A domestic fraternal may be converted into a mutual, as follows:
(1)
In addition to complying with the requirements of Chapter 16, Insurance Holding Companies, the board or the supreme governing body shall adopt a plan of conversion stating:
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Terms Used In Utah Code 31A-9-503
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Certificate: means evidence of insurance given to:
Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
Corporation: means an insurance corporation, except when referring to:
a risk distributing arrangement providing for compensation or replacement for damages or loss through the provision of a service or a benefit in kind;
(ii)
a contract of guaranty or suretyship entered into by the guarantor or surety as a business and not as merely incidental to a business transaction; and
(iii)
a plan in which the risk does not rest upon the person who makes an arrangement, but with a class of persons who have agreed to share the risk. See Utah Code 31A-1-301
another similar entity or combination of entities acting in concert. See Utah Code 31A-1-301
(a)
the reasons for and purposes of the proposed action;
(b)
the proposed terms, conditions, and procedures and the estimated expenses of implementing the conversion;
(c)
the proposed name of the corporation; and
(d)
the proposed articles and bylaws.
(2)
If the board and the supreme governing body disagree on the conversion plan, the decision of the supreme governing body prevails.
(3)
The plan shall be filed with the commissioner for approval, together with any information under Subsection 31A-5-204(2) the commissioner reasonably requires. The commissioner shall approve the plan unless the commissioner finds, after a hearing, that it would be contrary to the law, that the new mutual would not satisfy the requirements for a certificate of authority under Section 31A-5-212, that the plan would be contrary to the interests of members or the public, or that the applicable requirements of Chapter 16, Insurance Holding Companies, have not been satisfied.
(4)
After being approved by the commissioner, the plan shall be submitted for approval to the persons who were voting members on the date of the commissioner’s approval under Subsection (3). For approval of the plan, at least a majority of the votes cast shall be in favor of the plan, or a larger number if required by the laws of the fraternal.
(5)
The officers and directors of the fraternal shall be the initial officers and directors of the mutual.
(6)
A copy of the resolution adopted under Subsection (4) shall be filed with the commissioner, stating the number of members entitled to vote, the number voting, the method of voting, and the number of votes cast in favor of the plan, stating separately the votes cast by mail and the votes cast in person.
(7)
If the requirements of the law are met, the commissioner shall issue a certificate of authority to the new mutual. The fraternal then ceases its legal existence and the corporate existence of the new mutual begins. However, the new mutual is considered to have been incorporated as of the date the converted fraternal was incorporated. The new mutual has all the assets and is liable for all of the obligations of the converted fraternal. The commissioner may grant a period not exceeding one year for adjustment to the requirements of Chapter 5, Domestic Stock and Mutual Insurance Corporations, specifying the extent to which particular provisions of Chapter 5, Domestic Stock and Mutual Insurance Corporations, do not apply.
(8)
The corporation may not pay compensation other than regular salaries to existing personnel in connection with the proposed conversion. With the commissioner’s approval, payment may be made at reasonable rates for printing costs and for legal and other professional fees for services actually rendered in connection with the conversion. All expenses of the conversion, including the expenses incurred by the commissioner and the prorated salaries of any insurance office staff members involved, shall be paid by the corporation being converted.
