GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

S	1 

SENATE BILL 1056

Short Title:  Hospital/Med. Service Corp.	(Public)

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Sponsors: Senators Gulley and Winner.

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Referred to:  Rules and Operations of the Senate.

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April 21, 1997

A BILL TO BE ENTITLED
AN ACT TO AMEND THE NONPROFIT CORPORATION LAWS AND THE INSURANCE LAWS TO PROTECT THE PUBLIC'S INTEREST IN THE DISPOSITION OF FUNDS RESULTING FROM A CONVERSION BY A NONPROFIT HOSPITAL AND MEDICAL SERVICE CORPORATION TO A FOR-PROFIT ENTITY.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 55A-17-01 reads as rewritten:
"§ 55A-17-01.  Applicability of Chapter.
(a)	The provisions of this Chapter relating to domestic corporations shall apply to:
(1)	All corporations heretofore or hereafter organized under this Chapter.
(2)	All nonprofit corporations without capital stock heretofore or hereafter organized under any other act, unless there is some other specific statutory provision particularly applicable to such corporations or inconsistent with some provisions of this Chapter, in which case that other provision prevails.  
(b)	The provisions of this Chapter relating to foreign corporations shall apply to all corporations conducting affairs in this State for purposes for which a corporation might be organized under this Chapter. A foreign corporation authorized to conduct affairs in this State on July 1, 1994, is subject to this Chapter but is not required to obtain a new certificate of authority to conduct affairs under this Chapter.
(c)	Notwithstanding subdivision (a)(2) of this section, this Chapter does not:
(1)	Repeal or modify the provisions of G.S. 54-138.
(2)	Apply to a hospital and medical service corporation that is licensed under Article 65 of Chapter 58 of the General Statutes and that was incorporated prior to July 1, 1957.  However, if that corporation proposes to convert under G.S. 58-65-130(3), it shall provide written notice and a plan of the conversion to the Attorney General and the Commissioner of Insurance at least 30 days before the consummation of the conversion."
Section 2.  G.S. 58-65-130 reads as rewritten:
"§ 58-65-130. Amendments to certificate of incorporation.
Any corporation subject to the provisions of this Article and Article 66 of this Chapter may hereafter amend its charter in the following manner only:
(1)	a.	A meeting of the board of directors, trustees or other governing authority shall be called in accordance with the bylaws specifying the amendment to be voted upon at such meeting.
b.	If at such meeting two thirds of the directors, trustees or other governing authority present vote in favor of the proposed amendment, then the president and secretary shall under oath make a certificate to this effect, which certificate shall set forth the call for such meeting, a statement showing service of such call upon all directors, and a certified copy of so much of the minutes of the meeting as relate to the adoption of the proposed amendment.
c.	Said officers shall cause said certificate to be published once a week for two consecutive weeks in a newspaper in Raleigh and in the county where the corporation's principal office is located, or posted at the courthouse door if no newspaper be published within the county. Said printed or posted notices shall be in such form and of such size as the Commissioner may approve, and in addition to setting forth in full the certificate required in paragraph b shall state that application for amending the corporation's charter in the manner specified has been proposed by the board of directors, trustees, or other governing authority, and shall also state the time set for the meeting of certificate holders thereby called to be held at the principal office of the corporation to take action on the proposed amendment. A true copy of such notice shall be filed with the Commissioner. Such publication and filing of notice shall be completed at least 30 days prior to the date set therein for the meeting of the certificate holders and due proof thereof shall be filed with the Commissioner at least 15 days prior to the date of such meeting. If the meeting at which the proposed amendment is to be considered is a special meeting, rather than a regular annual meeting of certificate holders, such special meeting can be called only after the Commissioner has given his approval in writing, and the published notice shall show the fact of such approval. At said meeting those present in person or represented by proxy shall constitute a quorum.
d.	If at such certificate holders' meeting two thirds of those present in person or by proxy shall vote in favor of any proposed amendment, the president and secretary shall make a certificate under oath setting forth such fact together with the full text of the amendment thus approved. Said certificate shall, within 30 days after such meeting, be submitted to the Commissioner for his approval as conforming to the requirement of law, and it shall be the duty of the Commissioner to act upon all proposed amendments within 10 days after filing of such certificates with him. Should the Commissioner approve the proposed amendment or amendments, he shall certify this fact, together with the full text of such amendments as are approved by him, to the Secretary of State who shall thereupon issue the charter amendment in the usual form. Should the Commissioner disapprove of any amendment, then the same shall not be allowed.
(2)	All charters and charter amendments heretofore issued upon application of the board of directors, trustees or other governing authority of any corporations subject to the provisions of this Article and Article 66 of this Chapter are hereby validated.
(3)	The charter of any corporation subject to the provisions of this Article and Article 66 of this Chapter may be amended to convert that corporation, so amending its charter, into either a mutual nonstock or stock accident and health insurance company or life insurance company subject to the provisions of Articles 1 through 64 of this Chapter.
(4)	If the corporation proposing to convert is exempt under G.S. 55A-17-01(a)(2) from the provisions of Chapter 55A of the General Statutes, it is subject to the following:
a.	The filing of the notice and plan of the proposed conversion in accordance with G.S. 55A-17-01(c).
b.	Any rules adopted by the Commissioner of Insurance to protect the rights of subscribers or certificate holders in the reserves and capital of the corporation.
c.	The impressment of its reserves and capital or portions thereof by the State of North Carolina for the protection of the public, as determined concurrently by the Commissioner of Insurance and the Attorney General."
Section 3.  This act is effective when it becomes law.