A domestic stock corporation may be converted into a domestic mutual as follows:

   (1)   Action by board. The board shall adopt a plan of conversion. Thereafter no additional shares of capital stock shall be issued except that stock options to purchase capital stock may continue to be issued under existing contracts and outstanding options may continue to be exercised until the conversion is executed under sub. (6).

   (2)   Plan of conversion.

      (a)    The plan of conversion shall provide for the purchase by the corporation of all of its outstanding capital stock, at a price either specified in the plan or to be determined under a formula specified in the plan, for cash, specified debt securities to be issued by the corporation, or both. All holders of capital stock of the same class shall have the same rights under the plan. Shareholders may be given an election to take all or a portion of the price in the specified debt securities. Debt securities may be of any class authorized for mutual corporations under s. 611.33 (2).

      (b)    The plan shall provide a fair procedure subject to the commissioner’s supervision to value contractual obligations of the corporation, such as those relating to stock options, that must be terminated on the date of conversion and are compensable under sub. (6) (b).

   (3)   Approval requirement. No conversion may be effected unless the plan of conversion is approved by the commissioner. The corporation shall file with the plan so much of the information under s. 611.13 (2) for the new mutual as the commissioner reasonably requires.

   (4)   Condition for approval. The commissioner shall approve the conversion unless he or she finds, after a hearing, that:

      (a)    The conversion would violate the law; or

      (b)    Its terms are not fair to the shareholders or the policyholders; or

      (c)    The resulting mutual would not meet the requirements for a certificate of authority under s. 611.20.

   (5)   Approval by shareholders. After the commissioner approves the plan of conversion, it shall be submitted to the shareholders for approval by the affirmative vote of a majority of each class of shares entitled to vote. Only shareholders of record on the date of the adoption under sub. (1) may vote.

   (6)   Conversion.

      (a)    Continuation of corporation. If the shareholders approve the plan of conversion under sub. (5), the commissioner shall issue a new certificate of authority. The issuance of the certificate is the act of conversion, the corporation at once becomes a mutual and is no longer a stock corporation. The mutual shall be deemed to have been organized at the time the converted stock corporation was organized. The board shall thereupon implement the plan of conversion.

      (b)    Termination of contract rights. Any contractual obligation inconsistent with the nature of a mutual, including any obligation to issue or to redeem stock options, shall terminate upon the act of conversion under par. (a), without compensation unless the obligation was legally binding before April 30, 1972.

   (7)   Expenses. The corporation may not pay compensation of any kind to any person other than regular salaries to existing personnel, in connection with the proposed conversion, other than for clerical and mailing expenses, except that 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. 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 borne by the corporation being converted.