in accordance with the articles or bylaws of the converting insurance company, but in no event shall there be less than 20 days' advance notice of any meeting for a vote on approval of a mutual holding company plan, and in no event shall the required vote to approve the plan be less than a majority of those policyholders voting. Notice of such meeting shall be sent to the last-known address of each such policyholder and may be included with any notice sent under sub. (6) (b) 1. Only proxies specifically related to the mutual holding company plan may be used for a vote on approval under this subsection.
644.07(9) (9)Amendment or withdrawal. At any time before the effective date of the restructuring, the converting insurance company may, by resolution of its board, amend the mutual holding company plan or withdraw the mutual holding company plan. The commissioner shall determine whether any amendment made after the public hearing under sub. (6) changes the mutual holding company plan in a manner that is materially disadvantageous to any of the policyholders of the converting insurance company and, in such case, may require a further public hearing on the plan as amended. If an amendment that the commissioner determines is materially disadvantageous to any of the policyholders is made after the plan has been approved by the policyholders, the plan as amended shall be submitted for reconsideration by the policyholders.
644.07(10) (10)Effect of restructuring.
644.07(10)(a)(a) Continuation of insurance corporation and commencement of existence of mutual holding company. If the policyholders approve the mutual holding company plan under sub. (8), the commissioner shall issue a new certificate of authority to the converting insurance company and a certificate of incorporation to the mutual holding company. Upon issuance of the certificate of incorporation, the legal existence of the mutual holding company shall begin, its articles and bylaws shall become effective and its proposed directors and officers shall take office. The issuance of the certificate of incorporation shall be conclusive evidence of compliance with this section. On the effective date of the restructuring, the converting insurance company shall at once become a stock corporation and is no longer a mutual. The converted insurance company shall be considered to have been organized at the time that the converting insurance company was organized. Except as otherwise provided in the plan, the trustees, directors, officers, agents and employees of the converting insurance company shall continue in like capacity with the converted insurance company.
644.07(10)(b) (b) Continuation of rights and obligations. The restructuring of the converting insurance company into a stock insurance company subsidiary of a mutual holding company or an intermediate stock holding company shall in no way annul, modify or change any of such insurer's existing suits, rights, contracts or liabilities, except with respect to the membership interests and rights in surplus, if any, in such insurer that are extinguished as provided in s. 644.04, and the corporate existence of the converting insurance company shall be continued in all respects. The converted insurance company, after restructuring, shall exercise all of the rights and powers and perform all of the duties conferred or imposed by law upon insurers writing the classes of insurance written by the converting insurance company before the effective date of the restructuring, and shall retain the rights and contracts existing prior to restructuring, except with respect to the membership interests and rights in surplus that were extinguished.
644.07(10)(c) (c) Effective date. The date upon which the commissioner issues the certificate of authority to the converted insurance company shall be the effective date of the restructuring unless a later time is designated in the mutual holding company plan.
644.07(10)(d) (d) Effect on policyholders. A policyholder who has a membership interest in the converting insurance company on the effective date of the restructuring shall become a member of the mutual holding company. Policyholders of policies or contracts that are issued by a converted insurance company after the effective date of its conversion under this section shall become members of the mutual holding company in accordance with the articles of incorporation and bylaws of the mutual holding company and the applicable provisions of this chapter immediately upon issuance of the policy. The articles and bylaws of the mutual holding company may provide that a policyholder of any other insurance company that is or becomes a subsidiary of the mutual holding company may become a member of the mutual holding company. In no event shall a person remain a member after he or she ceases to be a policyholder.
644.07(10)(e) (e) Nontransferability of membership interests. No member of a mutual holding company may transfer such member's membership interests in the mutual holding company or any right arising from such membership interests apart from the policy that gives rise to the membership interest.
644.07(10)(f) (f) Liability of member. A member of a mutual holding company is not, by virtue of being a member, personally liable for the acts, debts, liabilities or obligations of the mutual holding company.
644.07(10m) (10m)Effect on service insurance corporation of disapproval of plan. Notwithstanding sub. (1) (a) 2. and s. 644.02 (1) (b), if the converting insurance company is a service insurance corporation, and the commissioner disapproves the mutual holding company plan under sub. (7) or the policyholders disapprove the mutual holding company plan under sub. (8), the converting insurance company shall remain a service insurance corporation subject to ch. 613.
644.07(11) (11)Expenses. The converting insurance company may not pay compensation of any kind to any person in connection with the mutual holding company plan other than regular salaries to the company's personnel. This subsection does not prohibit the payment of reasonable fees and compensation to attorneys at law, accountants, financial advisers, actuaries or other consultants for services performed in the independent practice of their professions. All expenses of the restructuring, including the expenses incurred by the commissioner and the prorated salaries of any involved office staff members of the office of the commissioner of insurance, shall be borne by the converting insurance company.
644.07 History History: 1997 a. 227.
644.08 644.08 Reservation of corporate name. Sections 181.0402 and 181.0403 (2), (3) and (3m) apply to mutual holding companies.
644.08 History History: 1997 a. 227; 1999 a. 30.
644.09 644.09 Articles, amendments, bylaws and principal officers.
644.09(1)(1)Articles. Section 181.0202 applies to the articles of a mutual holding company, except that all of the following apply:
644.09(1)(a) (a) The name of the mutual holding company shall include the word "mutual" and shall comply with s. 181.0401 (2) to (4).
644.09(1)(b) (b) The articles shall include provisions for mutual bonds, if any are to be authorized, which shall conform to s. 611.33 (2).
644.09(1)(c) (c) The purposes of the mutual holding company shall be limited to those permitted in this chapter.
644.09(1)(d) (d) Subject to s. 644.07 (10) (d), the articles may specify those classes of persons who may be members of the mutual holding company or may prescribe the procedure for establishing or removing restrictions on the classes of persons who may be members of the mutual holding company.
644.09(2) (2)Amendment of articles. A mutual holding company may amend its articles in the manner provided in ss. 181.1001, 181.1002 (1), 181.1003, 181.1005 and 181.1006, except that papers required by those sections to be filed with the department of financial institutions shall instead be filed with the commissioner. The articles may be amended in any desired respect, including substantial changes of its original purposes, except that no amendment may be made that is contrary to sub. (1). In addition to the requirements of s. 181.1005, the articles of amendment of a mutual holding company shall, if mail voting is used, state the number of members voting by mail and the number of such members voting for and against the amendment. No amendment may become effective until the articles of amendment have been filed with the commissioner. No amendment shall affect any existing cause of action in favor of or against such mutual holding company, any civil, criminal, administrative or investigatory proceeding to which the mutual holding company is a party or the existing rights of persons other than members. In the event that the corporate name is changed by amendment, no suit brought by or against such mutual holding company under its former name shall abate for that reason.
644.09(3) (3)Bylaws. The bylaws of a mutual holding company shall comply with this chapter. A copy of the bylaws and any amendments to the bylaws shall be filed with the commissioner within 60 days after adoption. Subject to this subsection, ss. 181.0206, 181.0207 and 181.1021 apply to mutual holding companies.
644.09(4) (4)Principal officers. Sections 181.0840 and 181.0841 apply to mutual holding companies.
644.09 History History: 1997 a. 227; 1999 a. 30.
644.10 644.10 Acquisition, merger or consolidation as part of the plan.
644.10(1)(1) The converting insurance company may propose to acquire, or to merge or consolidate with, one or more domestic or foreign insurers, or both, as part of a mutual holding company plan under s. 644.07. The commissioner shall approve the acquisition, merger or consolidation as part of the mutual holding company plan and shall approve the continued corporate existence of any domestic insurer that is a party to the plan under this section as a subsidiary of the mutual holding company or any intermediate stock holding company, if any of the following applies:
644.10(1)(a) (a) In the case of a domestic stock corporation, no grounds for disapproval exist under s. 611.72 (3).
644.10(1)(b) (b) In the case of a domestic mutual, no grounds for disapproval exist under s. 611.73 (3) and the domestic mutual has complied with s. 644.07 (2) to (8). The converting insurance company and any domestic mutual that the converting insurance company proposes to acquire, or merge or consolidate with, may adopt one plan. The commissioner may combine the hearings required under s. 644.07 (6) for the converting insurance company and any domestic mutual that is the subject of the acquisition by, or merger or consolidation with, the converting insurance company. Section 644.07 (9), (10) (b) to (f) and (11) applies to a domestic mutual acquired by, merged into or consolidated with a converting insurance company under this section.
644.10(2) (2) Any foreign insurer acquired under a plan under this section may remain a foreign company after such acquisition and may be admitted to do business in this state if it meets the applicable requirements of ch. 618.
644.10 History History: 1997 a. 227.
644.11 644.11 Restructuring of domestic or foreign mutual with existing domestic mutual holding company.
644.11(1)(1)Definition. In this section, "existing domestic mutual holding company" means a mutual holding company formed under this chapter.
644.11(2) (2)Domestic mutual reorganization.
644.11(2)(a)(a) Merger with existing domestic mutual holding company. A domestic mutual insurance company organized under ch. 611 may restructure by merging its policyholders' membership interests into an existing domestic mutual holding company in accordance with this section and any rules promulgated by the commissioner. The restructuring shall continue the corporate existence of the converting insurance company as a stock insurance company subsidiary of the existing domestic mutual holding company or as a stock insurance company subsidiary of an intermediate stock holding company.
644.11(2)(b) (b) Procedures applicable to converting insurance company. Sections 644.04 (3) and (4) and 644.07 (2) to (6), (8), (9), (10) (b) to (f), (10m) and (11) apply to a domestic mutual insurance company restructuring under this subsection.
644.11(2)(c) (c) Procedures applicable to existing domestic mutual holding company.
644.11(2)(c)1.1. The board of the existing domestic mutual holding company into which the converting insurance company's policyholders' membership interests are proposed to be merged under this subsection shall adopt a resolution approving the proposed plan of merger and directing that it be submitted to the commissioner for approval and to its members for a vote at a regular or special meeting. The existing domestic mutual holding company shall provide written notice of the meeting to each member in the manner provided under s. 644.07 (8) for notice to policyholders of a meeting for a vote on approval of a mutual holding company plan.
644.11(2)(c)2. 2. The commissioner may hold a hearing on the plan of merger prior to the meeting at which a vote of the members will be taken. A hearing under this subdivision may be combined with the hearing required under par. (b). The existing domestic mutual holding company shall provide written notice of the hearing to each member in the manner provided under s. 644.07 (6) (b) 1. for notice to policyholders of the hearing under s. 644.07 (6).
644.11(2)(c)3. 3. The commissioner shall approve the proposed plan of merger unless he or she finds that the plan is not fair and equitable to members or is contrary to the interests of members.
644.11(2)(c)4. 4. The proposed plan of merger shall be approved by the members of the existing domestic mutual holding company upon the affirmative vote of not less than a majority of those members voting in person or by proxy at the meeting required under subd. 1.
644.11(2)(d) (d) Commissioner issues new certificate of authority if approved. If under par. (b) the policyholders of the converting insurance company approve the plan of restructuring and under par. (c) the members of the existing domestic mutual holding company approve the plan of merger, the commissioner shall issue a new certificate of authority to the converting insurance company. The issuance of the certificate of authority shall be conclusive evidence of compliance with this subsection.
644.11(2)(e) (e) Effect of restructuring. On the effective date of the restructuring described in this subsection, all of the following shall occur:
644.11(2)(e)1. 1. The converting insurance company shall at once become a stock corporation organized and operating under ch. 611 and is no longer a mutual.
644.11(2)(e)2. 2. All membership interests and rights in surplus of the converting insurance company shall be extinguished and the members of the converting insurance company shall become members of the existing domestic mutual holding company in accordance with this chapter and the articles of incorporation and bylaws of the existing domestic mutual holding company.
644.11(2)(e)3. 3. All shares of the voting stock of the converting insurance company shall be acquired and retained by the existing domestic mutual holding company or any intermediate stock holding company, 51% or more of whose voting stock is owned by the existing domestic mutual holding company.
644.11(2)(e)4. 4. The converted insurance company shall be considered to have been organized at the time that the converting insurance company was organized.
644.11(2)(e)5. 5. Except as otherwise provided in the plan, the trustees, directors, officers, agents and employees of the converting insurance company shall continue in like capacity with the converted insurance company.
644.11(3) (3)Foreign mutual reorganization. A foreign mutual insurance company organized under the laws of any other state that, if a domestic corporation, would be organized under ch. 611 may restructure by merging its policyholders' membership interests into an existing domestic mutual holding company in accordance with rules promulgated by the commissioner and in compliance with the requirements of any other law or regulation that is applicable to the foreign mutual. The restructuring shall continue the corporate existence of the converting insurance company as a foreign stock insurance company subsidiary of the existing domestic mutual holding company or as a foreign stock insurance company subsidiary of an intermediate stock holding company. The restructuring foreign mutual insurance company may remain a foreign insurer after the restructuring and may be admitted to do business in this state if it meets the applicable requirements of ch. 618. A foreign mutual insurance company that is a party to the restructuring may at the same time redomesticate to this state by complying with the applicable requirements of this state and its state of domicile.
644.11 History History: 1997 a. 227.
644.12 644.12 Transfers of a mutual holding company's place of domicile to this state.
644.12(1) (1) A mutual holding company that is domiciled in another state and that desires to become a domestic mutual holding company may submit to the commissioner an application for a certificate of incorporation. The application shall comply with rules promulgated under sub. (2) and shall include or have attached any other relevant documents or information that the commissioner reasonably requires. Upon review of the application, the commissioner may issue a certificate of incorporation if the commissioner determines that all the following are satisfied:
644.12(1)(a) (a) The applicant is in compliance with the provisions of this chapter that apply to domestic mutual holding companies.
644.12(1)(b) (b) The directors and officers of the applicant are trustworthy and competent and collectively have the competence and experience to engage in the business proposed.
644.12(1)(c) (c) The applicant's insurance company subsidiary that converted from a mutual has become a domestic insurer under s. 611.223.
644.12(2) (2) The commissioner shall by rule specify the required contents and form of an application under sub. (1). In determining the required contents, the commissioner shall consider the information and documents that will permit the commissioner to determine whether the requirements of sub. (1) (a) to (c) are satisfied.
644.12 History History: 1997 a. 227.
644.13 644.13 Restrictions on ownership.
644.13(1) (1) In this section:
644.13(1)(a) (a) "Beneficial ownership", with respect to any voting stock, has the same meaning as provided by the rules administering section 16 of the Securities Exchange Act of 1934.
644.13(1)(b) (b) "Offer" means any of the following:
644.13(1)(b)1. 1. An offer to buy or acquire voting stock, or an interest in voting stock, for value.
644.13(1)(b)2. 2. A solicitation of an offer to sell voting stock, or an interest in voting stock, for value.
644.13(1)(b)3. 3. A tender offer for voting stock, or an interest in voting stock, for value.
644.13(1)(b)4. 4. A request or invitation for tenders of voting stock, or an interest in voting stock, for value.
644.13(2) (2)
644.13(2)(a)(a) Before the date that is one year after the initial sale to 3rd parties in a public offering of voting stock of the converted insurance company or any intermediate stock holding company, the directors, officers and other members of management of the mutual holding company, any intermediate stock holding company and the converted insurance company are prohibited from acquiring or offering to acquire, in any manner, the legal or beneficial ownership of any class of voting stock of the converted insurance company or intermediate stock holding company, except that this paragraph shall not in any way limit the rights of the directors, officers or other members of management to exercise subscription rights generally accorded to members of the mutual holding company.
644.13(2)(b) (b) Except as otherwise provided by the commissioner by rule, beginning on the date that is one year after the initial sale to 3rd parties of voting stock of the converted insurance company or any intermediate stock holding company, the directors, officers and other members of management of the mutual holding company, any intermediate stock holding company and the converted insurance company may not do any of the following:
644.13(2)(b)1. 1. Acting individually, directly or indirectly acquire or offer to acquire, in any manner, the legal or beneficial ownership of more than 5% of any class of voting stock of the converted insurance company or intermediate stock holding company.
644.13(2)(b)2. 2. In the aggregate, directly or indirectly acquire or offer to acquire, in any manner, the legal or beneficial ownership of more than 10% of any class of voting stock of the converted insurance company or intermediate stock holding company.
644.13(3) (3)
644.13(3)(a)(a) In the event of any violation of sub. (2), or of any action which, if consummated, might constitute such a violation, all voting stock of any intermediate stock holding company or the converted insurance company that is acquired by any person in excess of the maximum amount permitted to be acquired by such person under sub. (2) shall be considered to be nonvoting stock of any such intermediate stock holding company or converted insurance company, as the case may be.
644.13(3)(b) (b) In addition to the result specified in par. (a), the violation or action is subject to the enforcement procedures under s. 601.64.
644.13 History History: 1997 a. 227.
644.14 644.14 Member rights.
644.14(1)(1)Communication to members; member voting. Subject to this section, ss. 611.41, 611.42 (1), (1e), (1m), (2), (3), (4) (a) and (5), 611.43 and 611.53 (2) apply to mutual holding companies.
644.14(2) (2)Notice of regular meetings and elections. Notice of the time and place of regular meetings or elections may be given to a member by printing such time and place conspicuously on each policy under which the member derives a membership interest, or in such other reasonable manner as the commissioner approves or requires.
644.14 History History: 1997 a. 227; 1999 a. 30.
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