611.32(4)(b)1. 1. Shall be granted upon request if the corporation has made an addition to earned surplus in each of the 2 immediately preceding years of at least 6% of the capital raised by the sale of shares under the organization permit; and
611.32(4)(b)2. 2. May be granted upon a showing of hardship by the shareholder or the shareholder's estate or legatee, if the release from escrow of the shares or a portion thereof would not, in the commissioner's opinion, endanger the interests of insureds or the public.
611.32(5) (5)Options to purchase stock. For 3 years after the issuance of the certificate of authority, an option to purchase stock may be issued only pursuant to a plan approved by the commissioner.
611.32 History History: 1971 c. 260; 1979 c. 102 s. 236 (5); 1989 a. 303; 1991 a. 316.
611.33 611.33 Authorized securities.
611.33(1) (1)Stock corporations.
611.33(1)(a)(a) Classes of shares. The articles of a stock corporation shall authorize the kinds of shares required by s. 180.0601 (3) and may authorize any kind of shares permitted by ss. 180.0601 (1), (2) and (4), 180.0602 and 180.0603, or of stock rights, and options permitted by s. 180.0624, except that:
611.33(1)(a)1. 1. Until one year after the initial issuance of a certificate of authority, the corporation may issue no shares and no other securities convertible into shares except for a single class of common stock that satisfies s. 180.0601 (3) and, with the approval of the commissioner, on terms that he or she considers fair, a single class of preferred stock for sale to no more than 15 shareholders;
611.33(1)(a)2. 2. After the first year and within 5 years after the initial issuance of a certificate of authority, no additional classes of shares may be issued, except after approval of the commissioner, who may approve only if he or she finds that existing shareholders will not be prejudiced.
611.33(1)(b) (b) Fractional shares or scrip. No fractional shares may be issued. Subject thereto, s. 180.0604 applies.
611.33(1)(c) (c) Consideration for shares, certificates and transfer restrictions. Sections 180.0621 and 180.0625 to 180.0627 apply.
611.33(1)(d) (d) Liability of shareholders, transferees and others. Section 180.0622 applies.
611.33(1)(e) (e) Shareholders' preemptive rights. Sections 180.0630 and 180.1705 apply.
611.33(2) (2)Mutuals.
611.33(2)(a)(a) Mutual bonds. The articles of a nonassessable mutual may authorize mutual bonds of one or more classes and shall specify the amount of each class of bonds the corporation is authorized to issue, their designations, preferences, limitations, rates of interest, relative rights and other terms, subject to the following provisions:
611.33(2)(a)1. 1. During the first year after the initial issuance of a certificate of authority, the corporation may issue only a single class of bonds with identical rights;
611.33(2)(a)2. 2. After the first year but within 5 years after the initial issuance of a certificate of authority, additional classes of bonds may be authorized after approval of the commissioner, who shall approve if he or she finds that policyholders and prior bondholders will not be prejudiced;
611.33(2)(a)3. 3. The rate of interest shall be fair and reasonable; and
611.33(2)(a)4. 4. The bonds shall bear a maturity date not later than 10 years from the date of issuance, when principal and accrued interest shall be due and payable, subject to par. (d).
611.33(2)(b) (b) Contribution notes. Any mutual may issue contribution notes if the commissioner approves. The commissioner may approve only if he or she finds that:
611.33(2)(b)1. 1. The notes will not be issued in denominations of less than $500, and no single issue will be sold to more than 15 persons;
611.33(2)(b)2. 2. No discount, commission or other fee will be paid or allowed;
611.33(2)(b)3. 3. The notes will not be the subject of a public offering;
611.33(2)(b)4. 4. Their terms are not prejudicial to policyholders, holders of mutual bonds or of prior contribution notes; and
611.33(2)(b)5. 5. The mutual's articles or bylaws do not forbid their issuance.
611.33(2)(c) (c) Prohibited transactions. No mutual may:
611.33(2)(c)1. 1. If it has any outstanding obligations on mutual bonds or contribution notes, borrow on contribution notes from, or sell bonds to, any other insurer without approval of the commissioner; or
611.33(2)(c)2. 2. Make any loan to another insurer except a fully secured loan at usual market rates of interest.
611.33(2)(d) (d) Repayment. Payment of the principal or interest on mutual bonds or contribution notes may be made in whole or in part only after approval of the commissioner. Approval shall be given if all financial requirements of the issuer to do the insurance business it is then doing will continue to be satisfied after payment and if the interests of its insureds and the public are not endangered. In the event of liquidation under ch. 645 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 corporation at any time.
611.33(2)(e) (e) Other obligations. Nothing in this section prevents a mutual from borrowing money on notes which are its general obligations, nor from pledging any part of its disposable assets therefor.
611.33 History History: 1971 c. 260; 1973 c. 184; 1979 c. 102 ss. 98, 236 (5); 1989 a. 303.
611.34 611.34 Corporate repurchase of shares. No stock corporation may repurchase any of its own shares within 5 years after initial issuance of the certificate of authority, except pursuant to a plan for the repurchase which has been approved by the commissioner. After 5 years a stock corporation may repurchase its own shares under ss. 180.0631, 180.0640 and 180.1708 (2), but within 10 days after the end of any month in which it purchases more than one per cent of any class of its outstanding shares the corporation shall report the price and the names of the registered shareholders from whom the shares are acquired and of any other persons beneficially interested, so far as the latter are known to the corporation. The corporation shall make a like report within 10 days after the end of any 3-month period in which it purchases more than 2% of any class of its outstanding shares or within 10 days after the end of any 12-month period in which it purchases more than 5% of any class of its outstanding shares.
611.34 History History: 1971 c. 260; 1989 a. 303.
611.36 611.36 Number of shareholders. Section 180.0142 applies to stock corporations for purposes of this chapter.
611.36 History History: 1989 a. 303.
subch. IV of ch. 611 SUBCHAPTER IV
611.40 611.40 Shareholders' meetings.
611.40(1) (1)Meetings, notices, quorums and voting. Sections 180.0701 to 180.0703, 180.0705, 180.0721 to 180.0727 and 180.1708 (3) apply to stock corporations. Each director of a stock corporation shall be elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present.
611.40(2) (2)Record date and voting lists. Sections 180.0707 and 180.0720 apply to stock corporations.
611.40(3) (3)Voting trust. Sections 180.0730 and 180.0731 apply to stock corporations.
611.40 History History: 1971 c. 260, 307; 1973 c. 184; 1989 a. 303; 1997 a. 35.
611.41 611.41 Communications to shareholders or policyholders and commissioner's attendance at meetings.
611.41(1)(1)Copies of communications. The commissioner may by rule prescribe that copies of specified classes of communications circulated generally by a corporation to shareholders or policyholders shall be communicated to the commissioner at the same time.
611.41(2) (2)Attendance at meetings. The commissioner has the right to attend any shareholders' or policyholders' meeting.
611.41(3) (3)Exception. Subsection (2) and, so far as it relates to communications to shareholders, sub. (1) do not apply to stock corporations all of whose voting shares are owned by a single person, or all of whose shareholders are either members of the board or are represented on it.
611.41 History History: 1971 c. 260; 1979 c. 102 s. 236 (21).
611.42 611.42 Mutual policyholders' voting rights.
611.42(1) (1)General. Subject to this section and s. 611.53, ss. 181.0701, 181.0702, 181.0705 (1) to (4), 181.0722 (1) to (3), 181.0723, 181.0724 and 181.0727 apply to mutuals.
611.42(1e) (1e)Court-ordered meetings.
611.42(1e)(a)(a) The circuit court for the county where a mutual's principal office is located, or, if the mutual does not have its principal office in this state, where its registered office is located, may, after notice and an opportunity to be heard, order a meeting to be held on petition of a policyholder of the mutual who meets any of the following conditions:
611.42(1e)(a)1. 1. The policyholder is entitled to participate in an annual meeting and the annual meeting has not been held within 15 months after the mutual's last annual meeting.
611.42(1e)(a)2. 2. The policyholder has signed a demand for a special meeting that meets the requirements of s. 181.0702 and the mutual has failed to do any of the following:
611.42(1e)(a)2.a. a. Give notice of the special meeting within 30 days after the date that the demand was delivered to the mutual.
611.42(1e)(a)2.b. b. Hold the special meeting in accordance with the notice.
611.42(1e)(b) (b) The court may fix the time and place of the meeting. The court shall require that the meeting be called and conducted in accordance with the mutual's articles of incorporation and bylaws, in so far as possible, except that the court may do all of the following:
611.42(1e)(b)1. 1. Fix the quorum required for specific matters to be considered at the meeting or direct that the votes represented at the meeting constitute a quorum for action on those matters.
611.42(1e)(b)2. 2. Enter any other orders necessary to accomplish the purpose of the meeting.
611.42(1m) (1m)Record date. Section 181.0707 applies to mutuals.
611.42(2) (2)Voting rights.
611.42(2)(a)(a) Mandatory voting rights. Policyholders in all mutuals have the right to vote on conversion, voluntary dissolution, amendment of the articles and the election of all directors except public directors appointed under s. 611.53 (1). Directors may be divided into classes, and in that case one class shall be elected at least every 4 years for terms not exceeding 6 years.
611.42(2)(b) (b) Optional voting rights. The articles of any mutual may give the policyholders additional voting rights.
611.42(3) (3)Voting procedures. The articles or bylaws shall contain rules governing voting eligibility consistent with sub. (2) and voting procedures. No amendment to the rules may be effective until at least 30 days after it has been filed with the commissioner.
611.42(4) (4)Meetings and elections.
611.42(4)(a)(a) The articles may provide for regular or special meetings of the policyholders, or elections in lieu of meetings.
611.42(4)(b) (b) Notice of the time and place of regular meetings or elections shall be given to each policyholder by printing it conspicuously on each policy or in such other reasonable manner as the commissioner approves or requires.
611.42(5) (5)Representative assembly. The articles may provide that representatives or delegates be selected by the policyholders to represent specific geographical districts, or otherwise to represent defined classes of policyholders, determined on a reasonable basis. After the representative assembly has been selected by the policyholders, the assembly may choose replacements for members unable to complete their terms, if the articles so provide. The vote of a representative shall be treated as the vote of the policyholders he or she represents.
611.42 History History: 1971 c. 260; 1979 c. 102 s. 236 (5); 1997 a. 79.
611.43 611.43 Annual report to mutual policyholders. Every domestic mutual shall send to each policyholder requesting it an annual report which shall contain basic financial and operating data, information about important business and corporate developments, and such other information as the corporation wishes to include or as the commissioner by rule requires to be included in order to keep policyholders properly informed.
611.43 History History: 1971 c. 260.
611.51 611.51 Board of directors.
611.51(1)(1)General. Subject to this section, ss. 180.0801 and 180.0802 apply to stock corporations and ss. 181.0801 (1) and (2) and 181.0802 apply to mutuals.
611.51(2) (2)Number of directors.
611.51(2)(a)(a) General. Except under pars. (b) and (c), a corporation shall have at least 5 directors if no more than one director is an employee or representative of the corporation, and shall have at least 9 directors in other cases.
611.51(2)(b) (b) New corporations. During the first 5 years after initial issuance of a certificate of authority, a corporation shall have at least 5 directors.
611.51(2)(c) (c) Exception. The commissioner may by order reduce the number of directors required under this subsection, if he or she finds that it would be an unreasonable burden on the corporation to comply with the requirement and that the interests of policyholders and shareholders can be otherwise protected.
611.51(3) (3)Inside directors. Employees and representatives of a corporation may not constitute a majority of its board.
611.51(4) (4)Subsidiaries and closely held corporations. Subsections (2) (a) and (3) do not apply to an insurance subsidiary authorized under s. 611.26 (1) nor to a stock insurance corporation more than 95% of whose outstanding shares entitled to vote are owned by a single person or all of whose voting shareholders are either members of or are individually represented on the board.
611.51(5) (5)Classification of directors. If directors are divided into classes by the articles or the bylaws, no class may contain fewer than 3 members. Subject thereto, s. 180.0806 applies to stock corporations.
611.51(6) (6)Unlawful delegation. 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. 180.0841, 181.0841, 611.56 and 611.67.
611.51(7) (7)Quorum and voting. Section 180.0824 applies to the board of a stock corporation and s. 181.0824 applies to the board of a mutual except as modified by s. 611.60.
611.51(8) (8)Place and notice of directors' meetings. Sections 180.0820, 180.0822 and 180.0823 apply to stock corporations. Sections 181.0820, 181.0822 and 181.0823 apply to mutuals.
611.51(9) (9)Books and records.
611.51(9)(a)(a) Stock corporations. Sections 180.1601 to 180.1620 apply to stock corporations.
611.51(9)(am) (am) Mutuals.
611.51(9)(am)1.1. Each mutual shall keep correct and complete books and records of account and shall also keep minutes of the proceedings of its policyholders, board of directors and committees having any authority of the board of directors. Each mutual shall keep at its principal office or at the office of its secretary a record giving the names and addresses of policyholders entitled to vote, or records showing where such information can be obtained.
611.51(9)(am)2. 2. Except for the records of the names and addresses of policyholders entitled to vote, all relevant books and records of a mutual may be inspected by any policyholder or the policyholder's agent or attorney for any proper purpose at any reasonable time. Inspection of the records of the names and addresses of policyholders of mutuals entitled to vote shall be permitted only for the purpose of communicating with other policyholders with regard to the nomination and election of candidates for the board or other corporate matters which may be submitted to a vote of the policyholders. No person may, directly or indirectly, use any information so obtained for any other purpose.
611.51(9)(am)3. 3. In any pending action or proceeding, or upon petition, a court of record in this state may, upon notice fixed by the court, hearing and a showing of proper cause, and upon suitable terms, order any books and records of account, minutes and records of policyholders of a mutual and any other pertinent documents in the mutual's possession, or transcripts from or duly authenticated copies thereof, to be brought within this state and kept at such place and for such time and for such purposes as may be designated in the order. A mutual failing to comply with an order under this subdivision is subject to involuntary dissolution under this chapter and all of its directors and officers may be punished for contempt of court for disobedience of the order.
611.51(9)(b) (b) Form of books, records or minutes. Any books, records or minutes may be in written form or in any other form capable of being converted into written form within a reasonable time.
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