(215 ILCS 5/35) (from Ch. 73, par. 647)
(Section scheduled to be repealed on January 1, 2027)
Sec. 35.
Stock companies may become mutuals.
(1) Any domestic stock company may become a mutual company by
complying with the provisions of this Section.
(2) The board of directors shall adopt a mutualization plan and
amended articles of incorporation, which articles shall conform to the
articles required by this Code of a mutual company authorized to
transact the kind or kinds of insurance stated in the articles. The
mutualization plan and amended articles of incorporation shall be
executed in duplicate by the company by its president or vice-president
and its secretary or assistant secretary, or officers corresponding
thereto, and shall be delivered to the Director. The plan and amended
articles of incorporation delivered to the Director may be approved or
disapproved by him in the same manner as original articles of
incorporation. If the Director does not approve the plan and amended
articles, he or she shall notify the company in writing of the reasons for such
disapproval and if requested so to do, shall grant the company a
hearing.
(3) If the plan and amended articles of incorporation be approved
by the Director he or she shall place on file in his or her office one of the
duplicate copies of each of the documents, shall endorse upon the other
duplicate copies his approval thereof, and the month, day and year of
such approval, and deliver the same to the company.
(4) The plan and amended articles of incorporation shall thereupon
be submitted to and be approved by the shareholders in the same manner
as is required for the submission and approval of amendments to articles
of incorporation.
(5) After approval by the shareholders, a written or printed notice
setting forth a copy of the plan and amended articles of
incorporation, or a summary of the same, and stating the time and place
of the special meeting at which they will be considered, and the manner
of voting, shall be mailed to each policyholder of the company at least
thirty days before the date set for such meeting. In a life insurance
company each policyholder shall have one vote for each $1,000 of insurance
which on the day of the meeting has been in force
for one year or longer. In a company other than life, each policyholder
shall be entitled to one vote for each policy in force on the day of the
meeting, and upon which the premium has been paid at the time of the
meeting. A policyholder may vote in person, by proxy or by mail. The
election shall be under the supervision of not less than 3 nor more
than 5 inspectors who shall be appointed by the Director. Such
inspectors shall pass upon the qualifications of the voters, the
validity of the ballots, shall canvass the vote and certify the result
of such vote to the Director and to the company. If 2/3 of the
votes cast at the meeting are in favor of the adoption of the plan, the
said plan shall become effective. All necessary expenses incurred by the
Director or by the inspectors in connection with the vote shall be
certified to by the Director and paid by the company.
(6) The plan may provide for the acquisition by the company of
its own shares, by purchase, by gift or otherwise in the manner provided
therein. Any shares so acquired shall be held in trust for the company
and shall be assigned and transferred on the books of the company to
three individual trustees or to any trust company authorized under the
laws of this State to do a trust business, to be chosen or approved by a
majority vote of those policyholders who vote at the meeting referred to
in subsection (5) of this Section, and such trustee or trustees shall
vote the shares held by them or by it at any company meeting. Each such
trustee shall file with the company a verified acceptance of his, hers or its
appointment and a declaration that he or it will faithfully discharge
his, hers or its duties as such trustee. Any dividends or other sums acquired
or accruing to the trustees upon shares coming within their trusteeship
shall upon the termination of the trust be delivered to the company.
(7) If a shareholder of the company shall file with such company,
prior to or at the meeting of shareholders at which the plan of
mutualization is submitted to a vote, a written objection to such plan
and shall not vote in favor thereof, and such shareholder within 20
days after the plan is approved by such meeting shall make written
demand on the company for payment of the fair value of his shares as of
the day prior to the date on which such plan is approved by the
shareholders, such shareholder shall be entitled to receive prior to the
completion of the plan, upon surrender of his certificate or
certificates representing said shares, such fair value thereof. Any
shareholder who fails to make such objection or having objected fails to
make demand within the 20 day period shall be conclusively presumed
to have consented to the said plan and shall be bound by the terms
thereof.
(8) If within 30 days after the date of the written demand
mentioned in subsection (7), the value of such shares is agreed upon
between the dissenting shareholder, the company and the Director,
payment therefor shall be made within 90 days after the date of such
agreement upon the surrender of his or her certificate or certificates
representing the shares. Upon payment of the agreed value the
dissenting shareholder shall cease to have any interest in such shares
and cease to be a shareholder in the company.
(9) If, within such period of 30 days, the shareholder and the
company do not so agree, then the dissenting shareholder may within 60
days after the expiration of the 30 day period, petition the
Circuit Court of the county in which the principal office of
the company is located, to appraise the value of such shares as of the
date of the day prior to the date on which such vote was taken approving
such plan. A copy of the petition shall be delivered or mailed by
registered mail to the Director within 5 days after the filing
thereof and proof of such delivery or mailing shall be filed with the
court. The Director shall have the right to appear through the Attorney
General and be heard upon all questions and issues in the proceeding.
The practice, procedure, and judgment shall be, so far as practicable,
the same as that under the eminent domain laws of this State.
(10) The judgment shall be payable only upon and simultaneously with
the surrender to the company of the certificate or certificates
representing the shares. Upon the payment of the judgment the
dissenting shareholder shall cease to have any interest in such shares,
and cease to be a shareholder in the company. Unless the dissenting
shareholder shall file such petition within the time herein limited,
such shareholder and all persons claiming under him or her shall be
conclusively presumed to have approved and ratified the mutualization
plan, and shall be bound by the terms thereof. The right of a dissenting
shareholder to be paid the fair value of his shares as herein provided
shall cease if and when the company shall abandon the mutualization
plan.
(11) When all the shares of the Company have been acquired and
cancelled in conformity with the plan and this Section, the Director
shall issue a certificate to that effect, and the amended articles of
incorporation shall thereupon become effective and the company shall
thenceforth be a mutual company.
(12) The certificate mentioned in subsection (11) together with the
duplicate original of the amended articles of incorporation theretofore
approved by the Director shall be filed for record in the office of the
recorder where the principal office of the company is located,
within 15 days from the date of such certificate.
(Source: P.A. 83-358 .)
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