611.33 Authorized securities.

(1) Stock corporations.

(a) Classes of shares. The articles of a stock corporation shall authorize the kinds of shares required by s. 180.0601 (3) and may authorize any kind of shares permitted by ss. 180.0601 (1), (2) and (4), 180.0602 and 180.0603, or of stock rights, and options permitted by s. 180.0624, except that:

1. Until one year after the initial issuance of a certificate of authority, the corporation may issue no shares and no other securities convertible into shares except for a single class of common stock that satisfies s. 180.0601 (3) and, with the approval of the commissioner, on terms that he or she considers fair, a single class of preferred stock for sale to no more than 15 shareholders;

2. After the first year and within 5 years after the initial issuance of a certificate of authority, no additional classes of shares may be issued, except after approval of the commissioner, who may approve only if he or she finds that existing shareholders will not be prejudiced.

(b) Fractional shares or scrip. No fractional shares may be issued. Subject thereto, s. 180.0604 applies.

(c) Consideration for shares, certificates and transfer restrictions. Sections 180.0621 and 180.0625 to 180.0627 apply.

(d) Liability of shareholders, transferees and others. Section 180.0622 applies.

(e) Shareholders' preemptive rights. Sections 180.0630 and 180.1705 apply.

(2) Mutuals.

(a) Mutual bonds. The articles of a nonassessable mutual may authorize mutual bonds of one or more classes and shall specify the amount of each class of bonds the corporation is authorized to issue, their designations, preferences, limitations, rates of interest, relative rights and other terms, subject to the following provisions:

1. During the first year after the initial issuance of a certificate of authority, the corporation may issue only a single class of bonds with identical rights;

2. After the first year but within 5 years after the initial issuance of a certificate of authority, additional classes of bonds may be authorized after approval of the commissioner, who shall approve if he or she finds that policyholders and prior bondholders will not be prejudiced;

3. The rate of interest shall be fair and reasonable; and

4. The bonds shall bear a maturity date not later than 10 years from the date of issuance, when principal and accrued interest shall be due and payable, subject to par. (d).

(b) Contribution notes. Any mutual may issue contribution notes if the commissioner approves. The commissioner may approve only if he or she finds that:

3. The notes will not be the subject of a public offering;

4. Their terms are not prejudicial to policyholders, holders of mutual bonds or of prior contribution notes; and

5. The mutual's articles or bylaws do not forbid their issuance.

(c) Prohibited transactions. No mutual may:

1. If it has any outstanding obligations on mutual bonds or contribution notes, borrow on contribution notes from, or sell bonds to, any other insurer without approval of the commissioner; or

2. Make any loan to another insurer except a fully secured loan at usual market rates of interest.

(d) Repayment. Payment of the principal or interest on mutual bonds or contribution notes may be made in whole or in part only after approval of the commissioner. Approval shall be given if all financial requirements of the issuer to do the insurance business it is then doing will continue to be satisfied after payment and if the interests of its insureds and the public are not endangered. In the event of liquidation under ch. 645 unpaid amounts of principal and interest on contribution notes shall be subordinated to the payment of principal and interest on any mutual bonds issued by the corporation at any time.

(e) Other obligations. Nothing in this section prevents a mutual from borrowing money on notes which are its general obligations, nor from pledging any part of its disposable assets therefor.

History: 1971 c. 260; 1973 c. 184; 1979 c. 102 ss. 98, 236 (5); 1989 a. 303; 2009 a. 342.