reglab/statecodes huggingface dataset:
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 824 - Merger and Consolidation of Stock Insurance Corporations › Subchapter C. Effect of Merger or Consolidation › Section 824.103. Retirement and Cancellation of Treasury Shares

Sec. 824.103.  RETIREMENT AND CANCELLATION OF TREASURY SHARES.  (a)  After a merger or consolidation is completed, any shares of the new or surviving corporation acquired by that corporation as a result of distribution of shares to the shareholders of another corporation that is merged or consolidated or as a result of purchase of shares of dissenting shareholders, may be held as treasury shares until the first anniversary of the date on which the merger or consolidation takes effect.
(b)  After the period during which shares described by Subsection (a) are held as treasury shares, the corporation shall retire and cancel those shares by proper amendments to its charter if the shares have not previously been reissued.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 824 - Merger and Consolidation of Stock Insurance Corporations › Subchapter C. Effect of Merger or Consolidation › Section 824.104. Effect on Antitrust Laws

Sec. 824.104.  EFFECT ON ANTITRUST LAWS.  This chapter does not affect in any manner the antitrust laws of this state.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 824 - Merger and Consolidation of Stock Insurance Corporations › Subchapter D. Merger or Consolidation of Life Insurance Corporations › Section 824.151. Purchase of Outstanding Shares by Life Insurance Corporation

Sec. 824.151.  PURCHASE OF OUTSTANDING SHARES BY LIFE INSURANCE CORPORATION.  (a)  A life insurance corporation may purchase or contract to purchase all or part of the outstanding shares of another life insurance corporation for purposes of merger or consolidation.
(b)  Except as provided by Section 824.152, the provisions of Subchapter D, Chapter 425, that limit investments in the corporate stock of another corporation do not apply to a purchase made under this section.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 2E.013, eff. April 1, 2009.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter A. General Provisions › Section 825.001. Definitions

Sec. 825.001.  DEFINITIONS.  In this chapter:
(1)  "Converting company" means a stock insurance company that converts to a mutual insurance company under this chapter.
(2)  "Resulting company" means a mutual insurance company to which a stock insurance company converts under this chapter.
(3)  "Stock acquisition plan" means a converting company's plan for the acquisition of shares of its capital stock.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter A. General Provisions › Section 825.002. Authority to Convert to Mutual Insurance Company

Sec. 825.002.  AUTHORITY TO CONVERT TO MUTUAL INSURANCE COMPANY.  (a)  A domestic stock insurance company, as defined by law, may convert to a mutual insurance company.
(b)  To convert to a mutual insurance company, a stock insurance company must implement a plan for the acquisition of shares of its capital stock.
(c)  In implementing a stock acquisition plan under this chapter, a converting company may acquire shares of its stock by gift, bequest, or purchase.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter B. Stock Acquisition Plan › Section 825.051. Contents of Stock Acquisition Plan

Sec. 825.051.  CONTENTS OF STOCK ACQUISITION PLAN.  (a)  A stock acquisition plan must:
(1)  be adopted by a vote of a majority of the directors of the corporation at a directors' meeting called for that purpose;
(2)  be approved by a vote of shareholders representing a majority of the capital stock at a meeting of shareholders called for that purpose;
(3)  enable each shareholder to dispose of the same proportion of the shareholder's holdings at the same price per share and on the same terms as any other shareholder;
(4)  be approved by a vote of the majority of the policyholders eligible under Section 825.054 to participate at a meeting of the policyholders called for that purpose;  and
(5)  be submitted to the commissioner and approved by the commissioner in writing.
(b)  If the purchase price for the company's acquisition of shares of its capital stock is not set by the stock acquisition plan, each payment for those shares is subject to the commissioner's approval.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter B. Stock Acquisition Plan › Section 825.052. Sufficient Assets Required

Sec. 825.052.  SUFFICIENT ASSETS REQUIRED.  The commissioner may not approve a stock acquisition plan or a payment for stock under Section 825.051(b) unless, at the time of the approval, the company has assets equal to at least $500,000 more than the entire liability of the company, including the net values of its outstanding contracts computed as required by law, and all funds and contingent reserves, after deducting:
(1)  the aggregate amount allocated by the plan for the acquisition of any part or all of its capital stock, to be paid in cash or other assets of the company;  and
(2)  the amount of any payment not set by the plan and subject to separate approval by the commissioner after the approval of the plan.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter B. Stock Acquisition Plan › Section 825.053. Stock Acquisition Plan Approval

Sec. 825.053.  STOCK ACQUISITION PLAN APPROVAL.  A policyholders' meeting for approval of a stock acquisition plan may not be called until Sections 825.051(a)(1) and (2) are satisfied.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter B. Stock Acquisition Plan › Section 825.054. Policyholder Eligibility

Sec. 825.054.  POLICYHOLDER ELIGIBILITY.  To be eligible to participate in a policyholders' meeting held to approve a stock acquisition plan, a policyholder must have insurance coverage issued by the converting company that:
(1)  is in the amount of at least $1,000;
(2)  is in force on the date of the policyholders' meeting;  and
(3)  has been in force for at least one year before the date of the policyholders' meeting.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter B. Stock Acquisition Plan › Section 825.055. Policyholders' Meeting

Sec. 825.055.  POLICYHOLDERS' MEETING.  (a)  A converting company shall give notice of the policyholders' meeting to each eligible policyholder.
(b)  The notice must be mailed from the home office of the converting company not later than the 31st day before the scheduled date of the meeting in a sealed envelope, postage prepaid, to the policyholder at the policyholder's last known mailing address.
(c)  The policyholders' meeting shall be conducted in the manner provided by the stock acquisition plan.
(d)  The commissioner shall supervise and direct the procedure of the policyholders' meeting.  The converting company shall pay all necessary expenses incurred by the commissioner as certified by the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter B. Stock Acquisition Plan › Section 825.056. Policyholder Voting

Sec. 825.056.  POLICYHOLDER VOTING.  (a)  A policyholder may vote in person, by proxy, or by mail.  All votes must be cast by ballot.
(b)  The commissioner shall appoint an adequate number of inspectors to conduct the voting at the policyholders' meeting.
(c)  The inspectors determine all questions concerning the verification of the ballots, the validity of the ballots, the qualification of the voters, and the canvass of the vote and shall certify the results to the commissioner and the converting company.
(d)  An inspector shall act under rules prescribed by the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter C. Acquisition of Shares › Section 825.101. Issuance of Annuity Bonds in Payment of Stock

Sec. 825.101.  ISSUANCE OF ANNUITY BONDS IN PAYMENT OF STOCK.  (a)  A stock acquisition plan may provide that all or part of the purchase price of any part or all of the shares of stock of a converting company that are acquired by the company under the plan may be paid by the company through the issuance of annuity bonds payable in annual amounts and for the term provided by the plan.
(b)  Each annuity bond issued under Subsection (a) must expressly provide, on the face of the bond, that the bond is payable only out of the surplus of the converting company remaining after all liabilities, including reserves, are provided for and is not otherwise a liability or claim against the converting company or any of its assets, as provided by Section 882.253.
(c)  Not more than three-fourths of the net earnings of the converting company during any calendar year may be used or applied to the payment of the annuity bonds.
(d)  On the approval of the commissioner, the company issuing the annuity bonds or any life insurance company may invest its funds in the annuity bonds.  The investment in the annuity bonds may not at any time exceed 10 percent of the company's total admitted assets.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter C. Acquisition of Shares › Section 825.102. Acquisition in Trust

Sec. 825.102.  ACQUISITION IN TRUST.  (a)  Until all of the shares of a converting company are acquired, any shares acquired under the stock acquisition plan shall be held in trust for the policyholders of the converting company by three trustees appointed as provided by the stock acquisition plan.
(b)  Each appointee must file with the converting company a verified acceptance of the appointment and a declaration that the appointee will faithfully discharge the appointee's duties.
(c)  The shares shall be assigned and transferred on the books of the converting company to the trustees.  The trustees shall vote the shares at each meeting at which shareholders are entitled to vote, until all the capital stock of the converting company is canceled under Section 825.104.
(d)  After paying the necessary expenses of executing the trust, the trustees shall immediately pay all dividends and other amounts received on the shares of stock acquired under Section 825.101 to the converting company for the benefit of those who are or become policyholders of the resulting company entitled to participate in the profits of the resulting company.
(e)  All amounts received by the converting company under Subsection (d) shall be added to the surplus earned by the resulting company and accordingly are apportionable as a part of the surplus among the resulting company's policyholders.
(f)  A vacancy among the trustees shall be filled as provided by the stock acquisition plan.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter C. Acquisition of Shares › Section 825.103. Distribution of Dividends

Sec. 825.103.  DISTRIBUTION OF DIVIDENDS.  After conversion, the converting company shall annually distribute among its policyholders, under terms approved by the commissioner, dividends or earnings accruing to the converting company as the result of the acquisition of shares of the converting company's stock under this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 825 - Conversion of Stock Insurance Company to Mutual Insurance Company › Subchapter C. Acquisition of Shares › Section 825.104. Conversion Complete on Cancellation of Stock; Application of Certain Laws

Sec. 825.104.  CONVERSION COMPLETE ON CANCELLATION OF STOCK;  APPLICATION OF CERTAIN LAWS.  (a)  When the converting company acquires all of its capital stock and the purchase price for that stock, including any annuity bond issued for the purchase of the stock, is paid in full, the stock shall be canceled.
(b)  On cancellation of the stock, the converting company becomes a mutual insurance company without capital stock and is subject to the laws of this state governing mutual insurance companies.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter A. General Provisions › Section 826.001. Definitions

Sec. 826.001.  DEFINITIONS.  In this chapter:
(1)  "Conversion plan" means a plan adopted under this chapter to convert a mutual insurance company into a stock insurance company.
(2)  "Converting company" means a domestic mutual insurance company that is converting under this chapter into a domestic stock insurance company.
(3)  "Eligible member" means a member of a converting company whose policy is in force on the date that the company's board of directors adopts a conversion plan.  The term does not include a person insured under a group policy.
(4)  "Mutual insurance company" means a domestic mutual insurance company.
(5)  "Participating policy" means a policy issued by a mutual insurance company that grants a holder the right to receive declared dividends.
(6)  "Resulting company" means a domestic stock insurance company that has converted under this chapter from a domestic mutual insurance company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter A. General Provisions › Section 826.002. Authority to Convert to Stock Insurance Company

Sec. 826.002.  AUTHORITY TO CONVERT TO STOCK INSURANCE COMPANY.  (a)  A mutual insurance company may convert to a stock insurance company.
(b)  A converting company may not engage in the business of insurance as a stock insurance company until it complies with the requirements of this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter A. General Provisions › Section 826.003. Rights and Privileges of Resulting Company; Laws Applicable

Sec. 826.003.  RIGHTS AND PRIVILEGES OF RESULTING COMPANY;  LAWS APPLICABLE.  Except as provided by this chapter, a resulting company:
(1)  may exercise only the rights and privileges of a stock insurance company;  and
(2)  is subject to:
(A)  all of the requirements and rules imposed on stock insurance companies organized under this code;  and
(B)  the laws of this state relating to the regulation or supervision of insurance companies.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter A. General Provisions › Section 826.004. Certain Conversions Prohibited

Sec. 826.004.  CERTAIN CONVERSIONS PROHIBITED.  A mutual insurance company may not convert to a stock insurance company under this chapter if, as a direct result of the conversion, any affiliate or other person acquires control of the resulting company, unless that affiliate or person complies with Section 823.154.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter A. General Provisions › Section 826.005. Corporate Existence

Sec. 826.005.  CORPORATE EXISTENCE.  (a)  On the effective date of a conversion under this chapter:
(1)  the corporate existence of the converting company continues in the resulting company;
(2)  all assets, rights, franchises, and interests of the converting company in and to property and any accompanying thing in action are vested in the resulting company without a deed or transfer;  and
(3)  the resulting company assumes all the obligations and liabilities of the converting company.
(b)  Except as otherwise specified by the conversion plan, the directors and officers of the converting company serving on the effective date of the conversion serve as directors and officers of the resulting company until new directors and officers are elected under the articles of incorporation and bylaws of the resulting company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter B. Conversion Plan Adoption and Requirements › Section 826.051. Plan Adoption

Sec. 826.051.  PLAN ADOPTION.  (a)  To convert to a stock insurance company a mutual insurance company must adopt, by the affirmative vote of at least two-thirds of the members of its board of directors, a conversion plan consistent with this chapter.
(b)  For a conversion plan to take effect:
(1)  the commissioner must approve the conversion plan;  and
(2)  the eligible members must approve the conversion plan and adopt the amended or restated articles of incorporation of the resulting company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter B. Conversion Plan Adoption and Requirements › Section 826.052. General Requirements; Effect of Conversion on Policies

Sec. 826.052.  GENERAL REQUIREMENTS;  EFFECT OF CONVERSION ON POLICIES.  (a)  Each conversion plan must include the provisions required by this chapter.
(b)  Each policy in effect on the effective date of the conversion remains in effect under the terms of that policy, except that the following rights, to the extent they existed in the converting company, are extinguished on the effective date of the conversion:
(1)  any voting rights of policyholders;
(2)  except as provided by Subsection (c), a right to share in the surplus or profits of the converting company;  and
(3)  any assessment provisions.
(c)  The holder of a participating policy in effect on the effective date of the conversion continues to have a right to receive dividends as provided by the participating policy.
(d)  On the renewal date of a participating policy, the resulting company may issue to the insured a nonparticipating policy as a substitute for the participating policy, unless the participating policy is:
(1)  a guaranteed renewable accident and health policy;  or
(2)  a guaranteed renewable, noncancellable accident and health policy.
(e)  All the costs and expenses connected with a conversion plan shall be paid or reimbursed by the converting company or the resulting company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter B. Conversion Plan Adoption and Requirements › Section 826.053. Sale of Capital Stock

Sec. 826.053.  SALE OF CAPITAL STOCK.  A conversion plan must provide that shares of capital stock of the resulting company shall be sold in a private placement, public offering, or an alternative method approved by the commissioner unless the shares are:
(1)  sold or distributed to a holder of surplus notes of the converting company;  or
(2)  subscribed to by:
(A)  a tax-qualified employee benefit plan under Section 826.059;
(B)  a director or officer under Section 826.056(b);  or
(C)  an eligible member exercising subscription rights under Section 826.058.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter B. Conversion Plan Adoption and Requirements › Section 826.054. Purchase Price of Capital Stock

Sec. 826.054.  PURCHASE PRICE OF CAPITAL STOCK.  (a)  A conversion plan must set the total price of the capital stock in an amount equal to the estimated pro forma market value of the resulting company based on an independent valuation by a qualified expert, giving consideration to the amount of capital that the board of directors considers necessary to be raised by the company.  The pro forma market value may be the value estimated to be necessary to attract full subscription for the shares, as indicated by the independent valuation, and may be stated as a range of values.
(b)  The conversion plan may set the purchase price for a share of capital stock at any reasonable amount.  The price per share is not required to be the same for each class of purchaser.  However, eligible members purchasing stock under subscription rights received under Section 826.058 may purchase shares at the lowest available price under the plan.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter B. Conversion Plan Adoption and Requirements › Section 826.055. Limitation on Acquisition of Capital Stock

Sec. 826.055.  LIMITATION ON ACQUISITION OF CAPITAL STOCK.  (a)  The conversion plan must provide that a person or group of persons acting in concert may not acquire, in the public or private offering or through the exercise of subscription rights, more than 10 percent of the capital stock of the resulting company except with the approval of the commissioner.
(b)  This section does not apply to an entity that purchases 100 percent of the capital stock of the resulting company as part of the conversion plan approved by the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter B. Conversion Plan Adoption and Requirements › Section 826.056. Directors and Officers

Sec. 826.056.  DIRECTORS AND OFFICERS.  (a)  Except as otherwise provided by this section, the conversion plan must provide that a director or officer of the converting company, or a person acting in concert with a director or officer, may not acquire, without the permission of the commissioner, any capital stock of the resulting company or the stock of another corporation that is participating in the conversion plan before the third anniversary of the effective date of the conversion.  This subsection does not prohibit a director or officer from:
(1)  acquiring capital stock through a broker-dealer;
(2)  making purchases through the exercise of subscription rights received under the conversion plan;  or
(3)  participating in a stock benefit plan permitted by Section 826.059 or approved by the eligible members under Section 826.107.
(b)  A conversion plan may provide that the directors and officers of the converting company may receive, without payment, nontransferable subscription rights to purchase capital stock of the resulting company or the stock of another corporation that is participating in the conversion plan.
(c)  The aggregate number of shares that may be purchased by directors and officers under Subsection (b) may not exceed:
(1)  35 percent of the total number of shares to be issued for the resulting company if the total assets of the converting company are less than $50 million;  or
(2)  25 percent of the total number of shares to be issued for the resulting company if the total assets of the converting company are more than $500 million.
(d)  For converting companies with total assets between $50 million and $500 million, inclusive, the maximum percentage of the total number of shares that may be purchased shall be interpolated from amounts provided under Subsection (c).
(e)  A conversion plan must provide that a director or officer of the converting company may not sell stock purchased under the conversion plan before the first anniversary of the effective date of the conversion.
(f)  Notwithstanding Subsection (e), a conversion plan may provide for the purchase or redemption of stock in the event that a director or officer is no longer associated with the resulting company during the period described by Subsection (e).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter B. Conversion Plan Adoption and Requirements › Section 826.057. Rights of Holder of Surplus Notes

Sec. 826.057.  RIGHTS OF HOLDER OF SURPLUS NOTES.  A conversion plan must provide that any rights of a holder of a surplus note to participate in the conversion are governed by the terms of the surplus note.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter B. Conversion Plan Adoption and Requirements › Section 826.058. Subscription Rights; General Provisions

Sec. 826.058.  SUBSCRIPTION RIGHTS;  GENERAL PROVISIONS.  (a)  Except for an alternate conversion plan adopted under Section 826.061, each conversion plan must specify the subscription rights of eligible members.
(b)  The conversion plan must provide that:
(1)  each eligible member is to receive, without payment by the member, nontransferable subscription rights to purchase a portion of the capital stock of the resulting company;  and
(2)  in the aggregate, all eligible members have the right, before the right of any other party, to purchase 100 percent of the capital stock of the resulting company after provision for:
(A)  capital stock required to be sold or distributed to the holders of surplus notes, if any;
(B)  capital stock purchased by a stock benefit plan as permitted by Section 826.059;  and
(C)  capital stock acquired by the directors and officers, as permitted by Section 826.056(b).
(c)  As an alternative to subscription rights in the resulting company, the conversion plan may provide that each eligible member is to receive, without payment by the member, nontransferable subscription rights to purchase a portion of the capital stock of:
(1)  a corporation organized for the purpose of purchasing and holding all the stock of the resulting company;
(2)  a stock insurance company owned by the converting company into which the converting company is to be merged;  or
(3)  an unaffiliated stock insurance company or other corporation that is to purchase all the stock of the resulting company.
(d)  The conversion plan must provide that the subscription rights are allocated in whole shares among the eligible members using a fair and equitable formula.  The formula may consider that the different classes of policies of the eligible members contributed to the surplus of the converting company or any other factors that may be fair or equitable as determined by the board of directors.
(e)  The conversion plan must provide a fair and equitable method for allocating shares of capital stock in the event of an oversubscription to shares by eligible members exercising subscription rights under this section.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter B. Conversion Plan Adoption and Requirements › Section 826.059. Subscription Rights; Tax-Qualified Employee Benefit Plan

Sec. 826.059.  SUBSCRIPTION RIGHTS;  TAX-QUALIFIED EMPLOYEE BENEFIT PLAN.  The conversion plan may allocate to a tax-qualified employee benefit plan nontransferable subscription rights to purchase not more than 10 percent of the capital stock of the resulting company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter B. Conversion Plan Adoption and Requirements › Section 826.060. Liquidation Account

Sec. 826.060.  LIQUIDATION ACCOUNT.  (a)  The conversion plan may provide for the creation of a liquidation account for the benefit of members in the event of a voluntary liquidation after the conversion.
(b)  The liquidation account must be in an amount equal to the surplus of the converting company, exclusive of the principal amount of any surplus note, on the last day of the quarter preceding the date the conversion plan is adopted.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter B. Conversion Plan Adoption and Requirements › Section 826.061. Alternate Conversion Plan

Sec. 826.061.  ALTERNATE CONVERSION PLAN.  (a)  The board of directors may adopt a conversion plan that does not rely in whole or in part on the issuance of nontransferable subscription rights to members to purchase stock of the resulting company if the commissioner determines that the plan:
(1)  complies with this chapter;
(2)  is fair and equitable;  and
(3)  permits the resulting company to satisfy the requirements in effect on the date of the determination for a certificate of authority applicable to a domestic stock insurance company.
(b)  The conversion plan may:
(1)  include the merger of a domestic mutual insurance company with a domestic or foreign stock insurance company;
(2)  provide for issuing stock, cash, or other consideration to members instead of subscription rights;
(3)  provide for the formation of a mutual holding company under Subchapter E;  or
(4)  establish another plan containing other provisions approved by the commissioner.
(c)  The commissioner may retain, at the converting company's expense, a qualified expert who is not a member of the commissioner's staff to assist in reviewing whether the conversion plan meets the requirements for approval by the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter C. Adoption of Conversion Plan › Section 826.101. Plan Information Filed With Commissioner; Commissioner Powers and Duties

Sec. 826.101.  PLAN INFORMATION FILED WITH COMMISSIONER;  COMMISSIONER POWERS AND DUTIES.  Not later than the 90th day after the date on which a converting company's board of directors adopts a conversion plan, the company shall file with the commissioner:
(1)  a copy of the documents relating to the conversion plan, including the valuation required by Section 826.054(a);
(2)  the form of notice required by Section 826.104;
(3)  the form of proxy to be solicited from eligible members under Section 826.107(a);
(4)  the form of notice required by Section 826.151 to persons whose policies are issued after adoption of the conversion plan but before the effective date of the conversion plan;
(5)  the proposed amended or restated articles of incorporation of the resulting company;
(6)  a statement regarding acquisition of control, if applicable, as required by Chapter 823;  and
(7)  any other information requested by the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter C. Adoption of Conversion Plan › Section 826.102. Approval of Plan by Commissioner

Sec. 826.102.  APPROVAL OF PLAN BY COMMISSIONER.  (a)  The commissioner shall approve a conversion plan if the commissioner determines that:
(1)  the plan complies with this chapter;
(2)  the plan's method of allocating subscription rights or other value is fair and equitable;  and
(3)  the resulting company would satisfy the requirements applicable to a domestic stock insurance company for a certificate of authority on the date of the determination.
(b)  Except as otherwise provided by this section, the commissioner shall approve or disapprove a conversion plan not later than the 60th day after the first day on which all the documents required under Section 826.101 are filed with the commissioner.
(c)  The commissioner may extend the time for decision by an additional 30 days on written notice to the converting company.  Except as provided under Subsection (e), the commissioner may not extend the time for decision beyond that 30-day period.
(d)  The commissioner shall immediately give written notice to the converting company of the commissioner's decision and, if the commissioner disapproves the plan, a detailed statement of the reasons for the disapproval.
(e)  The commissioner may retain, at the mutual insurance company's expense, a qualified expert who is not a member of the commissioner's staff to assist the commissioner in reviewing the conversion plan and the valuation required under Section 826.054(a).  If the commissioner retains a qualified expert under this subsection, the commissioner may extend the period for decision by an additional 60 days beyond the initial 60-day period.
(f)  After giving written notice to the converting company and other interested persons, the commissioner may hold a hearing on whether the conversion plan complies with this chapter.  The company and any other interested person have the right to appear at the hearing.  Notice to interested persons who have not filed an appearance in the matter may be made through publication in the Texas Register.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter C. Adoption of Conversion Plan › Section 826.103. Amendments; Withdrawal of Plan

Sec. 826.103.  AMENDMENTS;  WITHDRAWAL OF PLAN.  Before a conversion plan takes effect, a converting company may amend or withdraw the plan by the affirmative vote of at least two-thirds of the members of its board of directors.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter C. Adoption of Conversion Plan › Section 826.104. Notice to Eligible Members; Comments

Sec. 826.104.  NOTICE TO ELIGIBLE MEMBERS;  COMMENTS.  (a)  Not later than the 10th business day after the date of filing with the commissioner the documents required under Section 826.101, the converting company shall send to each eligible member a notice advising the member of:
(1)  the adoption and filing of the conversion plan;  and
(2)  the member's right to comment on the plan to the commissioner and the converting company.
(b)  The notice must include a description of the procedure to be used in making comments.  An eligible member who elects to make comments must make the comments in writing not later than the 30th day after the date on which the notice is sent.
(c)  Not later than the 60th day after the date of the commissioner's approval of the plan, the converting company shall send to each eligible member notice of the members' meeting to vote on the conversion plan.  The notice must be sent to the member's last known address, as shown on the converting company's records, before the 30th day preceding the date set for the meeting.  The notice must:
(1)  briefly but fairly describe the proposed conversion plan;  and
(2)  inform the member of the member's right to vote on the conversion plan.
(d)  If the meeting to vote on the conversion plan is held during the converting company's annual meeting of policyholders, a combined meeting notice satisfies the requirements of this section.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter C. Adoption of Conversion Plan › Section 826.105. Substantial Compliance With Notice Requirements

Sec. 826.105.  SUBSTANTIAL COMPLIANCE WITH NOTICE REQUIREMENTS.  If the converting company in good faith substantially complies with the notice requirements of this chapter, the company's failure to send a member the required notice does not impair the validity of an action taken under this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter C. Adoption of Conversion Plan › Section 826.106. Insolvent Converting Company; Notice Requirements

Sec. 826.106.  INSOLVENT CONVERTING COMPANY;  NOTICE REQUIREMENTS.  If a converting company is insolvent or, in the judgment of the commissioner, is in hazardous financial condition, its board of directors, by a majority vote, may request in its submission to the commissioner a waiver of the requirements for notice to and approval of the proposed conversion by eligible members.  The request must specify:
(1)  the method and basis for the issuance of the resulting company's shares of its capital stock to an independent party in connection with an investment by the independent party in an amount sufficient to restore the resulting company to a sound financial condition;  and
(2)  that the conversion is to be accomplished without payment of consideration to past, present, or future policyholders if the commissioner determines that the value of the converting company is insufficient to justify that payment.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
Sec. 826.107.  ELECTION;  APPROVAL OF PLAN;  ADOPTION OF AMENDED OR RESTATED ARTICLES OF INCORPORATION.  (a)  At a meeting convened to consider the conversion plan, an eligible member entitled to vote on the proposed conversion plan may vote in person or by proxy.  The number of votes each eligible member may cast is determined by the converting company's bylaws.  If the bylaws do not contain an applicable provision, each member may cast one vote.  Before the eligible members may vote on approval of a conversion plan, the converting company must comply with Sections 826.101 and 826.102.
(b)  At the meeting held to vote on the conversion plan, the eligible members shall also consider the adoption of amended or restated articles of incorporation.
(c)  Adoption of the conversion plan or adoption of amended articles of incorporation requires the affirmative vote of at least two-thirds of the votes cast by eligible members.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter C. Adoption of Conversion Plan › Section 826.108. Filing of Minutes, Articles of Incorporation, and Bylaws; Effective Date of Conversion

Sec. 826.108.  FILING OF MINUTES, ARTICLES OF INCORPORATION, AND BYLAWS;  EFFECTIVE DATE OF CONVERSION.  (a)  Not later than the 30th day after the date on which the eligible members approve the conversion plan, the converting company shall file with the commissioner:
(1)  the minutes of the meeting at which the plan was approved;  and
(2)  the amended or restated articles of incorporation and bylaws of the resulting company.
(b)  A conversion plan takes effect on the date that the amended or restated articles of incorporation are filed with the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter C. Adoption of Conversion Plan › Section 826.109. Conflict of Interest

Sec. 826.109.  CONFLICT OF INTEREST.  (a)  Except as provided by a conversion plan approved by the commissioner or this section, a director, officer, agent, or employee of a converting company may not receive a fee, commission, or other consideration, other than that person's usual salary or compensation, for aiding, promoting, or assisting in a conversion under this chapter.
(b)  This section does not prohibit the payment of reasonable fees and compensation to an attorney, accountant, or actuary for professional services performed by that person, even if the person is also a director or officer of the converting company.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter C. Adoption of Conversion Plan › Section 826.110. Limitation on Actions

Sec. 826.110.  LIMITATION ON ACTIONS.  An action challenging the validity of or arising out of acts taken or proposed to be taken regarding a conversion plan under this chapter must be commenced not later than the 30th day after the effective date of the conversion plan.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.
2023 Texas Statutes › Insurance Code › Title 6 - Organization of Insurers and Related Entities › Subtitle B - Organization of Regulated Entities › Chapter 826 - Conversion of Mutual Insurance Company to Stock Insurance Company › Subchapter D. Rights of Members on Conversion › Section 826.151. Rights of Members Whose Policies Are Issued After Adoption of Conversion Plan but Before Effective Date

Sec. 826.151.  RIGHTS OF MEMBERS WHOSE POLICIES ARE ISSUED AFTER ADOPTION OF CONVERSION PLAN BUT BEFORE EFFECTIVE DATE.  (a)  On issuance of a policy after a conversion plan has been adopted by the board of directors but before the effective date of the conversion plan, the converting company shall send to each member to whom a policy is issued a written notice regarding the conversion plan.
(b)  Except as provided by Subsection (d), a member of an accident and health insurance company entitled to notice under Subsection (a) is entitled to rescind the member's policy and receive a full refund of any amount paid for the policy not later than the 10th day after the date on which the notice is received.
(c)  Except as provided by Subsection (d), each member insured under a property or casualty insurance policy is entitled to notice under Subsection (a) and shall be advised of the member's right to:
(1)  cancel the policy;  and
(2)  receive a pro rata refund of unearned premiums.
(d)  A member who has made or filed a claim under the insurance policy is not entitled to a refund under Subsection (b) or (c).  A member who has exercised a right provided by Subsection (b) or (c) may not make or file a claim under the insurance policy.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.