Conversion of a domestic stock corporation into a mutual

611.75 Conversion of a domestic stock corporation into a mutual. 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 Updated 23-24 Wis. Stats. 18 DOMESTIC STOCK AND MUTUAL INSURANCE CORPORATIONS each class of shares entitled to vote. Only shareholders of record mittee shall receive reasonable compensation and shall be reimon the date of the adoption under sub. (1) may vote. bursed for reasonable expenses in discharging their duties. They (6) CONVERSION. (a) Continuation of corporation. If the may, as reasonably necessary, employ consultants to advise them shareholders approve the plan of conversion under sub. (5), the on technical problems of the appraisal. The appraisal committee commissioner shall issue a new certificate of authority. The is- shall consider the assets and liabilities of the corporation, adjustsuance of the certificate is the act of conversion, the corporation ing liabilities to take account of the amounts of any reserves in exat once becomes a mutual and is no longer a stock corporation. cess of or below realistic estimates, the value of the marketing orThe mutual shall be deemed to have been organized at the time ganization, the value of goodwill, the going-concern value and the converted stock corporation was organized. The board shall any other factor having an influence on the value of the corporation, including, in the case of a mutual life insurance company, thereupon implement the plan of conversion. (b) Termination of contract rights. Any contractual obligation the estimated amount needed to continue to maintain dividend inconsistent with the nature of a mutual, including any obligation scales on policies under s. 632.62 (4) (b) at the same level after to issue or to redeem stock options, shall terminate upon the act conversion as before conversion. of conversion under par. (a), without compensation unless the (d) Presumption. In a proceeding under this section, any reobligation was legally binding before April 30, 1972. port adopted by an appraisal committee under par. (c) or exami(7) EXPENSES. The corporation may not pay compensation of nation report concerning the domestic mutual or its affiliate is adany kind to any person other than regular salaries to existing per- missible as evidence and the facts asserted in the reports are presonnel, in connection with the proposed conversion, other than sumed to be true. for clerical and mailing expenses, except that with the commis(4) PLAN OF CONVERSION. The board may adopt a plan of sioner’s approval payment may be made at reasonable rates for conversion, which, unless sub. (4m) applies, shall specify: printing costs and for legal and other professional fees for ser(a) The number of shares proposed to be authorized for the vices actually rendered. All expenses of the conversion, includ- new stock corporation, their par value and the price at which they ing the expenses incurred by the commissioner and the prorated will be offered to policyholders, which price may not exceed onesalaries of any insurance office staff members involved, shall be half of the median equitable share of all policyholders under par. borne by the corporation being converted. (b); History: 1971 c. 260; 1979 c. 102 s. 236 (5). (b) That each person who has been a policyholder and has