38.2-4204.1 - Commission approval of mergers of nonstock corporations operating prepaid hospital, medical and surgical services plans.
§ 38.2-4204.1. Commission approval of mergers of nonstock corporationsoperating prepaid hospital, medical and surgical services plans.
A. Except as otherwise provided in this chapter, Article 11 (§ 13.1-894 etseq.) of Chapter 10 of Title 13.1 shall apply to mergers involvingcorporations licensed under this chapter.
B. Before any joint agreement for the merger of a corporation licensed underthis chapter is submitted to the members, it shall first be submitted to andapproved by the Commission. The Commission shall approve the agreement,unless, after giving notice and opportunity to be heard, it determines that:
1. After the merger, the new or surviving corporation would not be able tosatisfy the requirements of this chapter for the issuance of a license;
2. The effect of the merger would lessen competition substantially or tend tocreate a monopoly in insurance, prepaid hospital, medical and surgicalservices plans, or health care benefit plans in this Commonwealth;
3. The financial condition of any party to the merger might jeopardize thefinancial stability of the new or surviving corporation, or prejudice theinterest of the subscribers;
4. Any plans or proposals of the new or surviving corporation to liquidatethe new or surviving corporation, sell its assets or merge it with anyperson, or to make any other material change in its business or corporatestructure or management, are unfair and unreasonable to the subscribers andnot in the public interest;
5. The competence, experience, and integrity of those persons who wouldcontrol the operation of the new or surviving corporation are such that itwould not be in the interest of the subscribers and of the public to permitthe merger; or
6. After the change of control, the new or surviving corporation's surplus tosubscribers would not be reasonable in relation to its outstandingliabilities or adequate to its financial needs.
C. The provisions of subsection B notwithstanding, the Commission has theauthority to merge two nonstock corporations licensed under this chapterwhere it finds that (i) one of the corporations is insolvent or is in suchcondition that its further transaction of business in this Commonwealth ishazardous to subscribers and the public, (ii) that the merger of suchnonstock corporation into another nonstock corporation licensed under thischapter is desirable for the protection of its subscribers, and that suchmerger of such nonstock corporation is in the public interest, and (iii) thatan emergency exists, and if the board of directors of the insolvent orfinancially hazardous nonstock corporation to be merged approves a plan ofmerger of such nonstock corporation into another nonstock corporationlicensed under this chapter, compliance with the requirements of § 13.1-895shall be dispensed with as to such nonstock corporation and the approval bythe Commission of such plan of merger shall be the equivalent of approval oftwo-thirds of the members for all purposes of Article 11 (§ 13.1-894 et seq.)of Chapter 10 of Title 13.1. The Commission shall provide that prompt noticeof its findings, and plan of merger be sent to the members of record of suchcorporation for the purpose of providing such members an opportunity tochallenge the findings of the Commission and the plan of merger. TheCommission's findings and plan of merger shall become final if a hearingbefore the Commission is not requested by any member in a written requestdelivered to the Commission within fifteen days after the notice specifiedherein is sent.
(1986, c. 562.)