1124                           LAWS OF MARYLAND                       [CH. 553

(4)   Mutualization will result in retirement of shares of the in-
surer's capital stock at a price not in excess of the fair market value
thereof as determined by competent disinterested appraisers;

(5)   The plan provides for the purchase of the shares of any
objecting stockholder in the same manner and subject to the same
applicable conditions as provided by article 23, section 73, as to
rights of nonconsenting stockholders, with respect to consolidation
or merger of private corporations;

(6)   The plan provides for definite conditions to be fulfilled by a
designated early date upon which such mutualization will be deemed
effective; and

(7)   The mutualization leaves the insurer with surplus funds
reasonably adequate for the security of its policyholders and to
enable it to continue successful in business in the states in which it
is then authorized to transact insurance business, and for the kinds of
insurance included in its certificates of authority in such states.

(b) This section shall not apply to mutualization under order of
court pursuant to rehabilitation or reorganization of an insurer
under subtitle 10.

270. Converting Mutual Insurer.

(a)   A domestic mutual insurer may become a stock insurer under
such plan and procedure as may be approved by the Commissioner
after a hearing thereon.

(b)   The Commissioner shall not approve any such plan or proce-
dure unless:

(1)   It is equitable to the insurer's members;

(2)   It is subject to approval by vote of not less than three-fourths
of the insurer's current members voting thereon in person, by proxy,
or by mail at a meeting of members called for the purpose pursuant
to such reasonable notice and procedure as may be approved by the
Commissioner; if a life insurer, right to vote may be limited to
members who hold policies other than term or group policies, and
whose policies have been in force for not less than one year;

(3)   The equity of each policyholder in the insurer is determin-
able under a fair formula approved by the Commissioner, which
such equity shall be based upon not less than the insurer's entire
surplus (after deducting contributed or borrowed surplus funds)
plus a reasonable present equity in its reserves and in all non-
admitted assets;

(4)   The policyholders entitled to participate in the purchase of
stock or distribution of assets shall include all current policyholders
and all existing persons who had been a policyholder of the insurer
within three years prior to the date such plan was submitted to the
Commissioner;

(5)   The plan gives to each policyholder of the insurer as specified
in subdivision (4) above, a preemptive right to acquire his propor-
tionate part of all of the proposed capital stock of the insurer,
within a designated reasonable period, and to apply upon the pur-
chase thereof the amount of his equity in the insurer as determined
under subdivision (3) above;