(A) A plan of reorganization must be approved by the affirmative vote of not less than a two-thirds majority of the board of directors of the mutual insurer. The plan of reorganization approved by the board of directors shall be filed with the Director of the Department of Insurance for review and approval. At any time before the director renders a decision regarding the plan of reorganization the board of directors may modify or withdraw the plan of reorganization by the affirmative vote of not less than a two-thirds majority of the board of directors.
(B) An application to the director shall include the plan of reorganization and the following additional information:
(1) the purpose of reorganization;
(2) an analysis of the benefits and risks attendant to the proposed reorganization;
(3) a statement detailing how the plan is fair and equitable to policyholders;
(4) a copy of the proposed articles of incorporation and bylaws of the mutual insurance holding company, intermediate holding companies, and the reorganized mutual insurer specifying all membership rights;
(5) a copy of the proposed form of notice, the description of the plan of reorganization and proxy to be sent to all policyholders and a statement of the method by which that notice, description, and proxy will be distributed to all policyholders;
(6) an organization chart depicting the formal structure of the holding company and all subsidiaries and affiliates along with the estimated initial percent of ownership;
(7) a description of the number of members of the board of directors of the proposed mutual holding company required to be policyholders and how the number was determined;
(8) a statement that all of the initial shares of the voting stock of the reorganized company shall be issued to the mutual insurance holding company or an intermediate holding company and will not be pledged or encumbered;
(9) a plan for membership of future policyholders;
(10) a certification that the plan has been adopted by the vote of not less than two-thirds of the board of directors;
(11) certification by at least two-thirds of the members of the board of directors that the plan of reorganization is fair and equitable and that a fairness opinion has been obtained from either an independent actuary, an independent certified public accountant, or an independent investment banker, or from three independent actuaries from an independent actuarial firm;
(12) certification that management will not be enriched by the reorganization for aiding, promoting, or assisting in the reorganization except as set forth in the plan approved by the director;
(13) biographical affidavits for all mutual holding company officers and directors and for the reorganized stock insurer officers and directors;
(14) a description of the annual report and financials to be sent to each member;
(15) information sufficient to demonstrate the financial condition of the reorganizing insurer will not be adversely affected;
(16) information describing the holding company's plans, regarding accumulation of earnings including periodic distribution, if any, to members;
(17) an opinion from an attorney with experience in corporate tax matters who has been certified by the Commission on Continuing Legal Education and Specialization of the South Carolina Supreme Court as a specialist in taxation matters regarding potential taxes due as a result of the reorganization;
(18) a description of projected remuneration from all sources to officers and directors prior to the reorganization and a description of projected remuneration from all sources subsequent to the reorganization for all officers and directors. The plan shall contain a provision prohibiting officers and directors of the mutual insurance holding company and its subsidiaries and affiliates from purchasing or owning shares of the reorganized company's stock offering, or issuance of stock options to or for the benefit of such officers or directors for a period of six months following the first date the offering was publicly and regularly traded;
(19) terms of any proposed sale of capital stock;
(20) proposed balance sheet presentation of the mutual insurance holding company and reorganized stock insurer after reorganization;
(21) such other material as the director may require.
HISTORY: 1998 Act No. 413, Section 1.