Ch. 36                                          1995 LAWS OF MARYLAND

THE COMMISSIONER MAY NOT APPROVE A PLAN OR PROCEDURE FOR
MUTUALIZATION UNLESS:

(1)      THE PLAN OR PROCEDURE IS EQUITABLE TO STOCKHOLDERS AND
POLICYHOLDERS;

(2)      THE PLAN IS SUBJECT TO APPROVAL BY VOTE OF THE HOLDERS OF
AT LEAST THREE-FOURTHS OF THE INSURER'S OUTSTANDING CAPITAL STOCK WITH
VOTING RIGHTS AND BY VOTE OF AT LEAST TWO-THIRDS OF THE INSURER'S
POLICYHOLDERS WHO VOTE ON THE PLAN IN PERSON, BY PROXY, OR BY MAIL
UNDER THE NOTICE AND PROCEDURE APPROVED BY THE COMMISSIONER;

(3)      FOR A LIFE INSURER, THE RIGHT TO VOTE UNDER ITEM (2) OF THIS
SUBSECTION IS LIMITED TO HOLDERS OF POLICIES OTHER THAN TERM OR GROUP
POLICIES, THAT HAVE BEEN IN FORCE FOR MORE THAN 1 YEAR;

(4)      MUTUALIZATION WILL RESULT IN RETIREMENT OF SHARES OF THE
INSURER'S CAPITAL STOCK AT A PRICE NOT EXCEEDING THE FAIR MARKET VALUE
OF THE STOCK AS DETERMINED BY COMPETENT DISINTERESTED APPRAISERS;

(5)      THE PLAN PROVIDES FOR THE PURCHASE OF THE STOCK OF AN
OBJECTING STOCKHOLDER IN THE SAME MANNER AND SUBJECT TO THE SAME
APPLICABLE CONDITIONS PROVIDED BY TITLE 3, SUBTITLE 2 OF THE
CORPORATIONS AND ASSOCIATIONS ARTICLE FOR THE RIGHTS OF OBJECTING
STOCKHOLDERS WITH RESPECT TO CONSOLIDATION OR MERGER OF
CORPORATIONS;                                                                                                 

(6)      THE PLAN PROVIDES FOR DEFINITE CONDITIONS TO BE FULFILLED
BY A DESIGNATED EARLY DATE ON WHICH THE MUTUALIZATION WILL BE
CONSIDERED EFFECTIVE; AND

(7)      THE MUTUALIZATION LEAVES THE INSURER WITH SURPLUS FUNDS
THAT ARE REASONABLY ADEQUATE FOR THE SECURITY OF ITS POLICYHOLDERS
AND TO ENABLE THE INSURER TO CONTINUE SUCCESSFULLY IN BUSINESS IN THE
STATES WHERE IT IS THEN AUTHORIZED TO TRANSACT INSURANCE BUSINESS FOR
THE KINDS OF INSURANCE INCLUDED IN ITS CERTIFICATES OF AUTHORITY IN
THOSE STATES.

REVISOR'S NOTE: This section is new language derived without substantive
change from former Art. 48A, § 269.

In subsection (c)(1) of this section, the reference to "the plan or procedure" is
substituted for the former vague reference to "[i]t" to clarify that the plan or
procedure must be equitable to stockholders and policyholders.

In subsection (c)(2) of this section, the reference to "the plan" is substituted
for the former vague reference to "[i]t" to clarify that "the plan", but not the
procedure, must be approved by certain stockholders and policyholders. This
substitution conforms to § 3-121(b)(2) of this subtitle.

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