NRS693A.440. Resolution by board of directors; plan of conversion.

      1.  The board of directors of a domestic mutual insurer or a mutual insurance holding company may adopt a resolution proposing a plan of conversion and an amendment to its articles of incorporation. The resolution must be approved by a vote of not less than two-thirds of the members of the board.

      2.  The plan of conversion must:

      (a) Require the distribution of consideration equal to not less than the fair market value of the surplus of the converting mutual to the eligible members in exchange for the extinguishment of their membership interests in the converting mutual.

      (b) Describe the manner in which the fair market value of the converting mutual and its surplus has been or will be determined.

      (c) Require the distribution of consideration to the eligible members upon extinguishment of their membership interests in the converting mutual.

      (d) Provide that membership interests in the converting mutual are extinguished as of the effective date of conversion.

      (e) Specify the structure and form of the proposed consideration, including, without limitation, the projected range of the number of shares of capital stock to be:

             (1) Issued to policyholders by the new stock insurer or the holding company of the new stock insurer; and

             (2) Sold or reserved for sale to investors by the new stock insurer or the holding company of the new stock insurer, or to the trust established pursuant to this section.

      (f) If the distribution of consideration will not be made immediately following the final order of the Commissioner approving the conversion, provide for the establishment of a trust for the exclusive benefit of policyholders into which shares of the capital stock of the new stock insurer or the holding company of the new stock insurer must be placed pending distribution to the policyholders. The terms of the trust are subject to the approval of the Commissioner. Such a trust may exist only for a period of 6 months after the final approval of the conversion, during which time the distribution of consideration to eligible policyholders and other persons must be completed.

      (g) Provide for the determination of the reasonable dividend expectations of eligible members and other policyholders of policies that provide for distribution of policy dividends and the preservation of such expectations through the establishment of a closed block of assets.

      (h) Provide for such other proposed conditions and provisions as the board of directors of the converting mutual determines are necessary and are not inconsistent with the provisions of NRS 693A.400 to 693A.540, inclusive.

      (Added to NRS by 2001, 2232)