(1) A corporation organized under this chapter may become a stock insurance corporation under such plan and procedure as may be approved by the Commissioner of Insurance.

(2) The Commissioner of Insurance shall approve any such plan or procedure if:

(a) It is equitable to the corporation’s members;

(b) It is subject to approval by vote of not less than three-fourths (¾) of the corporation’s current members voting thereon in person or by proxy at a meeting of members called for the purpose pursuant to such reasonable notice and procedure as may be approved by the Commissioner of Insurance; right to vote may be limited to members who hold policies at the time of the vote and whose policies have been in force for not less than one (1) policy year;

(c) The equity of each member in the corporation is determinable under a fair formula approved by the Commissioner of Insurance, which such equity shall be based upon not less than the corporation’s entire surplus as reported in the corporation’s annual statement to the Commissioner of Insurance, after deducting borrowed surplus funds, plus all nonadmitted assets;

(d) The members entitled to participate in the purchase of stock or distribution of assets shall include all current members who hold policies at the time of the vote and whose policies have been in force for not less than one (1) policy year;

(e) The plan gives to each member, as specified in subsection (2)(d) of this section, a preemptive right to acquire his proportionate part of all of the proposed capital stock of the corporation, within a designated reasonable period, and to apply upon the purchase thereof the amount of his equity in the corporation as determined under subsection (2)(c) of this section;

(f) Shares are so offered to members at a price not greater than to be thereafter offered to others;

(g) The plan provides for payment to each member not electing to apply his equity in the corporation for, or upon, the purchase price of stock to which the member is preemptively entitled of cash in the amount of his equity not so used for the purchase of stock, and which case payment, together with stock so purchased, if any, shall constitute full payment and discharge of the member’s equity as a member of such corporation; and

(h) The plan, when completed, would provide for the converted corporation paid-in capital stock in an amount not less than the minimum paid-in capital required of a domestic stock insurer transacting like kinds of insurance, together with surplus funds in amount not less than one half (½) of such required capital.

(3) Once conversion under this section is complete, the converted corporation shall no longer be governed by this chapter and shall be governed by the provisions of the insurance laws of this state applicable to general liability insurers.