CHAPTER 431

An Act to amend and reenact §§ $8.1-64, 88.1-65, 88.1-71, $8.1-74, 88.1-75,
88.1-80, 88.1-81, $8.1-88, 88.1-495.5, 88.1-551, 88.1-579, 88.1-589,
88.1-666 and 88.1-667 of the Code of Virginia, and to repeal § 38.1-82
of the Code of Virginia, all relating to insurance, in order to conform
such sections to the proposed revision of the General Corporation Law
of Virginia.

[S 15]

Approved March 30, 1956

Be it enacted by the General Assembly of Virginia:

1. That §§ 38.1-64 and 38.1-65 of the Code of Virginia are hereby amended
and reenacted as follows:

§ 38.1-64. What constitutes appointment of attorney for service of
process.—Any of the following acts in this State, effected by mail or
otherwise, by a foreign or alien insurance company not authorized to do
business in this State, namely: (1) The issuance or delivery of contracts of
insurance to residents of this State or to corporations authorized to do
business therein, (2) the solicitation of applications for such contracts,
(3) the collection of premiums, membership fees, assessments or other con-
siderations for such contracts, or (4) the transactions of any other insur-
ance business in connection with such contracts, is equivalent to and shall
constitute an appointment by such company of the * clerk of the Com-
mission as its agent for the service of process in accordance with § 18.1-111
of this Code.

§ 38.1-65. How process served.—Service of process or notice upon
any such foreign or alien insurance company in any suit, action or pro-
-eeding arising out of or in connection with such business in this State
shall be made in the manner prescribed in * § 19.1-111. *

» That § 88.1-71 of the Code of Virginia is hereby amended and re-
macted as follows:

§ 38.1-71. Incorporation of stock companies.—Insurance companies
vith shares of capital stock may be incorporated under the provisions of
hapter 3 of * Article 1 of Title 13.1, and, except as otherwise provided
n this title, shall be subject to all the general restrictions and shall have
604 ACTS OF ASSEMBLY [va., 1956
all the general powers imposed and conferred upon such corporations by

law.
3. “That §§ 38.1-74 and 38.1-75 of the Code of Virginia are hereby amended
and reenacted as follows:

§ 38.1-74. Incorporation of companies without capital stock.—Insur-
ance companies without shares of capital stock may be incorporated under
the provisions of chapter * 3 of Article 2 of Title 13.1, as modified by the
provisions of this title, and, except as otherwise provided in this title, shall
be subject to all the general restrictions and have all the general powers
imposed and conferred upon such corporations by law. No charter shall
be granted to any such company, except as otherwise expressly provided
in this title, until the incorporators present to the Commission a certificate
of the State Treasurer that bonds or other securities to the amount and
of the description mentioned in § 38.1-108 are deposited with him to be
held under the provisions and upon the terms and conditions set out in
this chapter.

§ 38.1-75. Additional requirements of certificate; name.—The cer-
tificate of incorporation must be signed by not less than twenty persons,
a majority of whom are bona fide residents of this State; and such certifi-
cate shall, in addition to the requirements of * chapter 3 of Article 2 of
Title 13.1, set forth the class or classes of insurance the company proposes
to transact. The name of the company shall contain the word “mutual”,
and shall not be so similar to any name already in use by an existing insur-
ance company as to be confusing or misleading.

4. That §§ 38.1-80 and 38.1-81 of the Code of Virginia are hereby amended
and reenacted as follows:

§ 38.1-80. Merger or consolidation of insurance companies.—The pro-
visions of chapter 5 of * Article 1 of Title 18.1 in the case of stock com-
panies and of chapter 5 of Article 2 of Title 13.1 in the case of mutual
companies with respect to the merger and consolidation of corporations
shall, except as otherwise provided in this title, apply to mergers or con-
solidations of insurance companies.

§ 88.1-81. Plan of merger or consolidation to be approved by Com-
mission.—Before any joint agreement for such merger or consolidation
shall be submitted to the stockholders or members, * it shall first be sub-
mitted to and approved by the Commission. The Commission shall not ap-
prove any such agreement unless, after a hearing, it finds that the plan of
merger or consolidation is fair, equitable, consistent with law, and that
no reasonable objection thereto exists. If the Commission fails to approve
the plan it shall state its reasons for such failure in the order made on
the hearing.

5. That § 38. 1-83 of the Code of Virginia is hereby amended and reenacted
as follows:

§ 38.1-83. Admission of foreign and alien companies generally.—
Every foreign and alien insurance company shall, before transacting any
business in this State, comply with the provisions of chapter * 8 of Article
1 of Title 18.1 in the case of a stock company and of chapter 7 of Article 2
of Title 13.1 in the case of a mutual company, insofar as the same are
applicable, and obtain a certificate of authority so to do, which certificate
shall be in addition to the license to transact insurance required by Article
5 of this chapter.

6. That § 38.1-495.5 of the Code of Virginia is hereby amended and
reenacted as follows:

§ 38.1-495.5. Amendment of charter and by-laws; change of name;
retirement and cancellation of stock; when mutualization effective; assets
and liabilities; officers and directors; general restrictions and powers.—
Upon acquisition by the trustees under the plan of mutualization of a stock
CH. 431] ACTS OF ASSEMBLY 605

life insurance company of all its capital stock pursuant to the provisions
of article 7, chapter 9 of this title, the charter of the company shall be
amended to give effect to its mutualization and to comply with the pro-
visions of this article and in such other respects as may be deemed neces-
sary by the board of directors and trustees of the company, the proceeding
to be in accordance with * chapter 4, article 1, Title 13.1, the trustees under
the plan of mutualization being the sole stockholders of the company. The
name of the converted company may be changed by such amendment and
need not contain the word “incorporated’’, or the word “corporation”, or
the word “mutual”, but shall be such as to distinguish it from any other
corporation chartered for similar purposes, other than the converted stock
company. Upon such amendment of the charter of the company, the board
of directors named in the amendment shall adopt any changes in the
by-laws deemed necessary, and the by-laws and any amendments thereof
shall be filed with the State Corporation Commission within thirty days
after adoption. .

As soon as the charter of the company has been amended as aforesaid,
the capital stock of the company held by the trustees shall be assigned by
them to the company and shall be retired and cancelled forthwith, which
fact shall be forthwith certified to the State Corporation Commission by
the proper officers of the company, and the trustees acting under the plan
shall thereupon be discharged. Upon retirement and cancellation of such
stock and filing certification thereof with the State Corporation Commis-
sion, the life insurance company shall immediately be and become a mutual
life insurance company owning all the assets of the converted stock com-
pany and subject to all its liabilities.

The officers and directors of the company named in the amended
charter shall continue as the officers and directors of the mutual life insur-
ance company until their successors are duly elected in accordance with the
provisions of the amended charter and the by-laws adopted thereunder.

*

Such mutual life insurance company, except as otherwise provided
in this title, shall be subject to all the general restrictions and have all the
general powers imposed and conferred upon nonstock corporations by law.
7. That § 38.1-551 of the Code of Virginia is hereby amended and re-
enacted as follows:

§ 38.1-551. Society may be incorporated.—Any existing burial society
licensed and operating in this State which is an unincorporated association
may be incorporated under the provisions of chapter * 8 of Article 2 of
Title 13.1, and, except as otherwise provided in this title, shall be subject
to all the general restrictions and shall have all the general powers imposed
and conferred upon such corporations by law. All burial societies, whether
incorporated or not, shall be under the supervision and control of the
Commission.

8. That § 38.1-579 of the Code of Virginia is hereby amended and re-
enacted as follows:

§ 38.1-579. Incorporation of societies.—Fraternal benefit societies
may be incorporated under the provisions of chapter * 8 of Article 2 of
Title 18.1, as modified by the provisions of this title, and, except as other-
wise provided in this title, shall be subject to all the general restrictions
and shall have all the general powers imposed and conferred upon such
corporations by law.

9. That § 38.1-589 of the Code of Virginia is hereby amended and re-
enacted as follows:

§ 38.1-589. Prerequisites to admission of foreign society.—-No foreign
society shall transact any business in this State until it has complied with
the provisions of the general law of this State in regard to the admission of
606 ACTS OF ASSEMBLY [va., 1956

foreign corporations, and has procured a certificate from the Commission.
Any such society, having complied with such general law in regard to the
admission of foreign corporations, shall be entitled to a license to transact
business within this State upon filing with the Commission: *_ .

(1) A copy of its constitution and laws, certified by the secretary or
corresponding officer; *

(2) A statement of its business under oath of its president and
secretary, or corresponding officers, in the form required by the Com-
mission, duly verified by an examination made by the supervising insurance
office of its home state or other state satisfactory to the Commission;

(3) A certificate from the proper official in its home state, province or
country, that the society is legally organized;

(4) A copy of its contract, which must show that benefits are provided
for by periodical or other payments by persons holding similar contracts;

(5) Such other information as the Commission may deem necessary
to a proper showing of its business and plan of working, and satisfactory
evidence that its assets are invested in accordance with the laws of the
state or country where it is organized.

10. That §§ 88.1-666 and 38.1-667 of the Code of Virginia are hereby
amended and reenacted as follows:

§ 88.1-666. Incorporation of companies.—Mutual assessment fire in-
surance companies may be incorporated under the provisions of chapter *
$ of Article 2 of Title 13.1, as modified by the provisions of this title, and,
except as otherwise provided in this title, shall be subject to all the general
restrictions and shall have all the general powers imposed and conferred
upon such corporations by law.

§ 38.1-667. Directors; terms; annual meetings; voting; executive
committee.—The management of any company operating under this chapter
shall be vested as provided in the certificate of incorporation and as pro-
vided in the by-laws, in a board of at least five directors, each of whom
shall be a member of the company. Each director shall hold office for one
year or for such longer term as the by-laws prescribe, and thereafter until
his successor is elected and has qualified. Directors may be divided into
classes and a portion only elected each year. Vacancies in the board may
be filled for the unexpired term by the remaining directors. The annual
meeting of the members of the company shall be held annually as pro-
vided by the certificate of incorporation or by the by-laws. A quorum
shall consist of such number of members not less than ten as the certificate
of incorporation or the by-laws provide. Each member of the company
shall be entitled to one vote in all meetings of members. Votes by proxy
may be received if the certificate of incorporation or the by-laws so pro-
vide, but only in accordance therewith. The date of the annual meeting
may be carried in the policy and no other notice shall be required. Not-
withstanding the provisions of the charter of any company to the contrary
upon a resolution adopted by the board of directors of such company and
approved by a majority of its members present in person or by proxy,
the directors of such company may be divided into classes and a portion
only elected each year. Pursuant to the provisions of * § 18.1-224 the
directors may appoint an executive committee to exercise the powers and
perform the duties set out therein.

11. That § 38.1-82 of the Code of Virginia is hereby repealed.
12. That the provisions hereof shall become effective January one, nine-
teen hundred fifty-seven.