(215 ILCS 5/Art. II heading) ARTICLE II. DOMESTIC STOCK COMPANIES (Article scheduled to be repealed on January 1, 2027)

(215 ILCS 5/6) (from Ch. 73, par. 618)

(Section scheduled to be repealed on January 1, 2027)

Sec. 6. Scope of Article. This Article shall apply to all domestic stock companies transacting or being organized to transact any of the kinds of insurance business enumerated in Section 4.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/7) (from Ch. 73, par. 619)

(Section scheduled to be repealed on January 1, 2027)

Sec. 7. Name. The corporate name of any company organized under this Article shall not be the same as, or deceptively similar to, the name of any domestic company, or of any foreign or alien company authorized to transact business in this State.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/8) (from Ch. 73, par. 620)

(Section scheduled to be repealed on January 1, 2027)

Sec. 8. Principal office and place of business. The principal office of any company organized under this Article shall be located in this State. Unless the Director has approved otherwise, the principal place of business of any company organized under this Article shall be located in this State.

(Source: P.A. 82-498.)

(215 ILCS 5/9) (from Ch. 73, par. 621)

(Section scheduled to be repealed on January 1, 2027)

Sec. 9. Authorized kinds of business.

(1) Companies may be organized under this Article either for the purpose of transacting any of the kind or kinds of business enumerated in Class 1 of Section 4, or for the purpose of transacting any of the kind or kinds of business enumerated in Classes 2 and 3 of that Section, except that those companies offering mortgage pool or mortgage guaranty insurance may provide no other types of insurance.

(2) A domestic company may, notwithstanding limitations otherwise applicable, and provided it maintains books and records which account for such business, engage directly in any of the following businesses: (a) rendering investment advice; (b) rendering services related to the functions involved in the operation of its insurance business including, but not limited to, actuarial, loss prevention, safety engineering, data processing, accounting, claims, appraisal and collection services; (c) acting as administrative agent for a government instrumentality which is performing an insurance function for a health or welfare program; (d) reinsuring the business of title insurance companies, provided such domestic company if organized as a stock company shall have capital and surplus of not less than $5,000,000 and if organized as a domestic mutual or reciprocal company have surplus of not less than $5,000,000; (e) any other business activity reasonably complementary or supplementary to its insurance business; either to the extent necessarily or properly incidental to the insurance business the company is authorized to do in this State or to the extent approved by the Director and subject to any limitations he may prescribe for the protection of the interests of the policyholders of the company taking into account the effect of such business on the company's existing insurance business and its surplus, the proposed allocation of the estimated cost of such business and the risks inherent in such business as well as the relative advantages to the company and its policyholders of conducting such business directly instead of through a subsidiary.

(Source: P.A. 86-1156.)

(215 ILCS 5/10) (from Ch. 73, par. 622)

(Section scheduled to be repealed on January 1, 2027)

Sec. 10. Directors.

(1) After the date of incorporation, as determined by Section 18, and until the first meeting of shareholders, the incorporators shall have the powers and perform the duties ordinarily possessed and exercised by a board of directors.

(2) Upon the issuance of a certificate of authority to a company organized under this article, the corporate powers shall be exercised by, and its business and affairs shall be under the control of, a board of directors composed of not less than 3 nor more than 21 natural persons who are shareholders, except where the Company is a wholly owned subsidiary, and who are at least 18 years of age and at least 3 of whom are residents and citizens of this State. After June 30, 2002, at least 20%, but not less than one, of the directors of a company that is not subject to Section 131.20b shall be persons who are not officers or employees of the company. A person convicted of a felony may not be a director, and all directors shall be of good character and known professional, administrative, or business ability, such business ability to include a practical knowledge of insurance, finance, or investment. The first board of directors shall be elected at the first meeting of shareholders, and, except as provided in subsection (3) below, all directors shall be elected annually thereafter.

(3) If the board of directors consists of 6 or more members, in lieu of electing the membership of the whole board of directors annually, the articles of incorporation may provide that the directors shall be divided into two or three classes, each class to be as nearly equal in number as is possible. The term of office of directors of the first class shall expire at the first annual meeting of shareholders after their election, that of the second class shall expire at the second annual meeting after their election, and that of the third class, if any, shall expire at the third annual meeting after their election. At each annual meeting after such classification, a number of directors equal to the number of directors in the class whose terms expire at the time of such meeting shall be elected to hold office until the second succeeding annual meeting, if there are two classes, or until the third succeeding annual meeting, if there are three classes.

(4) In all elections for directors every shareholder of common shares has the right to vote, in person or by proxy, for the number of common shares owned by him, for as many persons as there are directors to be elected, or to cumulate his shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares equals, or to distribute them on the same principle among as many candidates as he thinks fit, and directors shall not be elected in any other manner.

(5) Meetings of the board of directors, regular or special, may be held either within or without the State. Meetings of the board of directors shall be upon such notice as the by-laws may prescribe. Attendance of a director at any meeting shall constitute a waiver of notice of such meeting except where a director attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting, unless expressly otherwise provided by this Code. Unless specifically prohibited by the articles of incorporation or by-laws, members of the board of directors or of any committee of the board of directors may participate in and act at any meeting of such board or committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating. Unless specifically prohibited by the articles of incorporation or by-laws, members of the board of directors or of any committee of the board of directors may take action without a meeting, if a consent in writing setting forth the action so taken shall be signed by all of the directors entitled to vote with respect to the subject matter thereof, or by all of the members of such committee, as the case may be. The consent shall be evidenced by one or more written approvals, each of which sets forth the action taken and bears the signature of one or more directors or committee members. All approvals evidencing the consent shall be filed in the company's corporate records. The action taken shall be effective when all of the directors, or members of the committee, have approved the consent unless the consent specifies a different effective date.

(6) If the number of directors provided for in the articles of incorporation be indefinite, the number of directors to be elected, within the minimum and maximum limits set forth in paragraph (2), shall be as provided in the by-laws. The number of directors may be increased or decreased from time to time by amendment to the by-laws. The by-laws may establish a variable range for the size of the board by prescribing a minimum and maximum number of directors. The maximum may not exceed the minimum by more than 5. If a variable range is established, the number of directors may be fixed or changed from time to time, within the minimum and maximum, by the directors or the shareholders without further amendment to the by-laws.

(7) (a) A company may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the company) by reason of the fact that he or she is or was a director, officer, employee or agent, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to the best interests of the company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interest of the company or, with respect to any criminal action or proceeding, that the person had reasonable cause to believe that his or her conduct was unlawful.

(b) A company may indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the company to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to the best interests of the company, provided that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to the company, unless, and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses as the court shall deem proper.

(c) To the extent that a director, officer, employee or agent of a company has been successful, on the merits or otherwise, in the defense of any action, suit or proceeding referred to in subsections (a) and (b), or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.

(d) Any indemnification under subsections (a) and (b) (unless ordered by a court) shall be made by the company only as authorized in the specific case, upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in subsections (a) or (b). Such determination shall be made (1) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the shareholders.

(e) Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the company in advance of the final disposition of such action, suit or proceeding, as authorized by the board of directors in the specific case, upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he or she is entitled to be indemnified by the company as authorized in this Section.

(f) The indemnification provided by this Section shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any by-law, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the heirs, executors and administrators of such a person.

(g) A company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the company, or who is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of his or her status as such, whether or not the company would have the power to indemnify such person against such liability under the provisions of this Section.

(h) If a company has paid indemnification or has advanced expenses to a director, officer, employee or agent, the company shall report the indemnification or advance in writing to the shareholders with or before the notice of the next shareholders meeting.

(i) For purposes of this Section, references to "the company" shall include, in addition to the surviving company, any merging company (including any company having merged with a merging company) absorbed in a merger which, if its separate existence had continued, would have had the power and authority to indemnify its directors, officers, and employees or agents, so that any person who was a director, officer, employee or agent of such merging company, or was serving at the request of such merging company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section with respect to the surviving company as such person would have with respect to such merging company if its separate existence had continued.

(j) For purposes of this Section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the company" shall include any service as a director, officer, employee or agent of the company which imposes duties on, or involves services by such director, officer, employee, or agent with respect to any employee benefit plan, its participants, or beneficiaries. A person who acted in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of any employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interest of the company" as referred to in this Section.

(Source: P.A. 92-140, eff. 7-24-01.)

(215 ILCS 5/11) (from Ch. 73, par. 623)

(Section scheduled to be repealed on January 1, 2027)

Sec. 11. Executive committee. If the by-laws of any company subject to the provisions of this article, so provide, the board of directors, by a resolution adopted by a majority of the whole board, may designate three or more directors to constitute an executive committee, which committee, to the extent provided in the resolution or in the by-laws, shall have and exercise, during the interim between the meetings of the board, all of the authority of the board in the management of the company, but the designation of such committee shall not relieve the board nor any member thereof of any responsibility imposed by law.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/12) (from Ch. 73, par. 624)

(Section scheduled to be repealed on January 1, 2027)

Sec. 12. By-laws.

(1) The incorporators shall adopt by-laws for the company and such by-laws may not be altered, amended, or repealed, prior to the issuance of a certificate of authority to the company, except by written consent of subscribers representing at least two-thirds of the shares subscribed, and the approval of the Director.

(2) After a certificate of authority is issued to a company, the power to make, alter, amend or repeal by-laws shall be vested in the board of directors unless reserved to the shareholders by the articles of incorporation.

(Source: Laws 1937, 696.)

(215 ILCS 5/13) (from Ch. 73, par. 625)

(Section scheduled to be repealed on January 1, 2027)

Sec. 13. Minimum capital and surplus requirements.

(1) A company organized after December 31, 1985 under this Article must have and at all times maintain a paid-up capital of not less than the minimum capital requirement applicable to the class or classes and clause or clauses of section 4 describing the kind or kinds of insurance which it is authorized to write, as follows: Life, Accident, Health and Legal Expense (a) Class 1, Clauses (a), (b) or (c), $1,000,000; more than one clause, $1,000,000.

Casualty, Fidelity and Surety (b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j) $1,000,000; more than one clause, $1,000,000.

Fire, Marine and Legal Expense (c) Class 2, Clauses (e), (f), (k), (l) or Class 3, any or all clauses or any combination thereof, $400,000.

Multiple Line (d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $1,000,000.

Glass and Livestock and Domestic Animals (e) Class 2, Clause (f) only or (k) only, $100,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

Any company organized prior to January 1, 1986 and regulated under this Article must have and at all times maintain paid-up capital of not less than the minimum capital that was required for that particular company at the time it was organized, unless any clause or clauses have been added. If any clause or clauses have been added, then such company must have and at all times maintain paid-up capital of not less than the minimum capital requirement applicable to the class or classes and clause or clauses of Section 4 at the time that the additional clause or clauses are authorized.

(2) A company organized after December 31, 1985 under this Article must have at the time its Certificate of Authority is issued by the Director paid-in surplus of not less than the minimum paid-in surplus requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows: Life, Accident, Health and Legal Expense (a) Class 1, Clauses (a), (b) or (c), $1,000,000; more than one clause, $1,000,000.

Casualty, Fidelity and Surety (b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $1,000,000; more than one clause, $1,000,000.

Fire, Marine and Legal Expense (c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $600,000.

Multiple Line (d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $1,000,000.

Glass and Livestock and Domestic Animals (e) Class 2, Clause (f) only or (k) only, $150,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(3) Any company organized after December 31, 1985 under this Article must have and at all times maintain, in addition to the minimum capital required by paragraph (1) of this Section, minimum surplus requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows: Life, Accident, Health and Legal Expense (a) Class 1, Clauses (a), (b) or (c), $500,000; more than one clause, $500,000.

Casualty, Fidelity and Surety (b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $500,000; more than one clause, $500,000.

Fire, Marine and Legal Expense (c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $300,000.

Multiple Line (d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $500,000.

Glass and Livestock and Domestic Animals (e) Class 2, Clause (f) only or (k) only, $50,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(4) Any company organized prior to January 1, 1986 and regulated under this Article, in addition to the minimum capital which is required by paragraph (1) of this Section, must have and at all times maintain until December 31, 1986, minimum surplus of $300,000; and on December 31, 1986 and thereafter such company must have and maintain at all times, surplus of no less than the following amounts: Life, Accident, Health and Legal Expense (a) Class 1, Clauses (a), (b) or (c), $500,000; more than one clause, $500,000.

Casualty, Fidelity and Surety (b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $500,000; more than one clause, $500,000.

Fire, Marine and Legal Expense (c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $300,000.

Multiple Line (d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $500,000.

Glass and Livestock and Domestic Animals (e) Class 2, Clause (f) only or (k) only, $50,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(5) Any company organized prior to January 1, 1986 and regulated under this Article must have on December 31, 1990 and thereafter maintain until December 31, 1995 the greater of (a) minimum capital required by paragraph (1) of this Section plus the surplus required to be maintained after December 31, 1986 by paragraph (4) of this Section; or (b) combined capital and surplus of not less than the minimum requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write as follows: Life, Accident, Health and Legal Expense (a) Class 1, Clauses (a), (b) or (c), $1,200,000; more than one clause, $1,200,000.

Casualty, Fidelity and Surety (b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $1,200,000; more than one clause, $1,200,000.

Fire, Marine and Legal Expense (c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $600,000.

Multiple Line (d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $1,200,000.

Glass and Livestock and Domestic Animals (e) Class 2, Clause (f) only or (k) only, $100,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(6) Any company organized prior to January 1, 1986 and regulated under this Article must have on December 31, 1995 and thereafter maintain at all times combined capital and surplus of not less than the minimum requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write as follows: Life, Accident, Health and Legal Expense (a) Class 1, Clauses (a), (b) or (c), $1,500,000; more than one clause, $1,500,000.

Casualty, Fidelity and Surety (b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $1,500,000; more than one clause, $1,500,000.

Fire, Marine and Legal Expense (c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $700,000.

Multiple Line (d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $1,500,000.

Glass and Livestock and Domestic Animals (e) Class 2, Clause (f) only or (k) only, $150,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(7) Any company organized prior to January 1, 1986 and regulated under this Article experiencing a change in control, as control is defined in Section 131.1(b) of this Code, must have simultaneously with the change in control and thereafter maintain at all times combined capital and surplus of not less than the minimum requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write as follows: Life, Accident, Health and Legal Expense (a) Class 1, Clauses (a), (b) or (c), $1,500,000; more than one clause, $1,500,000.

Casualty, Fidelity and Surety (b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $1,500,000; more than one clause, $1,500,000.

Fire, Marine and Legal Expense (c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $700,000.

Multiple Line (d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $1,500,000.

Glass and Livestock and Domestic Animals (e) Class 2, Clause (f) only or (k) only, $150,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

Notwithstanding, the foregoing provisions of this paragraph (7), any company which experiences a change in control, as control is defined in Section 131.1(b) of this Code, by reason of any laws of descent, distribution or probate, shall be exempt from the requirements of this paragraph (7) for a period of 2 years following the date of death or incompetency giving rise to the change in control.

(8) Any company organized prior to September 10, 1971 or converted from a mutual company to a stock company between July 1, 1983 and June 30, 1985, which had less than $1,000,000 capital and surplus on January 1, 1986, and whose authority is limited to Class 2 of Section 4 of this Code and which is regulated under this Article, shall be exempt from the requirements of paragraphs (5) and (6) of this Section.

(9) The Director shall take action under Section 34 of this Code against any company which fails to maintain the minimum surplus required by this Section. The words "minimum surplus" mean the net total of the following accounts, where applicable, as they appear in the annual statement of a stock company on the usual and proper annual statement form prescribed by the National Association of Insurance Commissioners: paid-in surplus; contributed surplus; unassigned or earned surplus; and special surplus.

(Source: P.A. 87-315.)

(215 ILCS 5/14) (from Ch. 73, par. 626)

(Section scheduled to be repealed on January 1, 2027)

Sec. 14. Incorporators. Any one or more natural persons, at least one of whom is a resident of this State, who desire to form a company under this Article shall sign and acknowledge before an officer authorized to take acknowledgments, articles of incorporation in duplicate.

(Source: P.A. 84-502.)

(215 ILCS 5/14.1) (from Ch. 73, par. 626.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 14.1. Articles of incorporation. The articles shall set forth:

(a) the corporate name;

(b) the location of its principal office;

(c) the period of duration, which may be perpetual;

(d) the class or classes of insurance business as provided in Section 4, in which it proposes to engage and the kinds of insurance in each class it proposes to write;

(e) the number of its directors, or that the number of directors shall be not less than the minimum nor more than the maximum stated in Section 10, the terms of office; and the manner of electing the directors;

(f) the amount of its authorized capital, the number of authorized common and non-voting preferred shares, the par value of each share, and the number of the common and non-voting preferred shares to be issued and sold in accordance with this Article to provide at least the minimum paid-up capital and paid-in surplus as set forth in Section 13 of this Article;

(g) the terms and conditions on which preferred shares may be converted to common shares, if any shares are issued with the right of conversion;

(h) such other provisions not inconsistent with law as may be deemed by the incorporators to be necessary or advisable.

(Source: P.A. 90-381, eff. 8-14-97.)

(215 ILCS 5/15) (from Ch. 73, par. 627)

(Section scheduled to be repealed on January 1, 2027)

Sec. 15. Documents to be delivered to Director by incorporators. Upon the execution of the articles of incorporation, there shall be delivered to the Director:

(a) duplicate originals of the articles of incorporation;

(b) a copy of the by-laws adopted by the incorporators;

(c) the form of subscription agreement to be used by the company;

(d) 2 organization bonds or the cash or securities provided for in Section 16; and

(e) the form of escrow agreement for the deposit of cash or securities.

(Source: P.A. 100-863, eff. 8-14-18.)

(215 ILCS 5/16) (from Ch. 73, par. 628)

(Section scheduled to be repealed on January 1, 2027)

Sec. 16. Organization bonds.

(1) The incorporators except as stated in subsection (3) of this Section, shall deliver to the Director two bonds in favor of the State of Illinois, in the penalty of $50,000 each, with the incorporators as principals and a duly authorized surety company as surety. One of such bonds shall be for the use and benefit of the State of Illinois, and shall be conditioned upon the payment of costs incurred by the State by reason of any legal proceedings for liquidation or dissolution of such company prior to the issuance to it of a certificate of authority to do an insurance business. The other bond shall be for the use and benefit of subscribers, shareholders and creditors, and shall be conditioned upon the full and complete accounting for all funds and property coming into the possession of the incorporators or into the possession of the company prior to the issuance to it of a certificate of authority to do an insurance business.

(2) In lieu of delivering the above bonds, the incorporators may deposit with the Director $100,000 in cash or securities of the United States Government or of the State of Illinois, having a market value of at least $100,000. The cash or securities so deposited shall be held in trust by the Director, until the issuance of a certificate of authority to the company, to indemnify the State of Illinois and all subscribers, shareholders and creditors of the company for the same matters and things set forth as conditions of the organization bonds mentioned in subsection (1).

(3) No bonds are required if the stock of the company is to be purchased by a sole shareholder.

(Source: P.A. 84-1431.)

(215 ILCS 5/17) (from Ch. 73, par. 629)

(Section scheduled to be repealed on January 1, 2027)

Sec. 17. Publication of intention.

(1) Upon complying with the provisions of Section 15, the incorporators shall cause to be published in a newspaper of general circulation in this State, in the county where the principal office of the company is to be located, once each week for 3 consecutive weeks, a notice setting forth:

(a) their intent to form the company and the proposed name thereof;

(b) the class or classes of insurance business in which the company proposes to engage; and

(c) the address where its principal office shall be located.

(2) Proof of such publication made by a certificate of the publisher or his agent shall be delivered to the Director.

(Source: P.A. 100-863, eff. 8-14-18.)

(215 ILCS 5/18) (from Ch. 73, par. 630)

(Section scheduled to be repealed on January 1, 2027)

Sec. 18. Approval of documents.

(1) If the Director finds that the documents and papers so delivered comply with this Code, he must place on file in his office the by-laws, form of subscription agreement, bonds or securities, and one of the duplicate originals of the articles of incorporation, and endorse upon the other duplicate original his approval, and the month, day and year of approval and deliver it to the incorporators. The company is deemed to be fully organized on the date of the approval of the articles of incorporation by the Director, and that date is the date of incorporation of the company.

(2) If the Director finds that any of said documents are insufficient or do not comply with this Code, he shall notify the incorporators in writing in what respect said documents are found to be insufficient and if requested so to do must grant the incorporators a hearing.

(Source: P.A. 77-747.)

(215 ILCS 5/19) (from Ch. 73, par. 631)

(Section scheduled to be repealed on January 1, 2027)

Sec. 19. Recording articles of incorporation. The duplicate original of the articles of incorporation returned by the Director shall be filed for record, within 15 days after it is delivered to the company, in the office of the recorder of the county where the principal office of the company is to be located.

(Source: P.A. 83-358.)

(215 ILCS 5/20) (from Ch. 73, par. 632)

(Section scheduled to be repealed on January 1, 2027)

Sec. 20. Authority to solicit subscriptions.

(1) Upon the approval of the articles of incorporation by the Director and upon compliance with such reasonable regulations relating to the offering and subscription of or for shares as may be promulgated by the Director to the end that no inequity, fraud or deceit may be worked or tend to be worked upon prospective subscribers to or purchasers of such shares, he shall issue to the company a permit, which shall expire at the end of two years from its date, authorizing it to solicit subscriptions in accordance with such regulations, this Code and the form of subscription agreement filed with him, to receive payment for its shares and to do such other acts as may be necessary and proper in order to complete its organization and to entitle it to receive a certificate of authority to transact an insurance business.

(2) No subscription for shares shall be solicited, until such subscriptions or shares shall have been qualified or registered in accordance with any law of this State or of the United States requiring qualification or registration.

(3) If the Director finds that any company in process of organization has failed to comply with, or has violated any provision of the Code, he may proceed against the company under Article XIII, and may after notice and hearing, if any provision of the Code or any regulation promulgated under subsection (1) has been violated, revoke the permit issued to it under subsection (1).

(Source: Laws 1959, p. 1428.)

(215 ILCS 5/21) (from Ch. 73, par. 633)

(Section scheduled to be repealed on January 1, 2027)

Sec. 21. Subscription agreement.

(1) The company and each subscriber shall enter into an agreement for the subscription to the shares of the company and such agreement shall also constitute an agreement between the several subscribers. It shall state:

(a) the price of the shares, terms, time, and medium of payment therefor;

(b) the part of the price that may be used for commission, promotion, organization, and other expenses;

(c) the name of the bank or trust company in this State in which the funds or securities are to be deposited pending the completion of the organization of the company; and

(d) that the total cash or securities received in payment will be returned to the subscribers who have made such payments in the event the organization of the company is not completed.

(2) Subscriptions to shares shall be irrevocable unless subscribers representing 50% or more of the amount subscribed consent to the revocation.

(3) Any subscription agreement may provide for payment in installments but in the case of subscriptions prior to the issuance of a certificate of authority to the company, such installments shall not extend beyond 2 years from the date of the permit of the Director authorizing the solicitation of subscriptions.

(Source: P.A. 100-863, eff. 8-14-18.)

(215 ILCS 5/21.1) (from Ch. 73, par. 633.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 21.1. Escrow agreement. The company and the bank or trust company designated in the subscription agreement shall execute an escrow agreement. The escrow agreement shall state that the proceeds of all subscriptions to shares shall be placed in the bank or trust company and remain until an organization examination has been completed, at which time the escrow agent is authorized to purchase securities for deposit in the amount required by Section 26 and forward them to the Director. The escrow agent is authorized to release the balance of the escrowed funds to the company only upon notification that a Certificate of Authority or similar documentation has been issued by the Director.

(Source: P.A. 84-502.)

(215 ILCS 5/22) (from Ch. 73, par. 634)

(Section scheduled to be repealed on January 1, 2027)

Sec. 22. Payments for shares-Promotion expenses. The net proceeds of all subscriptions to shares prior to the issuance of a certificate of authority to the company to transact business shall not be less than the paid up capital specified in the articles of incorporation and the required paid-in surplus. Payments upon subscriptions shall be made only in cash or securities that are eligible for investment under Article VIII. The part of the subscription price, that may be used for commission, promotion, organization, and other expenses, in no event shall be in excess of 15% of the amount collected on the respective subscriptions and in no case shall such expenses be paid out of the subscription proceeds until such time as the sale of all of the shares constituting the offering has been completed.

(Source: Laws 1961, p. 3735.)

(215 ILCS 5/23) (from Ch. 73, par. 635)

(Section scheduled to be repealed on January 1, 2027)

Sec. 23. Deposit of proceeds of shares - When subscribers deemed shareholders.

(1) The cash or securities received by the company upon subscriptions for shares shall be placed in the bank or trust company designated in the escrow and subscription agreements. No part of the cash or securities so deposited shall be used by the company prior to the issuance to it of a certificate of authority to transact business, except when payments for all the shares to be issued and sold, as set forth in the articles of incorporation, are completed, for the purpose of making the deposit as provided for in Section 26.

(2) Any officer, director or incorporator of a company who, prior to the issuance of the certificate of authority to the company, withdraws, causes to be withdrawn or knowingly permits the withdrawal of any cash or securities on deposit in such bank or trust company, for any purposes other than those authorized in subsection (1), shall be guilty of a Class A misdemeanor.

(3) The subscribers shall be deemed to be shareholders when full payment upon the subscriptions for all shares which the company proposes to issue and sell, as set forth in the articles of incorporation, shall have been received by the company, but no certificate for shares may be issued by the company prior to the issuance to it of a certificate of authority to transact business.

(4) In the event that payments for all shares to be issued and sold by the company, as set forth in the articles of incorporation, are not completed within the time provided in the permit of the Director authorizing the solicitation of subscriptions the cash and securities received in payment shall be returned to the subscribers who have made the payments.

(Source: P.A. 84-502.)

(215 ILCS 5/24) (from Ch. 73, par. 636)

(Section scheduled to be repealed on January 1, 2027)

Sec. 24. Certificate of authority to do an insurance business. When the Director has been notified that the capital required by the articles of incorporation has been fully subscribed, and that such capital and the required surplus has been fully collected, he shall conduct an examination of the company. If he finds that the organization of the company is complete, that the required capital provided in the articles of incorporation and required surplus has been fully collected and deposited with the designated bank or trust company, that the deposit provided for by Section 26 has been made and that all of the requirements imposed by this Code, have been met, he shall issue to the company a certificate of authority to transact the kind or kinds of business specified therein. No company shall transact any business of insurance until it has received a certificate of authority as herein prescribed nor any business of insurance not specified in such certificate of authority.

(Source: Laws 1957, p. 603.)

(215 ILCS 5/25) (from Ch. 73, par. 637)

(Section scheduled to be repealed on January 1, 2027)

Sec. 25. Voluntary surrender of the articles of incorporation. At any time prior to the issuance of the certificate of authority to the company the articles of incorporation may be voluntarily surrendered and the company dissolved by written agreement filed with the Director, signed by a majority of the incorporators, and by subscribers representing at least two-thirds of the shares subscribed. Such surrender and dissolution shall become effective only upon the approval thereof by the Director. The Director shall approve the surrender of such articles of incorporation if upon investigation he shall find that:

(a) no insurance business has been transacted by the company;

(b) all sums of money or securities, if any, collected upon subscriptions, have been returned to the subscribers; and

(c) all obligations of the company have been paid or discharged.

(Source: P.A. 100-863, eff. 8-14-18.)

(215 ILCS 5/26) (from Ch. 73, par. 638)

(Section scheduled to be repealed on January 1, 2027)

Sec. 26. Deposit.

(a) A company subject to the provisions of this Article shall make and maintain with the Director for the protection of all creditors, policyholders and policy obligations of the company, a deposit of securities having a fair market value equal to the minimum capital and surplus required to be maintained under Section 13. The Director may release the required deposit of securities upon receipt of an order of a court having proper jurisdiction or upon: (i) certification by the company that it has no outstanding creditors, policyholders, or policy obligations in effect and no plans to engage in the business of insurance; (ii) receipt of a lawful resolution of the company's board of directors effecting the surrender of its articles of incorporation for administrative dissolution by the Director; and (iii) receipt of the name and forwarding address for each of the final officers and directors of the company, together with a plan of dissolution approved by the Director.

(b) All deposits by insurers subject to this Article must be limited to the following types:

(1) United States government bonds, notes, and bills for which the full faith and credit of the government of the United States is pledged for the payment of principal and interest.

(2) United States public bonds and notes of any state or of the District of Columbia, or Canadian public bonds and notes of any province thereof, for which the full faith and credit of the issuer has been pledged for the payment of principal and interest.

(3) United States and Canadian county, provincial, municipal, and district bonds and notes for which the issuer has lawful authority to levy taxes or make assessments for the payment of principal and interest.

(4) Bonds and notes of any federal agency that are guaranteed as to payment of principal and interest by the United States.

(5) International development bank bonds, bonds issued by the State of Israel and sold through the Development Corporation for Israel or its successor entities, and notes issued, assumed, and guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, or the International Finance Corporation.

(6) Corporate bonds and notes of any private corporations that are not affiliates or subsidiaries of the insurer, which corporations are organized under the laws of the United States, Canada, any state, the District of Columbia, any territory or possession of the United States, or any province of Canada.

(7) Certificates of deposit.

(c) To be eligible for deposit under subsection (b), any bond or note must have the following characteristics:

(1) The bond or note must be interest-bearing or interest-accruing, and the insurer must be the exclusive owner of the interest accruing thereon and entitled to receive the interest for its account.

(2) The issuer must be in a solvent financial condition and the bond or note must not be in default.

(3) The bond, note, or debt of the issuing country must be rated in one of the 4 highest classifications by an established, nationally recognized investment rating service or must have been given a rating of 1 by the Securities Valuation Office of the National Association of Insurance Commissioners.

(4) The market value of the bond or note must be readily ascertainable or the value of the bond or note must be obtainable by the insurer or its custodian from the issuer's fiscal agent.

(5) The bond or note must be the direct obligation of the issuer.

(6) The bond or note must be stated in United States dollar denominations.

(7) The bond or note must be eligible for book-entry form on the books of the Federal Reserve's book-entry system or in a depository trust clearing system or on the books of the issuer's transfer agent or evidenced by a certificate delivered to the insurer or its custodian.

(d) To be eligible for deposit under item (7) of subsection (b), a certificate of deposit must have the following characteristics:

(1) The certificate of deposit must be issued by a bank, savings bank, or savings association that is organized under the laws of the United States, of this State, or of any other state and that has a principal office or branch office in this State that is authorized to receive deposits in this State.

(2) The certificate of deposit must be interest-bearing and may not be issued in discounted form.

(3) The certificate of deposit must be issued for a period of not less than one year.

(4) The issuing bank, savings bank, or savings association must agree to the terms and conditions of the Director regarding the rights to the certificate of deposit and must have executed a written certificate of deposit agreement with the Director. The terms and conditions of the agreement shall include, but need not be limited to:

(A) Exclusive authorized signature authority for the chief financial officer.

(B) An agreement to pay, without protest, the proceeds of its certificate of deposit to the Director within 30 business days after presentation.

(C) A prohibition against levies, setoffs, survivorship, or other conditions that might hinder the Director's ability to recover the full face value of a certificate of deposit.

(D) Instructions regarding interest payments, renewals, taxpayer identification, and early withdrawal penalties.

(E) An agreement to be subject to the jurisdiction of the courts of this State, or those of the United States that are located in this State, for the purposes of any litigation arising out of this Section.

(F) Such other conditions as the Director requires.

(e) The Director may refuse to accept certain securities or refuse to accept the reported market value of certain securities offered pursuant to this Section in order to ensure that sufficient cash and securities are on hand to meet the purposes of the deposit. In making a refusal under this subsection (e), the guidelines for use of the Director may include, but need not be limited to, whether the market value of the securities cannot be readily ascertained and the lack of liquidity of the securities. Securities refused under this subsection (e) are not acceptable as deposits.

(f) All deposits required of a domestic insurer pursuant to the laws of another state, province, or country must be comprised of securities of the kinds required under subsection (b), having the characteristics required under subsections (c) and (d), and permitted by the laws of the other state, province, or country, except common stocks, mortgages or loans of any kind, real estate investment trust funds or programs, commercial paper, and letters of credit.

(Source: P.A. 98-110, eff. 1-1-14; 98-969, eff. 1-1-15.)

(215 ILCS 5/27) (from Ch. 73, par. 639)

(Section scheduled to be repealed on January 1, 2027)

Sec. 27. Dividends and other distributions.

(1) The board of directors of any company subject to this Article may declare and the company may pay dividends and other distributions (i) on its outstanding shares in cash, property, or its own shares and (ii) on its treasury shares in its own shares, subject to the following provisions:

(a) No dividend or other distribution may be declared or paid at any time except out of earned, as distinguished from contributed, surplus, nor when the surplus of the company is less than the surplus required by Section 13 for the kind or kinds of business authorized to be transacted by such company, nor when the payment of a dividend or other distribution would reduce its surplus to less than such amount.

(b) Except in the case of share dividends, surplus for determining whether dividends or other distributions may be declared shall not include surplus arising from unrealized appreciation in value, or revaluation of assets, or from unrealized profits upon investments.

(c) No dividend or other distribution may be declared or paid contrary to any restriction contained in the articles of incorporation.

(d) No dividend or other distribution may be declared or paid contrary to Section 131.20 or 131.20a.

(2) No payments may be made to policyholders by way of dividends unless the company possesses admitted assets in the amount of such payments in excess of its capital, minimum required surplus and all liabilities.

(Source: P.A. 88-364.)

(215 ILCS 5/27.1) (from Ch. 73, par. 639.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 27.1. Treasury shares. "Treasury shares" means (a) shares of a company which have been issued, have been subsequently acquired by and belong to the company, and have not, either by reason of the acquisition or thereafter, been cancelled or restored to the status of authorized but unissued shares and (b) shares declared and paid as a share dividend on the shares referred to in clause (a) or this clause (b) of this Section. Treasury shares shall be deemed to be "issued" shares but not outstanding shares and shall not be voted. Shares converted into or exchanged for other shares of the company shall not be deemed to be treasury shares.

(Source: P.A. 100-863, eff. 8-14-18.)

(215 ILCS 5/28) (from Ch. 73, par. 640)

(Section scheduled to be repealed on January 1, 2027)

Sec. 28. Dealing in shares of company.

(1) A company subject to the provisions of this Article shall have the power to purchase, take, receive, or otherwise acquire, hold, own, pledge, transfer, or otherwise dispose of its own shares, provided that it shall not purchase, either directly or indirectly, its own shares when its net assets are less than the sum of its paid-up capital, and its required surplus, any surplus arising from unrealized appreciation in value or revaluation of its assets and any surplus arising from surrender to the corporation of any of its shares, or when by so doing its net assets would be reduced below the minimum capital and surplus requirements of Section 13 hereof, and as set forth in the articles of incorporation. Notwithstanding the foregoing limitations, a company may purchase its own shares for any of the following purposes:

(a) eliminating fractional shares;

(b) collecting or compromising claims of the company or securing any indebtedness to the company previously incurred;

(c) paying dissenting shareholders entitled to payment for their shares in the event of a merger or consolidation;

(d) effecting a plan for the mutualization of the company; or

(e) furthering a general savings and investment plan for employees of the company.

(2) No shares which are or have been reacquired, purchased, pledged or held pursuant to paragraph (1) of this Section shall be considered an admitted asset as defined in this Code, or considered in determining the solvency of such company.

(Source: Laws 1959, p. 631.)

(215 ILCS 5/28.1) (from Ch. 73, par. 640.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 28.1. Dealing in shares of company by officers, directors and principal stockholders.

(a) Any person who is directly or indirectly the beneficial owner of more than 10% of any class of any equity security of a domestic stock insurance company, or who is a director or an officer of such company, shall file in the office of the Director by January 31, 1966 or within 10 days after he becomes such beneficial owner, director or officer, a statement, in such form as the Director may prescribe, of the amount of all equity securities of such company of which he is the beneficial owner; and, within 10 days after the close of each calendar month thereafter, if there has been a change in such ownership during such month, shall file in the office of the Director a statement, in such form as the Director may prescribe, indicating his ownership at the close of the calendar month and such changes in his ownership as have occurred during such calendar month.

(b) For the purpose of preventing the unfair use of information which may have been obtained by such beneficial owner, director or officer by reason of his relationship to such company, any profit realized by such beneficial owner, officer or director from any purchase and sale, or any sale and purchase, of any equity security of such company within any period of less than 6 months, unless such security was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the company, irrespective of any intention on the part of such beneficial owner, director or officer in entering into such transaction of holding the security purchased or of not repurchasing the security sold for a period exceeding 6 months. Suit to recover such profit may be instituted at law or in equity by the company, or if the company shall fail or refuse to bring such suit within 60 days after request or shall fail diligently to prosecute such a suit, a suit may be instituted by the owner of any security of the company in the name and in behalf of the company, but no such suit shall be brought more than 2 years after the date such profit was realized. This subsection shall not be construed to cover any transaction where such beneficial owner was not such both at the time of the purchase and sale, or the sale and purchase, of the security involved, or any transaction or transactions which the Director by rules and regulations may exempt as not comprehended within the purpose of this subsection.

(c) It is unlawful for any such beneficial owner, director or officer, directly or indirectly, to sell any equity security of such company if the person selling the security or his principal (i) does not own the security sold, or (ii) if owning the security, does not deliver it against such sale within 20 days thereafter, or does not within 5 days after such sale deposit it in the mails or other usual channels of transportation; provided, however, that this provision does not apply if such person proves that notwithstanding the exercise of good faith he was unable to make such delivery or deposit within such time, or that to do so would cause undue inconvenience or expense.

(d) The provisions of paragraph b of this Section do not apply to any purchase and sale, or sale and purchase, and the provisions of paragraph c of this Section do not apply to any sale, of an equity security of a domestic stock insurance company not then or theretofore held by such beneficial owner, director or officer in an investment account, by a dealer in the ordinary course of his business and incident to the establishment or maintenance by him of a primary or secondary market (otherwise than on an exchange as defined in the Securities Exchange Act of 1934) for such security. The Director may, by such rules and regulations as he finds to be necessary or appropriate in the public interest, define and prescribe terms and conditions with respect to securities held in an investment account and transactions made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market.

(e) The provisions of paragraphs a, b and c of this Section do not apply to foreign or domestic arbitrage transactions unless made in contravention of such rules and regulations as the Director may adopt in order to carry out the purposes of this Act.

(f) The term "equity security" when used in this Act means any stock or similar security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any other security which the Director finds to be of similar nature and considers necessary or appropriate, by such rules and regulations as he may prescribe in the public interest or for the protection of investors, to treat as an equity security.

(g) The provisions of paragraphs a, b and c of this Section do not apply to equity securities of a domestic stock insurance company if (i) such securities are registered, or are required to be registered, pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or if (ii) such domestic stock insurance company does not have any class of its equity securities held of record by 100 or more persons on the last business day of the year next preceding the year in which equity securities of the company would be subject to the provisions of paragraphs a, b and c of this Section except for the provisions of this subsection (ii).

(h) The Director may make such rules and regulations as may be necessary for the execution of the functions vested in him by this Section, and may for such purpose classify domestic stock insurance companies, securities, and other persons or matters within his jurisdiction. No provision of this Section imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule or regulation of the Director, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason.

(i) The provisions of this Section do not apply to any sale made prior to its effective date.

(Source: Laws 1965, p. 2257.)

(215 ILCS 5/28.2) (from Ch. 73, par. 640.2)

(Section scheduled to be repealed on January 1, 2027)

Sec. 28.2. Proxies, consents and authorizations of domestic stock companies.

(a) The Director is authorized to regulate proxies, consents, and authorizations in respect of securities issued by any company subject to the provisions of this Article to the extent as may be necessary or appropriate in the public interest or for the protection of investors, and such regulation may include but shall not be limited to rules and regulations under which any such company, director, or employee of the company or any other person may solicit or permit the use of his name to solicit any proxy, consent or authorization in respect of securities issued by any such company.

(b) Unless proxies, consents or authorizations in respect of a security of a company subject to the provisions of this Article are solicited by or on behalf of the management of such company from the holders of record of such security in accordance with the provisions of any rules and regulations prescribed under subsection (a) of this Section, prior to any annual or other meeting of the holders of such security, such company shall, if required by such rules and regulations prescribed by the Director as may be necessary or appropriate in the public interest or for the protection of investors, file with the Director and transmit to all holders of record of such security information substantially equivalent to the information which would be required to be transmitted if a solicitation were made.

(c) The authority granted under subsections (a) and (b) hereof includes the power on the part of the Director to require such companies to file with the Director and transmit to shareholders prior to the annual meeting of shareholders an annual report containing such financial statements for the last fiscal year as are referred to in the Stockholder Information Supplement filed with the annual statement of any such company under the provisions of Section 136 of this Code.

(d) If the Director finds, after notice and hearing, that such company or any director, officer or employee of such company or any other person has willfully violated the provisions of this Section or of any rule or regulation prescribed by the Director hereunder, he may order such company or any director, officer or employee of such company, or any other person, as the case may be, to pay to the State of Illinois a penalty in a sum not exceeding $5,000 for each such offense. The findings, determinations and orders of the Director made pursuant to this Section shall be subject to judicial review under the Administrative Review Law, as now or hereafter amended.

(Source: P.A. 82-783.)

(215 ILCS 5/28.2a) (from Ch. 73, par. 640.2a)

(Section scheduled to be repealed on January 1, 2027)

Sec. 28.2a. Proxies.

(1) A shareholder may appoint a proxy to vote or otherwise act for him or her by signing an appointment form and delivering it to the person so appointed.

(2) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this Section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by, or by attendance at the meeting and voting in person by, the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.

(3) An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest in the shares or in the corporation generally. By way of example and without limiting the generality of the foregoing, a proxy is coupled with an interest when the proxy appointed is one of the following:

(a) a pledgee;

(b) a person who has purchased or had agreed to purchase the shares;

(c) a creditor of the corporation who has extended it credit under terms requiring the appointment, if the appointment states the purpose for which it was given, the name of the creditor, and the amount of credit extended; or

(d) an employee of the corporation whose employment contract requires the appointment, if the appointment states the purpose for which it was given, the name of the employee, and the period of employment.

(4) The death or incapacity of the shareholder appointing a proxy does not revoke the proxy's authority unless notice of the death or incapacity is received by the officer or agent who maintains the corporation's share transfer book before the proxy exercises his or her authority under the appointment.

(5) An appointment made irrevocable under subsection (3) becomes revocable when the interest in the proxy terminates such as when the pledge is redeemed, the shares are registered in the purchaser's name, the creditor's debt is paid, the employment contract ends, or the voting agreement expires.

(6) A transferee for value of shares subject to an irrevocable appointment may revoke the appointment if the transferee was ignorant of its existence when the shares were acquired and both the existence of the appointment and its revocability were not noted conspicuously on the certificate (or information statement for shares without certificates) representing the shares.

(7) Unless the appointment of a proxy contains an express limitation on the proxy's authority, a corporation may accept one proxy's vote or other action as that of the shareholder making the appointment. If the proxy appointed fails to vote or otherwise act in accordance with the appointment, the shareholder is entitled to such legal or equitable relief as is appropriate in the circumstances.

(Source: P.A. 102-558, eff. 8-20-21.)

(215 ILCS 5/29) (from Ch. 73, par. 641)

(Section scheduled to be repealed on January 1, 2027)

Sec. 29. Amendment of articles of incorporation.

(1) A company subject to the provisions of this article may amend its articles of incorporation in any respect not in violation of law but may not amend its articles to insert any provision prohibited, or to delete any provision required, in original articles of incorporation for a similar domestic company organized under this Code, except as provided by Section 35.

(2) Amendments to the articles of incorporation, after a certificate of authority has been issued to the company, shall be made in the following manner:

(a) The board of directors shall adopt a resolution setting forth the proposed amendment and directing that it be submitted to a vote of shareholders at either an annual or special meeting.

(b) Written or printed notice setting forth the proposed amendment or a summary of the changes to be effected thereby and stating the time and place of the meeting at which the same will be considered, shall be mailed, postage prepaid and properly addressed, to each shareholder at least ten days before the time fixed for such meeting. A written waiver of notice signed by the shareholders, whether before or after the date of the meeting mentioned therein, shall be deemed equivalent to the notice in this Section provided.

(c) At such meeting a vote of the shareholders shall be taken on the proposed amendment. The proposed amendment shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds of the outstanding shares.

(3) Amendments to the articles of incorporation, prior to the issuance of a certificate of authority to the company, shall be made by the submission of the proposed amendment by the incorporators to a vote of the subscribers in the same manner as provided in subsection (2) for submission to shareholders. The proposed amendment in such cases shall be adopted upon receiving the affirmative vote of all subscribers. If such company has no subscribers the proposed amendment shall be adopted by the written consent of all the incorporators.

(4) Upon the adoption of the amendment to the articles of incorporation, the restated articles of incorporation shall be executed in duplicate by the company by its president or vice-president and its secretary or assistant secretary, or officers corresponding thereto, and the corporate seal shall be thereunto affixed.

(5) There shall be delivered to the Director duplicate originals of the restated articles of incorporation and an affidavit of the secretary or assistant secretary of the company, setting forth the facts showing that the requirements of this Section have been complied with.

(Source: P.A. 84-502.)

(215 ILCS 5/30) (from Ch. 73, par. 642)

(Section scheduled to be repealed on January 1, 2027)

Sec. 30. Approval of amendment. The restated articles of incorporation and the other documents so delivered to the Director may be approved or disapproved by the Director in the same manner as original articles of incorporation. If said restated articles of incorporation be approved by the Director, he shall place on file in his office all the documents so delivered to him, except one of the duplicate originals of the restated articles of incorporation, and shall endorse upon such duplicate original his approval thereof and the month, day and year of such approval and deliver it to the company. The restated articles shall be effective as of the date of the approval thereof by the Director.

(Source: P.A. 84-1431.)

(215 ILCS 5/31) (from Ch. 73, par. 643)

(Section scheduled to be repealed on January 1, 2027)

Sec. 31. Recording restated articles of incorporation. The duplicate original of the restated articles of incorporation returned by the Director shall be filed for record, within 15 days after it is delivered to the company, in the office of the recorder of the county where the principal office of the company is located.

(Source: P.A. 84-1431.)

(215 ILCS 5/32) (from Ch. 73, par. 644)

(Section scheduled to be repealed on January 1, 2027)

Sec. 32. Increase in capital.

(1) Any company subject to this Article may increase its paid-up capital either by issuing additional shares not to exceed the number of authorized shares as set forth in its Articles or by increasing the par value of its shares. No company shall issue additional shares nor increase the par value of its shares without first procuring from the Director a permit so to do, which permit shall expire one year from its date. If the proposed increase in capital is part of a series of transactions that includes subsequent transactions that will be subject to Article VIII 1/2, the company shall provide the Director all of the information called for in Article VIII 1/2 prior to the Director's issuance of a permit. The Director may decline to issue a permit if the Director is not satisfied that the proposed series of transactions satisfies the standards established in Article VIII 1/2.

The Director, upon compliance by the company with the applicable provisions of this Code, and such reasonable regulations relating to the offering, issuance, subscription or sale of or for shares as may be promulgated by the Director to the end that no inequity, fraud or deceit may be worked or tend to be worked upon prospective subscribers to, recipients or purchasers of shares or present holders thereof, shall issue a permit to the company to issue additional shares upon receipt of a copy of a resolution by the Board of Directors authorizing the issuance of such shares.

If preferred shares having a right of conversion to common shares are to be issued, the terms and conditions on which the shares may be converted shall be provided to the Director before a permit may be issued pursuant to this Section.

In the case of shares to be issued for sale, the permit shall authorize the company to solicit subscriptions to such shares on a form of subscription agreement which shall have been submitted to and approved by the Director.

All of the provisions of this Code relative to the filing, terms and effect of subscription agreements, payment for shares, the limitations of expenses, filing of bonds except that no bonds shall be required when a company issues stock to its sole shareholder, deposit of proceeds of shares, return of funds in the event the payment for all of the additional shares is not completed, and qualification or registration shall apply to the same extent and effect as if the additional shares were shares representing the original capital of a company being organized under this Article, except that no organization bond with regard to costs incurred in connection with liquidation or dissolution shall be required, and if the subscription agreement provides for payment in installments, such installments shall not extend beyond one year from date of the permit of the Director.

If shares are to be issued as a stock dividend, or if the par value of shares is to be increased, the permit shall authorize the company to pay for such additional shares or increase in par value by transferring the requisite amount of surplus to paid-up capital provided, however, no transfer of such surplus shall be made which will reduce the remaining surplus to less than the surplus required by Section 13. In the case of an increase in par value, the company may require each shareholder to surrender his or her certificate and to accept in lieu thereof a new certificate conforming to such increase in par value.

No more than one permit of the types under this Section may be outstanding in the name of any company at any time.

(2) When the Director is notified that the additional shares proposed to be issued have, or that the increase in par value has, been fully paid, and that all of the requirements of the permit have been satisfied, he or she shall make an examination of the company and if he or she finds that the provisions of this Section have been complied with, he or she shall issue a certificate of paid-up capital to that effect which shall be filed with the recorder of the county in which the principal office of the company is located within 15 days from the date of said certificate. Upon the issuance of such certificate, the company may withdraw the proceeds of the sale, if any, of its shares and the bond, conditioned upon the full and complete accounting by the company for the proceeds of any such sale of shares, shall terminate or the cash deposited with the Director in lieu of such bond shall be returned.

(3) If the Director finds that any company has failed to comply with, or has violated any provision of the Code or any regulation promulgated under subsection (1), he or she may, in addition to and notwithstanding any other procedure, remedy or penalty provided under the laws of this State, after notice and hearing, revoke the permit issued to it under subsection (1).

(Source: P.A. 90-381, eff. 8-14-97.)

(215 ILCS 5/32.1) (from Ch. 73, par. 644.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 32.1. Stock option plans. A company subject to this Article which has done business in Illinois for 3 or more years and which has adopted a stock option plan shall submit that plan to the Director. Unless the Director finds that such stock option plan creates an inequity, fraud, or deception upon shareholders of the company, the Director shall approve such plan and issue a permit to the company authorizing the issuance of such shares of stock as optionees under the plan are entitled from time to time to acquire by the exercise of their options, including an adjustment in the number of shares to be issued as may at any time be appropriate due to the increase or decrease in the number of shares resulting from any share dividend, and subdivision or combination of shares, or any reorganization, merger, consolidation, or other recapitalization or change in the corporate structure or shares of the company. A stock option plan is deemed prima facie as not creating any inequity, fraud, or deception upon shareholders if it complies with applicable provisions of the Internal Revenue Code in effect at the time of the adoption of the plan and continues in compliance with those provisions or other new provisions of the Internal Revenue Code as it hereafter may be amended; provided, however, that the number of shares in respect to such plan together with the number of shares in respect of which unexpired options are outstanding or may be granted under any and all option plans of the company shall in no event exceed 10% of the total shares outstanding. The permit is effective with respect to all shares issued at any time to optionees under the plan. After receipt of the permit and upon receipt by the company of the full purchase price for any shares to be issued to any optionee, the company may issue such shares to any such optionee without further authorization from the Director. If a plan approved by the Director is amended, no shares may be issued under the plan as amended until the amendment, or the plan as amended, has been approved by the Director. Upon such approval, the permit previously issued shall be deemed to authorize the issuance of shares under the plan as amended. A permit or permits to issue shares under this Section may be outstanding in addition to any outstanding permit to issue shares for any other purpose.

On or before the 25th day of each month a company which issued shares during the preceding month under this Section shall provide the Director with the following information and affidavit:

(1) a list of the names of the individuals to whom were issued shares during the preceding month under the stock option plan;

(2) the number of shares and a description of the shares issued to each individual;

(3) the date of each issue;

(4) the price per share and total price paid by each said individual; and

(5) an affidavit signed by either the president, a vice president, the secretary, or the treasurer of the company under oath averring that the dollar consideration due from each such individual was actually received by the company before the issuance of those shares. Such information and affidavit shall be accompanied by the company's request for a certificate of paid-up capital.

After receiving the information and affidavit and satisfying himself as to the accuracy thereof, the Director shall issue a certificate of paid-up capital which shall be recorded by the company with the recorder of the county in which the principal office of the company is located, within 15 days from the date of the issuance of the certificate. No bond or cash deposit with the Director is required with respect to shares issued under this Section.

(Source: P.A. 83-358.)

(215 ILCS 5/33) (from Ch. 73, par. 645)

(Section scheduled to be repealed on January 1, 2027)

Sec. 33. Decrease of capital.

(1) When articles of amendment providing for a decrease of capital or a decrease in the par value of shares, or both, become effective, each issued share of the company shall thereupon be changed into and be a fractional part of a share, or a share having a reduced par value, or both, as provided by such amendment, and the holders of shares issued before the amendment shall thereupon cease to be holders of such shares and shall be and become holders of the shares authorized by the amendment upon the basis specified in the amendment, whether or not certificates representing the shares authorized by the amendment are then issued and delivered. The company may require each shareholder to surrender his or her certificate and accept in lieu thereof a new certificate conforming to such decrease.

(2) No distribution of the assets of the company shall be made to the shareholders upon any decrease of capital which shall reduce its surplus to less than the surplus required by this Code for the kind or kinds of business authorized to be transacted by the company.

(3) If the proposed articles of amendment providing for a decrease of capital or a decrease in the par value of shares, or both, is part of a series of transactions that includes subsequent transactions that will be subject to Article VIII 1/2, the company shall provide the Director all of the information called for in Article VIII 1/2 prior to the Director's approval. The Director may decline to approve if the Director is not satisfied that the proposed series of transactions satisfies the standards established in Article VIII 1/2.

(Source: P.A. 90-381, eff. 8-14-97.)

(215 ILCS 5/34) (from Ch. 73, par. 646)

(Section scheduled to be repealed on January 1, 2027)

Sec. 34. Procedure when insufficient assets possessed by company.

(1) Whenever the Director finds that the admitted assets of any company subject to the provisions of this Article are less than its capital, minimum required surplus and all liabilities, he or she must give written notice to the company of the amount of the impairment and require that the impairment be removed within such period, which must be not less than 30 nor more than 90 days from the date of the notice, as he or she may designate. Unless otherwise allowed by the Director, the company must discontinue the issuance of new and renewal policies while the impairment exists.

(2) Upon the receipt of the notice from the Director, the board of directors of the company must cause the impairment to be removed and call upon its shareholders ratably for the necessary amount to remove the impairment, or, by proper action, reduce its capital to meet the impairment providing the reduced capital is not less than the minimum requirements fixed by this Code or by other means remove the impairment. If the impairment is not removed within the period of time designated, the Director may order the board of directors to call upon its shareholders ratably. If a shareholder of the company refuses or neglects to pay the amount so called for after notice, given personally or by mail, by a date stated in the notice not less than 15 days from the date of such notice, the Director may order the board of directors to declare, by resolution, the shares of such person cancelled, and in lieu thereof may issue new certificates for shares and dispose of the same at the best price obtainable not less than par. If the amount received for such new certificates for shares exceeds the amount required to be paid by such shareholder, the excess must be paid to the shareholder so refusing to pay his or her ratable share of the impairment. Nothing contained in this subsection may be construed to impose any liability on any shareholder as a result of any call, enforceable in any manner other than through a sale of his or her shares as provided in this subsection.

(3) If the impairment is not removed within the period specified in the Director's notice, the company shall be deemed insolvent and the Director shall proceed against the company in accordance with Article XIII.

(4) If while the impairment exists any officer or director of the company knowingly renews, issues or delivers or causes to be renewed, issued or delivered any policy, contract or certificate of insurance unless allowed by the Director, and the fact of such impairment is known to the officer or director of the company, such officer or director shall be guilty of a business offense and may be fined not less than $200 and not more than $5,000 for each offense.

(5) Nothing in this Section prohibits, while such impairment exists, any such officer, director, trustee, agent or employee from issuing or renewing a policy of insurance when an insured or owner exercises an option granted to him or her under an existing policy to obtain new, renewed or converted insurance coverage.

(Source: P.A. 90-381, eff. 8-14-97.)

(215 ILCS 5/34.1) (from Ch. 73, par. 646.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 34.1. Subordinated indebtedness. A company organized under this Article may borrow or assume a liability for the repayment of a sum of money under a written agreement. The loan or advance shall bear interest either (1) at a fixed rate not exceeding the corporate base rate as reported by the largest bank (measured by assets) with its head office located in Chicago, Illinois, in effect on the first business day of the month in which the loan document is executed, plus 3% per annum or (2) at a variable rate equal to the corporate base rate determined on the first business day of each month during the term of the loan plus 2% per annum. In no event shall the variable interest rate for any month exceed the initial rate for the loan or advance by more than 10% per annum. The insurer shall elect at the time of execution of the loan or advance agreement whether the interest rate is to be fixed or floating for the term of the agreement. The loan and interest shall be repaid only out of surplus of the company in excess of the minimum surplus as is stipulated in and by the agreement. The agreement shall first be submitted to and approved by not less than a majority of the voting shares of the company and the Director. Repayment of principal or payment of interest may be made only with the approval of the Director when he is satisfied that the financial condition of the company warrants that action, but approval may not be withheld if the company shall have and submit satisfactory evidence of surplus of not less than the amount stipulated in the repayment of principal or interest payment clause of the agreement. No loan or advance made under this Section or interest accruing thereon shall form a part of the legal liabilities of the company until authorized for payment by the Director but until that authorization all statements published by the company or filed with the Director shall show the amount thereof then remaining unpaid as a special surplus account. Subject to approval of the Director, the interest rate on all subordinated surplus debentures existing on the effective date of this amendatory Act of 1991 can be amended to the rate as permitted in this Section with the mutual agreement of the company and the subordinated surplus debenture holder. Nothing in this Section shall be construed to mean that a company may not otherwise borrow money, but the amount so borrowed with accrued interest thereon shall be carried by the company as a liability.

(Source: P.A. 87-777; 87-1090.)

(215 ILCS 5/35) (from Ch. 73, par. 647)

(Section scheduled to be repealed on January 1, 2027)

Sec. 35. Stock companies may become mutuals.

(1) Any domestic stock company may become a mutual company by complying with the provisions of this Section.

(2) The board of directors shall adopt a mutualization plan and amended articles of incorporation, which articles shall conform to the articles required by this Code of a mutual company authorized to transact the kind or kinds of insurance stated in the articles. The mutualization plan and amended articles of incorporation shall be executed in duplicate by the company by its president or vice-president and its secretary or assistant secretary, or officers corresponding thereto, and shall be delivered to the Director. The plan and amended articles of incorporation delivered to the Director may be approved or disapproved by him in the same manner as original articles of incorporation. If the Director does not approve the plan and amended articles, he or she shall notify the company in writing of the reasons for such disapproval and if requested so to do, shall grant the company a hearing.

(3) If the plan and amended articles of incorporation be approved by the Director he or she shall place on file in his or her office one of the duplicate copies of each of the documents, shall endorse upon the other duplicate copies his approval thereof, and the month, day and year of such approval, and deliver the same to the company.

(4) The plan and amended articles of incorporation shall thereupon be submitted to and be approved by the shareholders in the same manner as is required for the submission and approval of amendments to articles of incorporation.

(5) After approval by the shareholders, a written or printed notice setting forth a copy of the plan and amended articles of incorporation, or a summary of the same, and stating the time and place of the special meeting at which they will be considered, and the manner of voting, shall be mailed to each policyholder of the company at least thirty days before the date set for such meeting. In a life insurance company each policyholder shall have one vote for each $1,000 of insurance which on the day of the meeting has been in force for one year or longer. In a company other than life, each policyholder shall be entitled to one vote for each policy in force on the day of the meeting, and upon which the premium has been paid at the time of the meeting. A policyholder may vote in person, by proxy or by mail. The election shall be under the supervision of not less than 3 nor more than 5 inspectors who shall be appointed by the Director. Such inspectors shall pass upon the qualifications of the voters, the validity of the ballots, shall canvass the vote and certify the result of such vote to the Director and to the company. If 2/3 of the votes cast at the meeting are in favor of the adoption of the plan, the said plan shall become effective. All necessary expenses incurred by the Director or by the inspectors in connection with the vote shall be certified to by the Director and paid by the company.

(6) The plan may provide for the acquisition by the company of its own shares, by purchase, by gift or otherwise in the manner provided therein. Any shares so acquired shall be held in trust for the company and shall be assigned and transferred on the books of the company to three individual trustees or to any trust company authorized under the laws of this State to do a trust business, to be chosen or approved by a majority vote of those policyholders who vote at the meeting referred to in subsection (5) of this Section, and such trustee or trustees shall vote the shares held by them or by it at any company meeting. Each such trustee shall file with the company a verified acceptance of his, hers or its appointment and a declaration that he or it will faithfully discharge his, hers or its duties as such trustee. Any dividends or other sums acquired or accruing to the trustees upon shares coming within their trusteeship shall upon the termination of the trust be delivered to the company.

(7) If a shareholder of the company shall file with such company, prior to or at the meeting of shareholders at which the plan of mutualization is submitted to a vote, a written objection to such plan and shall not vote in favor thereof, and such shareholder within 20 days after the plan is approved by such meeting shall make written demand on the company for payment of the fair value of his shares as of the day prior to the date on which such plan is approved by the shareholders, such shareholder shall be entitled to receive prior to the completion of the plan, upon surrender of his certificate or certificates representing said shares, such fair value thereof. Any shareholder who fails to make such objection or having objected fails to make demand within the 20 day period shall be conclusively presumed to have consented to the said plan and shall be bound by the terms thereof.

(8) If within 30 days after the date of the written demand mentioned in subsection (7), the value of such shares is agreed upon between the dissenting shareholder, the company and the Director, payment therefor shall be made within 90 days after the date of such agreement upon the surrender of his or her certificate or certificates representing the shares. Upon payment of the agreed value the dissenting shareholder shall cease to have any interest in such shares and cease to be a shareholder in the company.

(9) If, within such period of 30 days, the shareholder and the company do not so agree, then the dissenting shareholder may within 60 days after the expiration of the 30 day period, petition the Circuit Court of the county in which the principal office of the company is located, to appraise the value of such shares as of the date of the day prior to the date on which such vote was taken approving such plan. A copy of the petition shall be delivered or mailed by registered mail to the Director within 5 days after the filing thereof and proof of such delivery or mailing shall be filed with the court. The Director shall have the right to appear through the Attorney General and be heard upon all questions and issues in the proceeding. The practice, procedure, and judgment shall be, so far as practicable, the same as that under the eminent domain laws of this State.

(10) The judgment shall be payable only upon and simultaneously with the surrender to the company of the certificate or certificates representing the shares. Upon the payment of the judgment the dissenting shareholder shall cease to have any interest in such shares, and cease to be a shareholder in the company. Unless the dissenting shareholder shall file such petition within the time herein limited, such shareholder and all persons claiming under him or her shall be conclusively presumed to have approved and ratified the mutualization plan, and shall be bound by the terms thereof. The right of a dissenting shareholder to be paid the fair value of his shares as herein provided shall cease if and when the company shall abandon the mutualization plan.

(11) When all the shares of the Company have been acquired and cancelled in conformity with the plan and this Section, the Director shall issue a certificate to that effect, and the amended articles of incorporation shall thereupon become effective and the company shall thenceforth be a mutual company.

(12) The certificate mentioned in subsection (11) together with the duplicate original of the amended articles of incorporation theretofore approved by the Director shall be filed for record in the office of the recorder where the principal office of the company is located, within 15 days from the date of such certificate.

(Source: P.A. 83-358.)

(215 ILCS 5/35.1) (from Ch. 73, par. 647.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 35.1. Par value of stock. No company organized after August 10, 1961 under this Article shall issue any shares of stock having a par value of less than $1.00 per share. No company organized under this article whose stock has a par value of $1.00 or more per share, or after August 10, 1961, whose stock shall be increased to $1.00 or more per share, shall decrease the par value of its stock to less than $1.00 per share; and after October 1, 1963, no such company whose stock has a par value of less than $1.00 per share shall decrease the par value below the value fixed for it on October 1, 1963. The restrictions of this Section shall not apply to a decrease in par value because of any reduction of capital under subsection (2) of Section 34.

(Source: Laws 1963, p. 2765.)