P.R. Laws tit. 26, § 2944
(1) A domestic mutual insurer may be converted into a domestic stock insurer pursuant to such plan and procedure as are approved by the Commissioner in advance of such conversion.
(2) The Commissioner shall not approve any such plan, procedure, or conversion unless:
(a) It is approved by the vote of not less than three-fourths of the insurer’s policyholders who vote on such plan, pursuant to such notice and procedure as may be approved by the Commissioner. Such vote may be in person, by mail, or by proxy.
(b) The equity of each policyholder in the insurer is determinable under a fair formula approved by the Commissioner, which such equity shall be based upon not less than the insurer’s entire surplus plus a reasonable present equity in its reserves and in all nonadmitted assets.
(c) The plan gives to each policyholder a preemptive right to acquire his proportionate part of all of the proposed capital stock of the insurer within a designated reasonable period, and to apply upon the purchase thereof the amount of his equity in the insurer as determined under clause (b) above.
(d) Shares are so offered to policyholders at a price not greater than to be thereafter offered to others. Such price may be at such premium as is reasonably necessary to provide adequate contributed surplus.
(e) The plan provides for payment in cash to each policyholder of his equity in the insurer as determined pursuant to clause (b) above, to the extent that the policyholder has not used the same toward purchase of shares.
(f) The plan applies as to all policyholders who would be entitled to share in the assets of the insurer on liquidation under § 2954 of this title.
(g) The plan is otherwise fair and equitable to policyholders.
History —Ins. Code § 29.440.