2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 121 - Fraternal Benefit Societies › § 4464. Organization

§ 4464. Organization
The organization of a society shall be governed as follows:
(1) Seven or more citizens of the United States, a majority of whom are citizens of this State, who desire to form a fraternal benefit society, may make, sign, and acknowledge before some officer, competent to take acknowledgments of deeds, articles of incorporation, in which shall be stated:
(A) The proposed corporate name of the society, which shall not so closely resemble the name of any society or insurance company as to be misleading or confusing;
(B) The purposes for which it is being formed and the mode in which its corporate powers are to be exercised. The purposes shall not include more liberal powers than are granted by this chapter, provided that any lawful, social, intellectual, educational, charitable, benevolent, moral, fraternal, or religious advantages may be set forth among the purposes of the society; and
(C) The names and residences of the incorporators and the names, residences, and official titles of all the officers, trustees, directors, or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which all the officers shall be elected by the supreme legislative or governing body, which election shall be held not later than one year from the date of the issuance of the permanent certificate.
(2) The articles of incorporation, duly certified copies of the constitution, laws, and rules, copies of all proposed forms of certificates, applications therefor, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year shall be filed with the Commissioner, who may require such further information as the Commissioner deems necessary. The bond with sureties approved by the Commissioner shall be in such amount, not less than $5,000.00 nor more than $25,000.00 as required by the Commissioner. All documents filed shall be in the English language. If the purposes of the society conform to the requirements of this chapter and all provisions of the law have been complied with, the Commissioner shall so certify, retain, and file the articles of incorporation and furnish the incorporators a preliminary certificate authorizing the society to solicit members as provided in this section.
(3) A preliminary certificate granted under the provisions of this section shall be valid for one year or for a further period, not exceeding one year, as may be authorized by the Commissioner upon cause shown, unless the 500 applicants required have been secured and the organization has been completed as provided in this section. The articles of incorporation and all other proceedings thereunder shall become null and void one year from the date of the preliminary certificate, or at the expiration of the extended period, unless the society has completed its organization and received a certificate of authority to do business as provided in this section.
(4) Upon receipt of a preliminary certificate from the Commissioner, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates as provided by its constitution and laws, and shall issue to each such applicant a receipt for the amount so collected. No society may incur any liability other than for the return of the advance premium, nor issue any certificate, nor pay, allow, or offer or promise to pay or allow, any death or disability benefit to any person until:
(A) actual bona fide applications for death benefits have been secured aggregating at least $500,000.00 on not less than 500 lives;
(B) all such applicants for death benefits shall have furnished evidence of insurability satisfactory to the society;
(C) certificates of examinations or acceptable declarations of insurability have been duly filed and approved by the chief medical examiner of the society;
(D) ten subordinate lodges or branches have been established into which the 500 applicants have been admitted;
(E) there has been submitted to the Commissioner under oath of the president or secretary, or corresponding officer of the society, a list of the applicants, giving their names, addresses, date each was admitted, name and number of the subordinate branch of which each applicant is a member, amount of benefits to be granted, and premiums therefor; and
(F) it has been shown to the Commissioner, by sworn statement of the treasurer, or corresponding officer of the society, that at least 500 applicants have each paid in cash at least one regular monthly premium as provided in this section, which premiums in the aggregate shall amount to at least $2,500.00, all of which have been credited to the fund or funds from which benefits are to be paid and no part of which may be used for expenses. The advance premiums shall be held in trust during the period of organization, and if the society has not qualified for a certificate of authority within one year, as provided in this section, the premiums shall be returned to the applicants.
(5) The Commissioner of Financial Regulation may make such examination and require such further information as he or she deems advisable. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, he or she shall issue to the society a certificate to that effect and that the society is authorized to transact business pursuant to the provisions of this chapter. The certificate shall be prima facie evidence of the existence of the society at the date of the certificate. The Commissioner of Financial Regulation shall cause a record of the certificate to be made. A certified copy of the record may be given in evidence with like effect as the original certificate.
(6) Every society shall have the power to adopt a constitution and laws for the government of the society, the admission of its members, the management of its affairs, and the fixing and readjusting of the rates of its members from time to time. It shall have the power to change, alter, add to, or amend the constitution and laws and shall have such other powers as are necessary and incidental to carrying into effect the objects and purposes of the society. (Added 1959, No. 197, § 4, eff. Nov. 22, 1959; amended 1989, No. 225 (Adj. Sess.), § 25; 1995, No. 180 (Adj. Sess.), § 38; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2021, No. 105 (Adj. Sess.), § 186, eff. July 1, 2022.)