(a) A captive insurance company may be converted to or merged with and into another captive insurance company according to a plan and this section.

(b) A plan for conversion or merger:

(1) Must be fair and equitable to the shareholders, in the case of a stock insurer, or the policyholders, in the case of a mutual insurer; and

(2) Shall 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 or a dissenting policyholder under § 4-26-1011.

(c) In the case of a conversion authorized under subsection (a) of this section:

(1) The conversion must be accomplished under a reasonable plan and procedure as may be approved by the Insurance Commissioner;

(2) The commissioner may not approve the plan of conversion, unless the plan:

(A) Satisfies subsection (b) of this section;

(B)

(i) 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 have the right to appear at the hearing.

(ii)

(a) The commissioner may waive or modify the requirements for the hearing.

(b) If a notice of hearing is required but no hearing is requested, the commissioner may cancel the hearing;

(C) 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; and

(D) Is approved:

(i) 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; or

(ii) 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 at which a quorum is present;

(3) 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 stated in § 23-63-1606(d);

(4) 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;

(5) Upon issuance of an amended certificate of authority of a reciprocal insurer by the commissioner, the conversion is effective; and

(6) Upon the effectiveness of the conversion, the corporate existence of the converting insurer shall cease.

(d) A merger authorized under subsection (a) of this section must be accomplished substantially in accordance with the Arkansas Insurance Code. For purposes of the merger:

(1) The plan or merger shall satisfy subsection (b) of this section;

(2) The subscribers' advisory committee of a reciprocal insurer must be equivalent to the board of directors of a stock or mutual insurance company;

(3) The subscribers of a reciprocal insurer must be the equivalent to the policyholders of a mutual insurance company;

(4) If a subscribers' advisory committee does not have a president or secretary, the officers of the committee having substantially equivalent duties are deemed to be the president and secretary of the committee;

(5)

(A) 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 stated in § 23-63-1606(d).

(B) If the commissioner approves the articles of merger, the commissioner shall endorse the articles;

(6)

(A) Notwithstanding § 23-63-1604, 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.

(B) There may be no more than one (1) authorized insurance company surviving the merger; and

(7)

(A) An alien insurer may be a party to a merger authorized under subsection (a) of this section, if the requirements for the merger between a domestic and a foreign insurer under the Insurance Holding Company Regulatory Act, § 23-63-501 et seq., apply to a merger between a domestic and an alien insurer under this subsection.

(B) The alien insurer must be treated as a foreign insurer under the Insurance Holding Company Regulatory Act, § 23-63-501 et seq., and other jurisdictions must be the equivalent of a state for purposes of the Insurance Holding Company Regulatory Act, § 23-63-501 et seq.

(e) A conversion or merger under this section has all the effects of a conversion or merger under the Arkansas Insurance Code, to the extent these effects are not inconsistent with this subchapter.