31A-9-503. Conversion of a fraternal to a mutual.
A domestic fraternal may be converted into a mutual, as follows:
(1) In addition to complying with the requirements of Chapter 16, the board or the
supreme governing body shall adopt a plan of conversion stating:
(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 he 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 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 must 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, specifying
the extent to which particular provisions of Chapter 5 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.
Enacted by Chapter 242, 1985 General Session
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Last revised: Thursday, May 28, 2009