NY Ins L § 7308 (2021)
2021 New York Laws ISC - Insurance Article 73 - Conversion to Different Type of Insurer 7308 - Conversion of Domestic Reciprocal Insurers Into Stock Property/casualty Insurance Companies.

§   7308.  Conversion  of  domestic  reciprocal  insurers  into  stock property/casualty  insurance  companies.  (a)  Any  domestic  reciprocal insurer  doing business under the provisions of this article may, by the affirmative vote of its subscribers holding two-thirds of its  operating reserve  accumulations  at the date of the meeting at which the proposal to convert is voted upon, be converted into  and  licensed  as  a  stock property/casualty  insurance  company,  in the manner prescribed by this section and subject to any  other  requirements  of  law.  The  advisory committee  of  any such reciprocal insurer proposing so to convert shall cause the attorney-in-fact of such reciprocal insurer to  give  to  each subscriber  of  record  at  the close of business on the last day of the quarter year next preceding the issue  of  such  notice  not  less  than thirty  days  notice  by  mail  of  the  meeting  at  which the proposed conversion is to be voted upon and  of  a  hearing  of  the  subscribers before  the  superintendent. At such hearing or any adjournment thereof, the superintendent shall  pass  upon  the  fairness  of  the  terms  and conditions  of  the proposed conversion and of the issuance of shares of the corporation and  he  shall  approve  or  disapprove  the  same.  The provisions  of  this  chapter  relative  to a similar domestic insurance company organized to do the same kinds of insurance business shall apply to the organization and licensing of such corporation.  (b) If converted into a stock insurance corporation, subscriptions  to the  capital shares may be made, in whole or in part, by the subscribers of the reciprocal insurer, and their subscriptions may be paid in to the extent of their operating reserve accumulations by a transfer thereof or any portion thereof to such corporation. The contingent surplus  of  the reciprocal insurer accumulated pursuant to subsection (a) of section six thousand  one  hundred  five  of  this  chapter shall be included in the capital and surplus of the corporation and shares representing the  same shall  be  issued  to  existing  subscribers,  at the rate determined as provided in the next sentence for each dollar of par value of the shares of such new corporation, in proportion to their shares in the  aggregate operating  reserves at the time when the proposal to convert is adopted. The rate of payment for each dollar of par value of the  stock  of  such new  corporation  shall  be determined by agreement between the advisory committee of the reciprocal insurer and the board of  directors  of  the stock insurance company.  Every such subscriber shall be entitled in the subscription  to the capital shares of such corporation to a priority in subscribing thereto for thirty days after the opening of  the  books  of subscription in proportion to his interest in such reciprocal insurer at such date but at the rate of payment fixed by the board of directors. At the  expiration  of such thirty days the board of directors may sell and dispose of the capital shares which have not been taken  or  subscribed, as aforesaid, but at not less than the same rate of payment.  (c)   If   after   examination,  the  superintendent  finds  that  the proceedings for the conversion to a corporation of any such insurer have been regularly taken in conformity with law, and  that  the  corporation meets  with  the requirements of this chapter, he may issue a license to such insurer to do  business  under  the  provisions  of  this  chapter. Thereupon,  the  remaining  assets shall be forthwith transferred to it, and the predecessor reciprocal insurer or insurers shall cease  to  have authority to do business as such and shall be deemed extinguished. Every such  new  corporation  formed by conversion shall assume and succeed to all of the obligations and  liabilities  of  the  converting  reciprocal insurer  and  be  held  liable  to  pay and discharge all such debts and liabilities in  the  same  manner  as  if  they  had  been  incurred  or contracted  by  the  corporation,  but the subscribers of the reciprocal insurer shall continue  subject  to  all  the  liabilities,  claims  and  demands  which  shall then exist, or which may thereafter accrue against them, or any of them, by reason of any obligations incurred by  them  or in  their behalf as such subscribers before the date of conversion. Upon the  conversion  of  any  reciprocal  insurer,  dissenting  subscribers, meaning thereby subscribers who shall not within thirty days  after  the opening  of  the  books of subscription have subscribed to shares of the corporation and applied their accumulated operating reserves to  payment therefor  as provided in subsection (b) hereof, shall be entitled to the conditional  withdrawal  of  their  accumulated  operating  reserves  on deposit  with  the reciprocal insurer as of the date of conversion but a sufficient amount thereof shall be retained  by  the  corporation  as  a deposit  until  all  of the obligations incurred on its behalf have been extinguished. When all of such obligations have been paid, discharged or terminated, and the superintendent after an examination  shall  have  so certified,  the  said  subscribers'  deposits  or  the  balances thereof remaining to their credit shall be returned and released, whereupon  the powers   of  the  attorney-in-fact  relating  thereto  shall  cease  and terminate.