§ 35

(Section scheduled to be repealed on January 1, 2027) Sec. 35. Stock companies may become mutuals. (1) Any domestic stock company may become a mutual company by complying with the provisions of this Section. (2) The board of directors shall adopt a mutualization plan and amended articles of incorporation, which articles shall conform to the articles required by this Code of a mutual company authorized to transact the kind or kinds of insurance stated in the articles. The mutualization plan and amended articles of incorporation shall be executed in duplicate by the company by its president or vice-president and its secretary or assistant secretary, or officers corresponding thereto, and shall be delivered to the Director. The plan and amended articles of incorporation delivered to the Director may be approved or disapproved by him in the same manner as original articles of incorporation. If the Director does not approve the plan and amended articles, he or she shall notify the company in writing of the reasons for such disapproval and if requested so to do, shall grant the company a hearing. (3) If the plan and amended articles of incorporation be approved by the Director he or she shall place on file in his or her office one of the duplicate copies of each of the documents, shall endorse upon the other duplicate copies his approval thereof, and the month, day and year of such approval, and deliver the same to the company. (4) The plan and amended articles of incorporation shall thereupon be submitted to and be approved by the shareholders in the same manner as is required for the submission and approval of amendments to articles of incorporation. (5) After approval by the shareholders, a written or printed notice setting forth a copy of the plan and amended articles of incorporation, or a summary of the same, and stating the time and place of the special meeting at which they will be considered, and the manner of voting, shall be mailed to each policyholder of the company at least thirty days before the date set for such meeting. In a life insurance company each policyholder shall have one vote for each $1,000 of insurance which on the day of the meeting has been in force for one year or longer. In a company other than life, each policyholder shall be entitled to one vote for each policy in force on the day of the meeting, and upon which the premium has been paid at the time of the meeting. A policyholder may vote in person, by proxy or by mail. The election shall be under the supervision of not less than 3 nor more than 5 inspectors who shall be appointed by the Director. Such inspectors shall pass upon the qualifications of the voters, the validity of the ballots, shall canvass the vote and certify the result of such vote to the Director and to the company. If 2/3 of the votes cast at the meeting are in favor of the adoption of the plan, the said plan shall become effective. All necessary expenses incurred by the Director or by the inspectors in connection with the vote shall be certified to by the Director and paid by the company. (6) The plan may provide for the acquisition by the company of its own shares, by purchase, by gift or otherwise in the manner provided therein. Any shares so acquired shall be held in trust for the company and shall be assigned and transferred on the books of the company to three individual trustees or to any trust company authorized under the laws of this State to do a trust business, to be chosen or approved by a majority vote of those policyholders who vote at the meeting referred to in subsection (5) of this Section, and such trustee or trustees shall vote the shares held by them or by it at any company meeting. Each such trustee shall file with the company a verified acceptance of his, hers or its appointment and a declaration that he or it will faithfully discharge his, hers or its duties as such trustee. Any dividends or other sums acquired or accruing to the trustees upon shares coming within their trusteeship shall upon the termination of the trust be delivered to the company. (7) If a shareholder of the company shall file with such company, prior to or at the meeting of shareholders at which the plan of mutualization is submitted to a vote, a written objection to such plan and shall not vote in favor thereof, and such shareholder within 20 days after the plan is approved by such meeting shall make written demand on the company for payment of the fair value of his shares as of the day prior to the date on which such plan is approved by the shareholders, such shareholder shall be entitled to receive prior to the completion of the plan, upon surrender of his certificate or certificates representing said shares, such fair value thereof. Any shareholder who fails to make such objection or having objected fails to make demand within the 20 day period shall be conclusively presumed to have consented to the said plan and shall be bound by the terms thereof. (8) If within 30 days after the date of the written demand mentioned in subsection (7), the value of such shares is agreed upon between the dissenting shareholder, the company and the Director, payment therefor shall be made within 90 days after the date of such agreement upon the surrender of his or her certificate or certificates representing the shares. Upon payment of the agreed value the dissenting shareholder shall cease to have any interest in such shares and cease to be a shareholder in the company. (9) If, within such period of 30 days, the shareholder and the company do not so agree, then the dissenting shareholder may within 60 days after the expiration of the 30 day period, petition the Circuit Court of the county in which the principal office of the company is located, to appraise the value of such shares as of the date of the day prior to the date on which such vote was taken approving such plan. A copy of the petition shall be delivered or mailed by registered mail to the Director within 5 days after the filing thereof and proof of such delivery or mailing shall be filed with the court. The Director shall have the right to appear through the Attorney General and be heard upon all questions and issues in the proceeding. The practice, procedure, and judgment shall be, so far as practicable, the same as that under the eminent domain laws of this State. (10) The judgment shall be payable only upon and simultaneously with the surrender to the company of the certificate or certificates representing the shares. Upon the payment of the judgment the dissenting shareholder shall cease to have any interest in such shares, and cease to be a shareholder in the company. Unless the dissenting shareholder shall file such petition within the time herein limited, such shareholder and all persons claiming under him or her shall be conclusively presumed to have approved and ratified the mutualization plan, and shall be bound by the terms thereof. The right of a dissenting shareholder to be paid the fair value of his shares as herein provided shall cease if and when the company shall abandon the mutualization plan. (11) When all the shares of the Company have been acquired and cancelled in conformity with the plan and this Section, the Director shall issue a certificate to that effect, and the amended articles of incorporation shall thereupon become effective and the company shall thenceforth be a mutual company. (12) The certificate mentioned in subsection (11) together with the duplicate original of the amended articles of incorporation theretofore approved by the Director shall be filed for record in the office of the recorder where the principal office of the company is located, within 15 days from the date of such certificate.

Legislative History

(Source: P.A. 83-358 .)