40 PA Cons Stat § 3502 (2021)
2021 Pennsylvania Consolidated & Unconsolidated Statutes|Title 40 - INSURANCE|Chapter 35 - Medical Professional Liability Reciprocal Exchange-to-Stock Conversion|Section 3502 - Adoption of plan of conversion

§ 3502. Adoption of plan of conversion. (a) Plan of conversion.--The following shall apply:  (1) A plan of conversion may not become effective unless the reciprocal insurer seeking to convert to a stock company has adopted:  (i) by the affirmative vote of not less than two-thirds of the subscribers' advisory committee or an equivalent governing body of the reciprocal insurer; or  (ii) in the absence of a governing body, by the board of directors or governing body of the attorney for the reciprocal insurer,  a plan of conversion consistent with the requirements of sections 3503 (relating to contents of plan of conversion) and 3504 (relating to optional provisions of plan of conversion).  (2) Before approval of a plan by the commissioner, the reciprocal insurer may amend or withdraw the plan under paragraph (1) by the affirmative vote of not less than two-thirds of:  (i) its subscribers' advisory committee or an equivalent governing body of the reciprocal insurer; or  (ii) in the absence of a governing body, by the board of directors or governing body of the attorney for the reciprocal insurer.  (b) Eligible subscriber.--A person insured under a group policy that is otherwise an eligible subscriber also shall be an eligible subscriber. A person whose policy becomes effective after the adoption of the plan or the voting record date, if a later date, but before the plan's effective date is not an eligible subscriber but shall have the rights established under section 3507 (relating to rights of subscribers whose policies are issued after adoption of plan and before effective date).  (c) Documents.--The following shall apply:  (1) Before a reciprocal insurer's eligible subscribers may vote on approval of a plan, the reciprocal insurer or the attorney shall file the following documents with the commissioner within 90 days after adoption of the plan:  (i) the plan of conversion, including the independent evaluation of pro forma market value required under section 3503(d).  (ii) the form of notice required under subsection (g); (iii) the form of proxy to be solicited from eligible subscribers under subsection (h); (iv) the form of notice required under section 3508 (relating to corporate existence) to persons whose policies are issued after adoption of the plan but before its effective date;  (v) the proposed articles of incorporation and bylaws of the stock company; (vi) the acquisition of control statement, as required under section 1402 of the act of May 17, 1921 (P.L.682, No.284), known as The Insurance Company Law of 1921; and  (vii) other information as the commissioner may request. (2) Upon filing of the documents required under this subsection with the commissioner, the reciprocal insurer shall send to eligible subscribers a notice advising eligible subscribers of:  (i) the adoption and filing of the plan; (ii) the ability of subscribers to provide the commissioner and the reciprocal insurer with comments on the plan within 30 days of the date of the notice; and  (iii) the procedure for making comments. (d) Notice and approval of plan.--The commissioner shall immediately give written notice to the reciprocal insurer of a decision and, in the event of disapproval, a statement in detail of the reasons for the decision. The commissioner shall approve the plan if the commissioner finds the following:  (1) the plan complies with this chapter; (2) the plan will not prejudice the interests of the subscribers; and (3) the plan's method of allocating subscription rights is fair and equitable. (e) Experts.--At the reciprocal insurer's expense, the commissioner may retain a qualified expert not otherwise a part of the commissioner's staff to assist in reviewing the plan and the independent evaluation of the pro forma market value required under section 3503(d).  (f) Hearing.--The commissioner may order a hearing on whether the terms of the plan comply with this chapter after giving written notice to the reciprocal insurer and other interested persons, all of whom have the right to appear at the hearing.  (g) Notice of subscribers' meeting.--The following shall apply:  (1) Eligible subscribers shall be sent notice of the subscribers' meeting to vote upon the plan. The notice must:  (i) briefly but fairly describe the proposed conversion plan; (ii) inform the subscriber of the subscriber's right to vote upon the plan; and (iii) be sent to each subscriber's last known address, as shown on the reciprocal insurer's records, at least 30 days before the time fixed for the meeting.  (2) If the reciprocal insurer holds an annual meeting of subscribers and the meeting to vote upon the plan is held at the annual meeting, only a combined notice of meeting is required.  (h) Voting.--The plan shall be voted upon by eligible subscribers and shall be deemed approved upon receiving the affirmative vote of at least two-thirds of the votes cast by eligible subscribers. Unless the governing documents of the reciprocal insurer establish a different date, the record date for determining subscribers eligible to vote on the plan shall be the date of adoption of the plan or other date set forth in the plan that shall be no less than 30 nor more than 90 days before the date of the meeting. Eligible subscribers entitled to vote upon the proposed plan may vote in person or by proxy. Unless the governing documents of the reciprocal insurer provide otherwise, an eligible subscriber may cast one vote.  (i) Approval of plan.--A merger of the reciprocal insurer with and into the stock company must be approved at the meeting of the subscribers called for the purpose of approving the plan of conversion and shall require for approval or ratification the affirmative vote of at least two-thirds of the votes cast by eligible subscribers.  (j) Documents to be filed following approval.--Within 30 days after the eligible subscribers approved the plan, the stock company shall file the following documents with the commissioner:  (1) the minutes of the meeting of the eligible subscribers at which the plan was approved; (2) the articles of incorporation and bylaws of the stock company; and (3) articles of merger for the merger of the reciprocal insurer with and into the stock company. The plan shall be consummated upon the filing of the articles of merger.