SB450: Bill Text

SB450,26,14 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.

SB450,26,20 (3) (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.

SB450,26,22 (b) In addition to the result specified in par. (a), the violation or action is subject to the enforcement procedures under s. 601.64.

SB450,26,25 644.14 Member rights. (1) Communication to members; member voting. Subject to this section, ss. 611.41, 611.42 (1), (2), (3), (4) (a) and (5), 611.43 and 611.53 (2) apply to mutual holding companies.

SB450,27,5 (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.

SB450,27,11 644.15 Sale of voting stock; subscription rights; dividends. (1) (a) No solicitation for the initial sale to 3rd parties of the voting stock of the converted insurance company or any intermediate stock holding company may be made without the approval of the commissioner under s. 611.31 (2) and without the approval of the commissioner and the members of the mutual holding company as follows:

SB450,27,14 1. If the mutual holding company plan includes a plan for the initial sale of voting stock, such approval shall be given at the time that the mutual holding company plan is approved under s. 644.07 (7) and (8).

SB450,27,19 2. If the mutual holding company plan does not include a plan for the initial sale of voting stock of the converted insurance company or any intermediate stock holding company, the board of the converted insurance company or any intermediate stock holding company, following the procedures under s. 644.07 (2) to (8), may adopt a plan for the initial sale of voting stock to 3rd parties at any future date.

SB450,27,24 (b) Prior to every issue of voting stock of the converted insurance company and any intermediate stock holding company, the commissioner, in addition to the approval required under s. 611.31 (2), shall approve the price of the stock, or the procedure for setting and determining the price of the stock, as fair and equitable to the company issuing the stock.

SB450,28,5 (2) No initial public offering of voting stock of the converted insurance company or any intermediate stock holding company may be conducted unless the persons who were members of the mutual holding company at the time such offering was approved by resolution of the board are afforded subscription rights in conjunction with the stock offering.

SB450,28,8 (3) If the converted insurance company is a life insurance company, before any approval for the initial sale of voting stock is granted the commissioner shall find the dividend plan fair and equitable to policyholders.

SB450,28,12 (4) Dividends and other distributions to the shareholders of the converted insurance company or any intermediate stock holding company of a converted insurance company may not be made except in compliance with ss. 617.22 and 617.225.

SB450,28,18 644.16 Board of directors, committees and records. (1) Board of directors. Subject to this section, ss. 181.18, 181.21, 611.51 (2), (3), (5) and (8) and 611.53 (1) and (3) apply to mutual holding companies. Section 181.22 applies to the board of a mutual holding company except as modified by s. 181.225. The board shall manage the business and affairs of the corporation and may not delegate its power or responsibility to do so, except to the extent authorized by ss. 181.23 and 181.25 (2).

SB450,28,20 (2) Committees of directors. Section 181.23 applies to mutual holding companies.

SB450,28,22 (3) Records. (a) Section 611.51 (9) (a) and (b) applies to mutual holding companies.

SB450,29,7 (b) Any provision of this chapter or of the articles or bylaws of a mutual holding company that requires the keeping of records concerning the names and addresses of members entitled to vote shall be considered complied with by the keeping of a record of the names of policyholders of, and the names and addresses of insureds or persons paying premiums on the policies of, the converted insurance company. Any provision of this chapter or of the articles or bylaws of a mutual holding company that requires the mailing or sending of notices, reports, proposals, ballots or other materials to a member shall be considered complied with if such mailing is made to the insured or the person paying premiums on the policy of the converted insurance company, for delivery to the policyholder.

SB450,29,9 (4) Director conflicts of interest. Section 181.225 applies to mutual holding companies.

SB450,29,11 644.17 Removal of officers. Section 181.26 applies to mutual holding companies.

SB450,29,13 644.18 Directors' and officers' liability and indemnification. (1) Liability. Sections 181.283 to 181.29 apply to mutual holding companies.

SB450,29,15 (2) Indemnification. Sections 181.041 to 181.051 apply to mutual holding companies.

SB450,29,16 (3) Insurance. Section 181.053 applies to mutual holding companies.

SB450,29,17 (4) Derivative actions. Section 181.295 applies to mutual holding companies.

SB450,29,19 644.19 Executive compensation. (1) General. Sections 181.19 and 611.63 (4) and (5) apply to mutual holding companies.

SB450,30,2 (2) Approval by members. A benefit plan or amendment to a benefit plan that proposes to provide benefits in the form of stock or stock options of a converted insurance company or any intermediate stock holding company to the directors or officers of the converted insurance company, intermediate stock holding company or mutual holding company may not take effect unless it is submitted to a vote of the members of the mutual holding company and approved by a majority of the members voting.

SB450,30,6 (3) Notice to commissioner. The commissioner may by rule require that any action taken by the board of a mutual holding company, or the board of any intermediate stock holding company, on any of the subjects specified in ss. 181.04 (15) and 181.19 be reported to the commissioner within 30 days after the action is taken.

SB450,30,10 644.20 Management contract services. A mutual holding company may not be a party to a contract that has the effect of delegating to a person, to the substantial exclusion of the board, the authority to exercise any management control of the mutual holding company or of any of its major corporate functions.

SB450,30,13 644.21 Annual report of domestic mutual holding company. Each mutual holding company domiciled in this state shall file such annual report as may be prescribed by the commissioner by rule.

SB450,30,15 644.22 Securities regulation. A membership interest in a domestic mutual holding company shall not constitute a security, as defined in s. 551.02 (13).

SB450,30,20 644.23 Authority to issue mutual bonds and contribution notes. Section 611.33 (2) (a), (b), (c) and (e) applies to mutual holding companies. In the event of dissolution under this chapter, unpaid amounts of principal and interest on contribution notes shall be subordinated to the payment of principal and interest on any mutual bonds issued by the mutual holding company at any time.

SB450,31,2 644.24 Subsequent restructuring. A mutual holding company, in conjunction with the converted insurance company and any intermediate stock holding company, may merge together and convert into a mutual insurance company if the requirements of ss. 611.72 and 611.75 are met and the members of the mutual holding company vote to approve the merger and conversion into a mutual insurance company.

SB450,31,7 644.25 Conversion of domestic mutual holding company into a stock corporation. (1) Conversion permitted and procedures. A mutual holding company formed by a converted insurance company under this chapter may convert into a stock corporation organized under ch.180. Subject to this section, s. 611.76 (1) to (3) and (5) to (11) applies to mutual holding companies.

SB450,31,9 (2) Plan of conversion. (a) In this subsection, "net premium" means gross premium less return premium and dividends paid.

SB450,31,11 (b) The board of a domestic mutual holding company may adopt a plan of conversion that specifies all of the following:

SB450,31,15 1. The number of shares proposed to be authorized for the new stock corporation, their par value and the price at which they will be offered to members, which price may not exceed 50% of the median equitable share of all members under subd. 2.

SB450,31,21 2. That each member who has been a policyholder of a converted insurance company and has paid premiums within 5 years prior to the resolution passed by the board related to the conversion under this section shall be entitled without additional payment to so much common stock of the new stock corporation as his or her equitable share of the value of the converting mutual holding company will purchase.

SB450,32,2 3. That each member's equitable share shall be determined by the ratio that the net premium paid by such member to the converted insurance company during the 5 years immediately preceding the resolution specified in subd. 2. bears to the total net premium received by the converted insurance company during the same period.

SB450,32,6 4. That, if a member's equitable share is sufficient only for the purchase of a fraction of a share of stock, the member shall have the option either to receive the value of the fractional share in cash or to purchase a full share by paying the balance in cash.

SB450,32,13 5. That, notwithstanding subds. 2. to 4., each member who was a policyholder of a converted life insurance company on the date of the resolution specified in subd. 2. or within 5 years prior to that date shall be entitled to an equitable share based on a formula that fairly reflects the policyholder's interest in the company and the policies and contracts issued by the company to the policyholder, and that takes into account premiums paid, cash surrender values, policy loans, reserves, surplus benefits payable and other relevant factors.

SB450,32,16 6. That a member's equitable share shall be provided to the member on a uniform basis approved by the commissioner in the form of common stock, cash, increased benefits or lower premiums or a combination of those forms.

SB450,32,19 7. The procedure for stock subscriptions, which shall include a written offer to each such member indicating his or her individual equitable share and the terms of subscription.

SB450,32,24 8. That no common stock under subd. 2. may be issued to persons other than the members under subd. 2. until all subscriptions by the members have been filled and that thereafter any new issue of stock for 5 years after the conversion shall first be offered to the persons who have become shareholders under subd. 2. in proportion to their interests under subd. 2.

SB450,33,6 9. That no member, other than a member who is a policyholder of a converted life insurance company, may receive a distribution of shares valued in excess of the amount to which he or she is entitled under s. 645.72 (4) (b). Any excess over that amount shall be distributed in shares to the state treasury for the benefit of the common school fund. After 5 years the shares may be sold by the treasurer at his or her discretion and the proceeds credited to the common school fund.

SB450,33,13 10. That, except with the approval of the commissioner, during the first 5 years after the conversion under this section the directors and officers of a mutual holding company with a converted life insurance company subsidiary and persons acting in concert with them may not, in the aggregate, acquire control over more than 5% of the common stock of the converted mutual holding company or any other corporation that acquires control of more than 5% of the common stock of the converted mutual holding company.

SB450,33,16 (3) After conversion. Upon the conversion of a mutual holding company under this section, this chapter no longer applies to the mutual holding company, any intermediate stock holding company or the converted insurance company.

SB450,33,18 644.26 Transfer of business or assets. Section 181.49 applies to mutual holding companies.

SB450,33,20 644.27 Merger and consolidation of mutual holding companies. Section 611.73 applies to mutual holding companies.

SB450,33,24 644.28 Voluntary dissolution of domestic mutual holding companies. (1) Plan of dissolution. Subject to this section, ss. 181.50 to 181.54 and 181.555 apply to mutual holding companies, except that the last sentence of s. 181.555 does not apply.

SB450,34,10 (2) Approval by the commissioner. (a) At least 60 days prior to the submission to members of any proposed voluntary dissolution of a mutual holding company under s. 181.50, the plan shall be filed with the commissioner. The commissioner may require the submission of additional information relevant to the effect of the proposed dissolution on the solvency of the converted insurance company. The commissioner shall approve the dissolution unless, after a hearing, the commissioner finds that dissolution of the mutual holding company would cause the converted insurance company to become insolvent, would be unfair or inequitable to the members of the mutual holding company or would not be in the best interests of the policyholders of the converted insurance company or the public.

SB450,34,13 (b) The acquisition of the converted insurance company and any other insurance company owned directly or indirectly by a dissolving mutual holding company shall be subject to ss. 611.71 and 611.72 and ch. 617.

SB450,34,17 (3) Revocation of voluntary dissolution. If the mutual holding company revokes the voluntary dissolution proceedings under s. 181.53, a copy of the resolution revoking the voluntary dissolution proceedings adopted under s. 181.53 shall be filed with the commissioner.

SB450,34,25 (4) Filing and recording articles of dissolution and effect thereof. Upon approval by the commissioner under sub. (2) and by the members under s. 181.50, the mutual holding company shall file articles of dissolution with the commissioner. When the articles are filed, the existence of the mutual holding company shall cease, except for the purpose of suits, other proceedings and appropriate corporate action of members, directors and officers as provided in this chapter and in ss. 181.50 to 181.54 and 181.555. Upon the filing of the articles, the commissioner may issue a certificate of dissolution.

SB450,35,5 (5) Distribution of assets. No distribution may be made to members of a mutual holding company in excess of the amounts to which they would be entitled under s. 645.72 (4) (b) had the converted insurance company not reorganized and formed a mutual holding company. Any excess over such amounts shall be paid into the state treasury to the credit of the common school fund.

SB450,35,14 644.29 Involuntary dissolution of domestic mutual holding companies. A mutual holding company may at any time during a voluntary dissolution under ss. 181.51 to 181.555 apply to the commissioner to have dissolution continued under the commissioner's supervision, in which case, subject to this section, s. 181.56 (1) and (2) applies to the mutual holding company except that for purposes of this section "attorney general" means the commissioner. Any distribution to members shall be limited in the same manner as under s. 644.28 (5) and any excess over such amounts shall be paid into the state treasury to the credit of the common school fund.

SB450,35,15 (End)