Chap. 8.—An ACT to amend chapter 169 of the Code of Virginia by adding two
new sections thereto, to be designated as sections 4251-a and 4251-b, providing
for the conversion of stock life insurance corporations into mutual life insur-
ance corporations; prescribing the procedure for the accomplishment of such
conversion; and providing how stock life insurance corporations may acquire
their own stock. [H B 17]

Approved February 8, 1934

1. Be it enacted by the General Assembly of Virginia, That chapter
one hundred and sixty-nine of the Code of Virginia be amended by
adding two new sections thereto, to be designated as sections forty-two
hundred and fifty-one-a, and forty-two hundred and fifty-one-b, and
to read as follows:

Section 425l-a. Conversion of a stock life insurance corporation
into a mutual life insurance corporation—Any domestic stock life in-
surance corporation may become a mutual life insurance corporation,
and to that end may carry out a plan for the acquisition of shares of
its capital stock, provided, however, that such plan: (First) shall have
been adopted by a vote of a majority of the directors of such corpora-
tion; (Second) shall have been approved by a vote of the holders of
two-thirds of the stock outstanding at the time of issuing the call for a
meeting for that purpose; (Third) shall have been submitted to the
State Corporation Commission and shall have been approved by it in
writing; and (Fourth) shall have been approved by a majority vote of
the policyholders (including, for the purpose of this act, the employer
or the president, secretary or other executive officer of any corporation
or association, to which a master group policy has been issued, but ex-
cluding the holders of certificates or policies issued under or in connec-
tion with a master group policy) voting at a meeting, called for that
purpose, at which meeting only such policyholders whose insurance
shall then be in force and shall have been in force for at least one year
prior to such meeting shall be entitled to vote: notice of such meeting
shall be given by mailing such notice, postage prepaid, from the home
office of such corporation at least thirty davs prior to such meeting ta
such policyholders at their last known post-office addresses, provided
that personal delivery of such written notice to any policyholder may be
in lieu of mailing the same; and such meeting shall be otherwise pro-
vided for and conducted in such manner as shall be provided in such
plan; provided, however, that policyholders may vote in person, by
proxy, or by mail; that all votes shall be cast by ballot and a representa-
tive of the State Corporation Commission shall supervise and direct
the methods and procedure of said meeting and appoint an adequate
number of inspectors to conduct the voting at said meeting who shall
have power to determine all questions concerning the verification of the
ballots, the ascertainment of the validity thereof, the qualifications of
the voters, and the canvass of the vote, and who shall certify to the said
representative and to the corporation the results thereof, and with
respect thereto shall act under such rules and regulations as shall be
prescribed by the State Corporation Commission; that all necessary
expenses incurrgd by the State Corporation Commission or its repre-
sentative shall be paid by the corporation as certified to by said com-
mission. Every payment for the acquisition of any shares of the capital
stock of such corporation, the purchase price of which is not fixed by
such plan, shall be subject to the approval of the commission; provided
that neither such plan, nor any payment thereunder, nor any payment
not fixed by such plan, shall be approved by the commission if the
making of such payment shall reduce the assets of the corporation to
an amount less than the entire liabilities of the corporation, including
therein the net values of its outstanding contracts computed according
to the standard adopted by the corporation under section forty-two
hundred and fifty-seven of the Code of Virginia, and also all other
funds, contingent reserves and surplus, which the corporation is re-
quired by order or direction of the State Corporation Commission to
maintain, save so much of the surplus as shall have been appropriated
or paid under such plan.

Section 4251-b. How stock life insurance corporation may acquire
its own capital stock—If a stock life insurance corporation shall deter-
mine to become a mutual life insurance corporation, it may, in carrying
out any plan to that end under the provisions of section forty-two hun-
dred and fifty-one-a, acquire any shares of its own stock by gift, be-
quest or purchase. And until all of such shares are acquired, any shares
so acquired shall be acquired in trust for the policyholders of the cor-
poration as hereinafter provided and shall be assigned and transferred
on the books of the corporation to not less than three nor more than
fve trustees and be held by them in trust and be voted by such trustees
at all corporate meetings at which stockholders have the right to vote,
until all of the capital stock of such corporation is acquired when the
entire capital stock shall be retired and cancelled and thereupon, unless
sooner incorporated as such, the corporation shall be and become a
mutual life insurance corporation without capital stock. Said trustees
shall be appointed and vacancies shall be filled as provided in the plan
adopted under section forty-two hundred and fifty-one-a. Said trus-
tees shall file with the corporation and with the State Corporation Com-

mission a verified acceptance of their appointments and declaration that
they will faithfully discharge their duties as such trustees. After the
payment of such dividends to stockholders or former stockholders as
may have been provided in the plan adopted under section forty-two
hundred and fifty-one-a, all dividends and other sums received by said
trustees on said shares of stock so acquired, after paying the necessary
expenses of executing said trust, shall be immediately repaid to said
corporation for the benefit of all who are or may become policyholders
of said corporation and entitled to participate in the profits thereof, and
shall be added to and become a part of the surplus earned by said
corporation and be apportionable accordingly as a part of said surplus
among said policyholders.

Z. An emergency existing, this act shall be in force from its passage.