WILLIAM DONALD SCHAEFER, Governor

Ch. 507

(2)      [It is] IS in compliance with Title 2, Subtitle 6 of the Corporations and
Associations Article; [and]

(3)      [The plan or procedure provides] PROVIDES that no part of the assets
or surplus of the nonprofit health service plan will inure directly or indirectly to any
officer or director of the corporation;

(4)      IS APPROVED BY AT LEAST TWO-THIRDS OF THE CORPORATION'S
CERTIFICATE HOLDERS WHO HAVE VOTED ON THE PLAN OR PROCEDURE:

(I)      IN PERSON, BY PROXY, OR BY MAIL; AND

(II)     PURSUANT TO THE REQUIREMENTS APPROVED BY THE
COMMISSIONER REGARDING NOTICE AND PROCEDURE; AND

(5)      ENSURES THAT THE RESULTING STOCK HEALTH INSURER WILL
POSSESS SURPLUS IN AN AMOUNT SUFFICIENT TO:

(I)      COMPLY WITH THE SURPLUS REQUIRED UNDER THIS ARTICLE
FOR A STOCK HEALTH INSURER; AND

(II)     PROVIDE FOR THE SECURITY OF THE RESULTING STOCK
HEALTH INSURER'S CERTIFICATE HOLDERS AND POLICYHOLDERS.

(c)     Any corporation that becomes a for-profit insurer under this section may not
be deemed to have abandoned its corporate status by virtue of the conversion, unless the
plan provides specifically to the contrary.

(d)     The certificate of authority, agent appointments, forms, and other filings
which are in existence at the time of the conversion shall continue in full force and effect
upon conversion if the corporation at all times remains qualified to engage in business in
this State.

(e)     All outstanding contracts of the converting corporation shall remain in full
force and effect and need not otherwise be endorsed unless ordered by the
Commissioner.

(f)      The Commissioner may conduct a hearing concerning the proposed
conversion of a nonprofit health services corporation into a for-profit STOCK HEALTH
insurer.

(G) THIS SECTION DOES NOT APPLY TO THE CONVERSION OF A
CORPORATION LICENSED UNDER THIS SUBTITLE TO A STOCK HEALTH INSURER
THAT RESULTS FROM A JUDICIAL ORDER ISSUED PURSUANT TO A REHABILITATION
OR REORGANIZATION OF THE CORPORATION UNDER SUBTITLE 10 OF THIS ARTICLE.

356AB.

(A) A CORPORATION THAT IS INCORPORATED UNDER THE LAWS OF THIS
STATE AND SUBJECT TO THIS SUBTITLE MAY CONVERT TO A MUTUAL HEALTH
INSURER SUBJECT TO THE PROVISIONS OF THIS ARTICLE UNDER A PLAN AND
PROCEDURE APPROVED BY THE COMMISSIONER.

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