Michigan Laws 500.5503 – Domestic stock insurer; division into 2 or more insurers; plan of division; requirements; amendment procedures; abandonment of plan
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Terms Used In Michigan Laws 500.5503
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Assets: means property, whether real, personal, mixed, tangible, or intangible, and any right or interest in the property, including all rights under contracts and other agreements. See Michigan Laws 500.5500
- Capital: means the capital stock component of statutory surplus, as defined in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions. See Michigan Laws 500.5500
- Contract: A legal written agreement that becomes binding when signed.
- Department: means the department of insurance and financial services. See Michigan Laws 500.102
- Dividing insurer: means a domestic stock insurer that approves a plan of division pursuant to section 5505. See Michigan Laws 500.5500
- division: means the act by operation of law by which a domestic stock insurer divides into 2 or more resulting insurers in accordance with a plan of division and this chapter. See Michigan Laws 500.5500
- Domestic stock insurer: means a domestic stock insurer organized or created under the laws of this state. See Michigan Laws 500.5500
- Insurer: means a corporation engaged or attempting to engage in the business of making insurance or surety contracts. See Michigan Laws 500.5500
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- New insurer: means a domestic stock insurer that is created by a division occurring on or after the effective date of the amendatory act that added this chapter. See Michigan Laws 500.5500
- Plan of division: means a plan of division approved by a dividing insurer in accordance with section 5505. See Michigan Laws 500.5500
- Resulting insurer: means a domestic stock insurer created by a division or a dividing insurer that survives a division. See Michigan Laws 500.5500
- Shareholder: means the person in whose name a share is registered in the records of a corporation or the beneficial owner of a share to the extent of the rights granted by a nominee certificate on file with a corporation. See Michigan Laws 500.5500
- state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
- Surplus: means total statutory surplus less capital, calculated in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions. See Michigan Laws 500.5500
(1) A domestic stock insurer may, in accordance with the requirements of this chapter, divide into 2 or more resulting insurers pursuant to a plan of division.
(2) Each plan of division must include all of the following:
(a) The name of the domestic stock insurer seeking to divide.
(b) The name of each resulting insurer that will be created by the proposed division.
(c) For each new insurer that will be created by the proposed division, a copy of both of the following:
(i) Its proposed articles of incorporation.
(ii) Its proposed bylaws.
(d) The manner of allocating between or among the resulting insurers both of the following:
(i) The assets of the domestic stock insurer that will not be owned by, if the dividing insurer survives the division, the dividing insurer, or, if the dividing insurer does not survive the division, all of the resulting insurers as tenants in common under section 5511.
(ii) The liabilities of the domestic stock insurer, including policy liabilities, to which not all of the resulting insurers will become jointly and severally liable under section 5513(1)(c).
(e) The manner of distributing shares in the new insurers to the dividing insurer or its shareholders.
(f) A reasonable description of the liabilities, including policy liabilities, and items of capital, surplus, or other assets, in each case, that the domestic stock insurer proposes to allocate to each resulting insurer, including the manner by which each reinsurance contract is to be allocated.
(g) All terms and conditions required by the laws of this state or the articles of incorporation and bylaws of the domestic stock insurer.
(h) All other terms and conditions of the division.
(3) If the domestic stock insurer will survive the division, the plan of division must include, in addition to the information required by subsection (2), all of the following:
(a) All proposed amendments to the dividing insurer’s articles of incorporation and bylaws, if any.
(b) If the dividing insurer desires to cancel some, but fewer than all, shares in the dividing insurer, the manner in which it will cancel the shares.
(c) If the dividing insurer desires to convert some, but fewer than all, shares in the dividing insurer into shares, securities, obligations, money, other property, rights to acquire shares or securities, or any combination thereof, a statement disclosing the manner in which it will convert the shares.
(4) If the domestic stock insurer will not survive the proposed division, the plan of division must contain, in addition to the information required by subsection (2), the manner in which the dividing insurer will cancel or convert shares in the dividing insurer into shares, securities, obligations, money, other property, rights to acquire shares or securities, or any combination thereof.
(5) A dividing insurer may amend a plan of division in accordance with any procedures set forth in the plan of division or, if no procedures are set forth in the plan of division, in any manner determined by the board of directors of the dividing insurer, except that a shareholder that was entitled to vote on or consent to approval of the plan of division is entitled to vote on or consent to any amendment of the plan of division that will change any of the following:
(a) The amount or kind of shares, securities, obligations, money, other property, rights to acquire shares or securities, or any combination thereof, to be received by any of the shareholders of the dividing insurer under the plan of division.
(b) The articles of incorporation or bylaws of any resulting insurer that will be in effect when the division becomes effective, except for changes that do not require approval of the shareholders of the resulting insurer under its articles of incorporation or bylaws.
(c) Any other terms or conditions of the plan of division, if the change would adversely affect the shareholders in any material respect.
(6) A dividing insurer may abandon a plan of division after it has approved the plan of division without any action by the shareholders and in accordance with any procedures set forth in the plan of division or, if no procedures are set forth in the plan of division, in a manner determined by the board of directors of the dividing insurer.
(7) A dividing insurer may abandon a plan of division after it has filed a certificate of division with the department by filing with the department a notice of abandonment signed by the dividing insurer. The notice of abandonment is effective on the date it is filed with the department and the dividing insurer is considered to have abandoned its plan of division on that date.
(8) A dividing insurer shall not abandon or amend its plan of division once the division becomes effective.