(a) An association captive insurance company or industrial insured group formed as a stock or mutual corporation may be converted to or merged with and into a reciprocal insurer in accordance with a plan therefor and this section.

(b) A plan for this conversion or merger shall satisfy both of the following:

(1) Be fair and equitable to the shareholders, in the case of a stock insurer, or the policyholders, in the case of a mutual insurer.

(2) Provide for the purchase of the shares of any nonconsenting shareholder of a stock insurer or the policyholder interest of any nonconsenting policyholder of a mutual insurer in substantially the same manner and subject to the same rights and conditions as are accorded a dissenting shareholder under Article 13, commencing with Section 10-2B-13.01, of Chapter 2B of Title 10.

(c) A conversion authorized under subsection (a) shall satisfy all of the following:

(1) The conversion shall be accomplished under a reasonable plan and procedure as may be approved by the commissioner. Notwithstanding the foregoing, the commissioner may not approve any plan of conversion unless the plan satisfies subsection (b) and all of the following:

a. Provides for a hearing, of which notice has been given to the insurer, its directors, officers, and stockholders, in the case of a stock insurer, or policyholders, in the case of a mutual insurer, all of whom shall have the right to appear at the hearing, except that the commissioner may waive or modify the requirements for the hearing. If a notice of hearing is required, but no hearing is requested, the commissioner may cancel the hearing.

b. Provides for the conversion of existing stockholder or policyholder interests into subscriber interests in the resulting reciprocal insurer, proportionate to stockholder or policyholder interests in the stock or mutual insurer.

c. Is approved as follows:

1. In the case of a stock insurer, by a majority of the shares entitled to vote represented in person or by proxy at a duly called regular or special meeting at which a quorum is present.

2. In the case of a mutual insurer, by a majority of the voting interests of policyholders represented in person or by proxy at a duly called regular or special meeting thereof at which a quorum is present.

(2) The commissioner shall approve the plan of conversion if the commissioner finds that the conversion will promote the general good of the state in conformity with those standards set forth in subsection (e) of Section 27-31B-8.

(3) If the commissioner approves the plan, the commissioner shall amend the converting insurer's certificate of authority to reflect conversion to a reciprocal insurer and issue the amended certificate of authority to the company's attorney-in-fact.

(4) Upon the issuance of an amended certificate of authority of a reciprocal insurer by the commissioner, the conversion shall be effective.

(5) Upon the effectiveness of the conversion the corporate existence of the converting insurer shall cease and the resulting reciprocal insurer shall notify the Secretary of State of the conversion.

(d) A merger authorized under subsection (a) shall be accomplished substantially in accordance with the procedures set forth in Sections 27-27-45 and 27-27-46, except that, solely for purposes of the merger, the plan of merger shall satisfy subsection (b) and comply with all of the following:

(1) The subscribers' advisory committee of a reciprocal insurer shall be equivalent to the board of directors of a stock or mutual insurance company.

(2) The subscribers of a reciprocal insurer shall be the equivalent of the policyholders of a mutual insurance company.

(3) If a subscribers' advisory committee does not have a president or secretary, the officers of the committee having substantially equivalent duties shall be deemed the president or secretary of the committee.

(4) The commissioner shall approve the articles of merger if the commissioner finds that the merger will promote the general good of the state in conformity with those standards set forth in subsection (e) of Section 27-31B-8. If the commissioner approves the articles of merger, the commissioner shall indorse his or her approval thereon and the surviving insurer shall present the same to the Secretary of State at the Secretary of State's office.

(5) Notwithstanding Section 27-31B-6, the commissioner may permit the formation, without surplus, of a captive insurance company organized as a reciprocal insurer, into which an existing captive insurance company may be merged for the purpose of facilitating a transaction under this section as long as there is no more than one authorized insurance company surviving the merger.

(6) An alien insurer may be a party to a merger authorized under subsection (a) if the requirements for a merger between a domestic and a foreign insurer under Sections 27-27-45 and 27-27-46 apply to a merger between a domestic and an alien insurer under this subsection. The alien insurer shall be treated as a foreign insurer under Sections 27-27-45 and 27-27-46 and other jurisdictions shall be the equivalent of a state for purposes of Sections 27-27-45 and 27-27-46.

(e) A conversion or merger under this section shall have all of the effects set forth in Section 10-2B-11.06 to the extent these effects are not inconsistent with the provisions of this chapter.