CHAPTER 319

AN ACT TO AMEND TITLE 18, DELAWARE CODE, TO PROVIDE FOR THE MERGER AND CONSOLIDATION OF ONE OR MORE MUTUAL INSURANCE COMPANIES INTO A SURVIVING OR NEW MUTUAL INSURANCE COMPANY.

Be it enacted by the General Assembly of the State of Delaware (two-thirds of all Members elected to each House thereof concurring therein):

Section 1. Title 18, Delaware Code of 1953, is amended by adding thereto the following new Chapter:

CHAPTER 8. MERGER AND CONSOLIDATION OF

MUTUAL INSURANCE COMPANIES

§ 801. Merger and consolidation of Mutual Insurance Companies authorized

Any two or more mutual insurance companies incorporated under the laws of this State may, in the manner hereinafter provided, be merged into one such company, hereinafter designated as the surviving company, or consolidated into a new company to be formed under this Chapter.

§ 802. Approval of joint plan of merger or consolidation

(a) The board of directors of each of the companies which desire to merge or consolidate shall, by resolution adopted by at least a majority of all the members of each board, approve a joint plan of merger or consolidation, as the case may be, setting forth the terms and conditions of the merger or consolidation and the mode of carrying the same into effect, and such other details and provisions as are deemed necessary.

(b) The board of directors of each company upon approving such plan of merger or consolidation in accordance with the provisions of this Section, shall, by resolution, direct that the plan be submitted to a vote of the members of such company entitled to vote thereon, at an annual or special

meeting of the members. Not less than 15 days before such annual or special meeting, written notice shall be given respectively to each member. The notice shall state the place, day, hour and purpose of the meeting and a copy or a summary of the plan of merger or consolidation, as the case may be, shall be included in or enclosed with such notice.

(c) The plan of merger or consolidation to form a surviving, or new company shall be ratified upon receiving the affirmative vote of two-thirds of all the votes cast by members represented at the meeting of each of the companies which desire to merge or consolidate.

§ 803. Articles of merger or consolidation

Upon the approval pursuant to the provisions of this Chapter of the plan of merger or consolidation by the members of the companies desiring to merge or consolidate, articles of merger or consolidation, as the case may be, shall be executed under the seal of each company and verified by a duly authorized officer of each company and shall set forth:

(1) The name of the surviving or new company.

(2) The time and place of the meeting of the directors at which the plan of merger or consolidation was proposed, and except where pursuant to the provisions of this Chapter a plan of merger is not submitted to a vote of the members of the surviving company, the time and place of the meeting of the members of each company at which the plan of merger or consolidation, as the case may be, was ratified, the kind and period of notice given to the members and the total vote by which the plan was adopted.

(3) In the case of a merger into a surviving company, any changes desired to be made in the articles of the surviving company or in the case of a consolidation into a new company, all of the statements required by law to be set forth in the original articles in the case of the formation of a company.

(4) The number, names and addresses of the persons to be the first directors of the surviving or new company.

(5) The plan of merger or consolidation.

§ 804. Advertisement

The company shall advertise its intention to file articles of merger or consolidation, as the case may be, with the Secretary of State. Advertisement shall appear in a newspaper of the county where the company involved has its principal office at least ten days prior to the day on which the articles of merger or consolidation are to be presented to the Secretary of State and shall set forth briefly:

(1) The name and the location of the principal place of business of each of the companies intending to merge or consolidate.

(2) The name of the location of the principal place of business of the surviving or new company.

(3) A statement that the articles of merger or consolidation are to be filed under the provisions of this Chapter.

(4) The purpose or purposes of the surviving or new company.

(5) The time when the articles of merger or consolidation will be delivered to the Secretary of State.

§ 805. Filing of articles of merger or consolidation; payment of fees; approval by Secretary of State

The articles of merger or consolidation, as the case may be, the proof of publication of the advertisement required by this Chapter and a certificate or certificates from the proper department or departments evidencing payment by the corporation of all taxes and charges as required by law shall be delivered to the Secretary of State.

The Secretary of State shall examine such articles of merger or consolidation, such proof of publication and such certificate or certificates herein required to be delivered therewith to determine whether they contain all the information and are in the form required by this Chapter, and also whether the name of the surviving or new company, as the case may be, conforms with the requirements of law for the name of such a company, or if the name is not the same as either or any of the merging or consolidating companies, whether it is the same as one already adopted or reserved by another corporation or person or is so similar thereto that it is likely to mislead the public.

After all the fees, taxes and other charges have been paid as required by law, except for the cost of an examination made by the State Insurance Commissioner pursuant to the provisions of this Chapter to determine whether to approve the merger or consolidation, the Secretary of State, if the articles of merger or consolidation and the proof of publication contain the information and are in the form required by this Chapter, shall forthwith, but not prior to the day specified in the advertisement of the intention to file the articles, endorse his approval thereon and shall forthwith transmit them to the State Insurance Commissioner.

If the Secretary of State shall disapprove the articles of merger or consolidation pursuant to this Chapter, he shall forthwith give notice thereof to the companies stating in detail his reasons for doing so and stating how such company can remedy the non-conformance with the provisions of this Chapter. Upon remedying the defects, such company may in the same manner file the same or amended articles, whichever the particular case may require.

§ 806. Approval of articles of merger or consolidation by the State Insurance Commissioner

The State Insurance Commissioner shall immediately upon the receipt from the Secretary of State of the articles of merger or consolidation conduct such examination as he may deem necessary to ascertain from the best sources of information at his command:

(1) Whether the name of the surviving or new company is likely to mislead the public.

(2) Whether consolidation or merger is made for legitimate purposes.

(3) Whether the interests of the policy holders or creditors are adequately protected.

(4) Whether the surviving or new company meets all the requirements of this Chapter and violates none of its prohibitions. The cost of such examination and any other charges of the State Insurance Commissioner bearing upon the filing of the articles of merger or consolidation shall be assessed upon the companies in the manner provided by law for assessments by the State Insurance Commissioner of costs of examinations or other charges.

Within 30 days after the receipt of the articles of merger or consolidation from the Secretary of State, the State Insurance Commissioner shall, upon the basis of the facts disclosed by the investigation provided for by this Section, either approve or disapprove such articles. He shall immediately notify the Secretary of State in writing of his action. If he shall approve the articles of merger or consolidation, he shall endorse his approval thereon and shall return them to the Secretary of State.

If the State Insurance Commissioner disapproves the articles of merger or consolidation, he shall return them to the Secretary of State, stating in detail his reasons for doing so. The Secretary of State shall immediately give notice to the companies desiring to merge or consolidate of the action of the State Insurance Commissioner and of the reasons therefor as stated to him by said State Insurance Commissioner. Such companies may within 30 days after the Secretary of State sends them notice of the disapproval of their articles of merger or consolidation appeal from such disapproval to the Governor who shall hear such appeal promptly and shall within 30 days thereafter decide the matter and certify his decision to the State Insurance Commissioner. The decision of the Governor shall be conclusive, and not subject to review. The State Insurance Commissioner shall act in accordance therewith.

§ 807. Issuance of certificate of merger or consolidation

Immediately upon receipt of the approved articles of merger or consolidation from the State Insurance Commissioner, the Secretary of State shall file the articles and shall issue to the surviving or new company or its representative a certificate of merger or consolidation. A copy of the approved articles of merger or consolidation shall be sent by the Secretary of State to the State Insurance Commissioner.

§ 808. Effect of merger or consolidation

Upon the merger or consolidation becoming effective the several companies parties to the plan of merger or consolidation shall be a single company, which in the case of a merger, shall be that company designated in the plan of merger as the surviving company, and in the case of a consolidation, shall be the new company provided for in the plan of consolidation. The separate existence of all the constituent companies parties to said agreement, or of all such constituent companies except the one into which the other or others of such constituent companies have been merged, as the case may be, shall cease and the constituent company shall become a new company or be merged into one of such companies, as the case may be, in accordance with the provisions of said agreement.

All the property, real, personal and mixed, of each of the companies parties to the plan of merger or consolidation and all debts or obligations due to any of them, including subscriptions to shares and other choses in action belonging to either or any of them, shall be taken and be deemed to be transferred to and vested in the surviving or new company, as the case may be, without further act or deed. The surviving or new company shall thenceforth be responsible for all the liabilities and obligations of each of the companies so merged or consolidated; but the liabilities of the merging or consolidating companies or of their directors or officers shall not be affected, nor shall the rights of creditors thereof or of any person dealing with such companies or any liens upon the property of such companies be impaired by such merger or consolidation, and any claim existing or action or proceeding pending by or against any of such companies may be prosecuted to judgment as if such merger or consolidation had not taken place, or the surviving or new company may be proceeded against or substituted in its place. In the case of a merger, the articles of incorporation of the surviving company shall be deemed to be amended to the extent, if any, that changes in its articles are stated in the articles of merger; and in the case of a consolidation, the statements set forth in the articles of consolidation and which are required or permitted to be set forth in the articles of incorporation of companies formed under the general corporation laws of this State shall deem to be the articles of incorporation of the new company.

§ 809. Effective date of merger or consolidation

Upon the issuance of the certificate of merger or consolidation by the Secretary of State, the merger or consolidation shall be effective. The certificate of merger or consolidation shall be conclusive evidence of the performance of all conditions precedent to such consolidation or merger and the creation or existence of a new or surviving company except as against the State.

Approved January 11, 1962.