40-4002. Resolution by board of directors; plan of conversion; approval by commissioner and policyholders; withdrawal or amendment of plan.
40-4002
40-4002. Resolution by board of directors; plan of conversion;approval by commissioner and policyholders; withdrawal or amendment of plan.(a) A resolution shall be adopted by a 2/3 majority of the entire boardof directors of the insurer which shall state the reasons suchconversionwould benefit the insurer and be in the best interests of its policyholders.Following adoption of such resolution a detailed plan of conversion shallbe developed and shall be approved by a 2/3 majority of the entire board ofdirectors.The plan of conversion shall not be effective unless the plan has been soapproved by the board of directors.
(b) A draft of the plan of conversion may be submitted to the commissionerfor preliminary examination and comment prior to or after the adoption of theresolution described in subsection (a).
(c) After the completion of the process of preliminary examinationand comment, the plan shall be submitted to the commissionerforapproval in writing, subject to the provisions of K.S.A. 40-4004 andamendments thereto.The plan of conversion shall not be effective unless the plan has beenapproved by the commissioner.
(d) The plan shall beapprovedby 2/3 of the policyholders voting in person or by proxy at a meetingof the policyholders called for that purpose, pursuant to the bylawsof the insurer, except that if a majority of all policyholders vote inperson or by proxy, then a majority of those voting shall constitute approval,andthe plan of conversion shall not be effective unless the plan has been soapproved by the policyholders.No such proxy vote shall be effective unless the proxy specifically providesthe proxyholder with the authority to vote on the plan of conversion, andunless the proxy is dated subsequent to the day on which the plan of conversionis initially approved by the board of directors of the mutual insurer.Proxy statements relating to the planmay be mailed to the policyholders in accordance with the bylaws of theinsurer.
(e) The board of directors by a vote of not less than 2/3 ofthe entireboard may, at any time prior to the issuance of the certificate of authority pursuant toK.S.A. 40-4010 and amendments thereto:
(1) Withdraw the plan, if conversion is deemed to be no longer in thebest interests of the insurer or its policyholders; or
(2) amend the plan, except that no amendment which materially changesthe plan shall take effect unless such amendmentis approved by the commissioner. In the event of a material change to theplan, the commissioner:
(A) Shall order a hearing to be conducted in accordance with the provisionsof the Kansas administrative procedure act before approving or disapprovingsuch material change; and
(B) may require that such a change be approved by the policyholders pursuantto subsection (d).
(f) The plan shall be filed in the office of the commissionerafter having been approved as provided by subsections (a), (c) and(d).
(g) As used in this act: (1) "Policyholder" means a policyholder of themutual insurer on the day the plan of conversion is initially approved by theboard of directors of the mutual insurer; except that, with respect to amutual insurance company authorized totransact the business of insurance in the state of Kansas under the authoritygranted in article 10 or article 12 of chapter 40 of the Kansas StatutesAnnotated, "policyholder" means a policyholder of the mutual insurer on the daythe plan of conversion is initially approved by the board of directors of themutual insurer, whose policy or policies have been in effect for not less thantwo out of three years immediately prior to the date the board of directorsapproved the plan, or whose policy or policies have been in effect for at least90 days during the 365 days immediately preceding the date the board ofdirectors approved the plan if the insured is a crop hail insurancepolicyholder.
(2) "Commissioner" means the commissioner of insurance.
History: L. 1985, ch. 154, § 2;L. 1988, ch. 356, § 128;L. 1997, ch. 107, § 2; July 1.