Effect of reliance on commissioner's rule.
No provision of sub. (4)
imposing any liability applies to any act done or omitted in good faith in conformity with any rule of the commissioner, even if the rule is, after the act or omission, amended or rescinded or determined by judicial or other authority to be invalid.
Effect of violation.
A contract for subscription to or the purchase of shares in any corporation made in violation of this chapter or of ch. 551
is valid and enforceable against but not in favor of the corporation or the insider, except that the contract is valid and enforceable in favor of the corporation against an insider.
History: 1971 c. 260
; 1979 c. 102
, 236 (13)
See also ss. Ins 6.41
, and 6.43
, Wis. adm. code.
During the period of effectiveness of the organization permit the incorporators, directors, and principal officers of a stock corporation shall among themselves subscribe and pay, at the public offering price, at least $100,000 in cash or in property of equivalent value approved by the commissioner, for shares offered by the corporation under the organization permit.
No person may subscribe for promoter stock on terms more favorable than those on which subscriptions are being solicited from the general public.
Except under this section and s. 611.18 (2) (a) 2.
, and except for stock dividends, no promoter stock may be issued for 5 years following the initial issuance of the certificate of authority, without the approval of the commissioner which may be granted by the commissioner only if he or she finds that:
The corporation is in need of additional capital; and
The value proposed to be given for the stock is fair to existing shareholders and has a reasonable relation to the current value of the outstanding shares.
This subsection shall not affect the exercise of preemptive rights.
Deposit in escrow.
Shares of promoter stock and any stock received thereon as the result of a stock dividend, stock split or exercise of preemptive rights shall be deposited in escrow with a depository satisfactory to the commissioner under an agreement providing that the shares may not be transferred without the approval of the commissioner.
Release from escrow.
If the corporation issues any life insurance policies, any shares subject to this section shall be released from escrow 5 years after issuance of the certificate of authority. In other cases, the shares shall be released from escrow 3 years after issuance of the certificate of authority.
In this subsection, “earned surplus" means the balance of the net profits, income, gains and losses of a corporation from the date of incorporation.
Shall be granted upon request if the corporation has made an addition to earned surplus in each of the 2 immediately preceding years of at least 6 percent of the capital raised by the sale of shares under the organization permit; and
May be granted upon a showing of hardship by the shareholder or the shareholder's estate or legatee, if the release from escrow of the shares or a portion thereof would not, in the commissioner's opinion, endanger the interests of insureds or the public.
Options to purchase stock.
For 3 years after the issuance of the certificate of authority, an option to purchase stock may be issued only pursuant to a plan approved by the commissioner.
Authorized securities. 611.33(1)(a)1.
Until one year after the initial issuance of a certificate of authority, the corporation may issue no shares and no other securities convertible into shares except for a single class of common stock that satisfies s. 180.0601 (3)
and, with the approval of the commissioner, on terms that he or she considers fair, a single class of preferred stock for sale to no more than 15 shareholders;
After the first year and within 5 years after the initial issuance of a certificate of authority, no additional classes of shares may be issued, except after approval of the commissioner, who may approve only if he or she finds that existing shareholders will not be prejudiced.
Fractional shares or scrip.
No fractional shares may be issued. Subject thereto, s. 180.0604
The articles of a nonassessable mutual may authorize mutual bonds of one or more classes and shall specify the amount of each class of bonds the corporation is authorized to issue, their designations, preferences, limitations, rates of interest, relative rights and other terms, subject to the following provisions:
During the first year after the initial issuance of a certificate of authority, the corporation may issue only a single class of bonds with identical rights;
After the first year but within 5 years after the initial issuance of a certificate of authority, additional classes of bonds may be authorized after approval of the commissioner, who shall approve if he or she finds that policyholders and prior bondholders will not be prejudiced;
The rate of interest shall be fair and reasonable; and
The bonds shall bear a maturity date not later than 10 years from the date of issuance, when principal and accrued interest shall be due and payable, subject to par. (d)
Any mutual may issue contribution notes if the commissioner approves. The commissioner may approve only if he or she finds that:
The notes will not be the subject of a public offering;
Their terms are not prejudicial to policyholders, holders of mutual bonds or of prior contribution notes; and
The mutual's articles or bylaws do not forbid their issuance.
If it has any outstanding obligations on mutual bonds or contribution notes, borrow on contribution notes from, or sell bonds to, any other insurer without approval of the commissioner; or
Make any loan to another insurer except a fully secured loan at usual market rates of interest.
Payment of the principal or interest on mutual bonds or contribution notes may be made in whole or in part only after approval of the commissioner. Approval shall be given if all financial requirements of the issuer to do the insurance business it is then doing will continue to be satisfied after payment and if the interests of its insureds and the public are not endangered. In the event of liquidation under ch. 645
unpaid amounts of principal and interest on contribution notes shall be subordinated to the payment of principal and interest on any mutual bonds issued by the corporation at any time.
Nothing in this section prevents a mutual from borrowing money on notes which are its general obligations, nor from pledging any part of its disposable assets therefor.
Corporate repurchase of shares.
No stock corporation may repurchase any of its own shares within 5 years after initial issuance of the certificate of authority, except pursuant to a plan for the repurchase which has been approved by the commissioner. After 5 years a stock corporation may repurchase its own shares under ss. 180.0631
, and 180.1708 (2)
, but within 10 days after the end of any month in which it purchases more than one percent of any class of its outstanding shares the corporation shall report the price and the names of the registered shareholders from whom the shares are acquired and of any other persons beneficially interested, so far as the latter are known to the corporation. The corporation shall make a like report within 10 days after the end of any 3-month period in which it purchases more than 2 percent of any class of its outstanding shares or within 10 days after the end of any 12-month period in which it purchases more than 5 percent of any class of its outstanding shares.
Number of shareholders.
applies to stock corporations for purposes of this chapter.
History: 1989 a. 303
MANAGEMENT OF INSURANCE CORPORATIONS
Shareholders' meetings. 611.40(1)(1)
Meetings, notices, quorums and voting.
and 180.1708 (3)
apply to stock corporations. Each director of a stock corporation shall be elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present.
Communications to shareholders or policyholders and commissioner's attendance at meetings. 611.41(1)(1)
Copies of communications.
The commissioner may by rule prescribe that copies of specified classes of communications circulated generally by a corporation to shareholders or policyholders shall be communicated to the commissioner at the same time.
Attendance at meetings.
The commissioner has the right to attend any shareholders' or policyholders' meeting.
and, so far as it relates to communications to shareholders, sub. (1)
do not apply to stock corporations all of whose voting shares are owned by a single person, or all of whose shareholders are either members of the board or are represented on it.
History: 1971 c. 260
; 1979 c. 102
s. 236 (21)
Mutual policyholders' voting rights. 611.42(1b)(a)(a)
A mutual may hold an annual, regular, or special meeting of policyholders in or outside this state at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, the mutual shall hold the annual meeting at its principal office.
Notwithstanding par. (a)
, a mutual's bylaws may authorize the board of directors, in its sole discretion, to determine that an annual, regular, or special meeting of policyholders may be held solely by means of remote communication as authorized under s. 611.426
The circuit court for the county where a mutual's principal office is located, or, if the mutual does not have its principal office in this state, where its registered office is located, may, after notice and an opportunity to be heard, order a meeting to be held on petition of a policyholder of the mutual who meets any of the following conditions:
The policyholder is entitled to participate in an annual meeting and the annual meeting has not been held within 15 months after the mutual's last annual meeting.
The policyholder has signed a demand for a special meeting that meets the requirements of s. 181.0702
and the mutual has failed to do any of the following:
Give notice of the special meeting within 30 days after the date that the demand was delivered to the mutual.
The court may fix the time and place of the meeting or determine that the meeting shall be held solely by means of remote communication as provided under s. 611.426
. The court shall require that the meeting be called and conducted in accordance with the mutual's articles of incorporation and bylaws, in so far as possible, except that the court may do all of the following:
Fix the quorum required for specific matters to be considered at the meeting or direct that the votes represented at the meeting constitute a quorum for action on those matters.
Enter any other orders necessary to accomplish the purpose of the meeting.
A mutual shall give notice of meetings of policyholders as provided in its bylaws or, if the bylaws are silent, in a manner that is fair and reasonable.
A notice that conforms to the requirements of par. (c)
is fair and reasonable. Except for matters referred to in par. (c) 2.
, other means of giving notice may also be fair and reasonable when all of the circumstances are considered. Section 181.0141
applies to notices provided under this subsection.
Notice safe harbor.
Notice is fair and reasonable if all of the following conditions exist:
The mutual notifies its policyholders of the date, time, and, if applicable, place of each annual, regular, and special meeting of policyholders not more than 60 days and not less than 10 days, or, if notice is mailed by any type other than first class or registered mail, 30 days, before the meeting date. If the board of directors has authorized participation by means of remote communication under s. 611.426
, the notice shall describe the means of remote communication to be used.
Notice of a special meeting includes a description of the matter or matters for which the meeting is called.
Unless the bylaws require otherwise, if an annual, regular, or special meeting of policyholders is adjourned to a different date, time, or place or will be held by a new means of remote communication, notice need not be given of the new date, time, place, or means of remote communication if the new date, time, place, or means of remote communication is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under s. 181.0707
, notice of the adjourned meeting must be given under this subsection to the policyholders of record as of the new record date.
Mandatory voting rights.
Policyholders in all mutuals have the right to vote on conversion, voluntary dissolution, amendment of the articles, and the election of all directors except public directors appointed under s. 611.53 (1)
. Voting may be conducted by mail, by electronic means, or by any other method or combination of methods prescribed by the articles or bylaws. Directors may be divided into classes, and in that case one class shall be elected at least every 4 years for terms not exceeding 6 years.
Optional voting rights.
The articles of any mutual may give the policyholders additional voting rights.