2009 California Insurance Code - Section 11010-11033 :: Article 3. Organization

11010.  Seven or more United States citizens, a majority of whom are
citizens of this state, who desire to form a fraternal benefit
society, may make, sign, and acknowledge articles of incorporation
before an officer competent to take acknowledgment of deeds. The
articles of incorporation shall state:
   (a) The proposed corporate name of the society, which shall not so
closely resemble the name of any society or insurance company as to
be misleading or confusing.
   (b) The purposes for which it is being formed, and the mode in
which its corporate powers are to be exercised.
   The purposes shall not include more liberal powers than are
granted by this chapter, provided that any lawful, social,
intellectual, educational, charitable, benevolent, moral, fraternal,
or religious purposes shall be set forth among the purposes of the
society.
   (c) The names and residences of the incorporators, and the names,
residences and official titles of all the officers, trustees,
directors, or other persons who are to have and exercise the general
control of the management of the affairs and funds of the society for
the first year, or until the ensuing election at which all officers
shall be elected by the supreme legislative or governing body. The
election shall be held within one year of the date of the issuance of
the permanent certificate.

11011.  The articles of incorporation, duly certified copies of the
constitution, laws and rules, copies of all proposed forms of
certificates, applications therefor, and circulars to be issued by
the society, and a bond, conditioned upon the return to applicants of
the advanced payments if the organization is not completed within
one year, such bond to be in the amount of ten thousand dollars
($10,000) and approved by the commissioner, shall be filed with the
commissioner, who may require such further information as the
commissioner deems necessary. All documents filed are to be in the
English language. If the purposes of the society conform to the
requirements of this chapter and all provisions of the law have been
complied with, the commissioner shall so certify, retain and file the
articles of incorporation and furnish the incorporators a
preliminary certificate authorizing the society to solicit members as
hereinafter provided. Copies of the articles of incorporation shall
also be filed with the Secretary of State.

11012.  No such preliminary certificate shall be valid after one
year from its date, or after such further period, not exceeding one
year, as may be authorized by the commissioner, upon cause shown,
unless the 500 applicants hereinafter required have been secured and
the organization has been completed as provided in this article. The
articles of incorporation and all other proceedings thereunder shall
become null and void in one year from the date of the preliminary
certificate, or at the expiration of the extended period, unless the
society shall have completed its organization and received a
certificate of authority to do business as hereinafter provided.

11013.  Upon receipt of a preliminary certificate from the
commissioner, the society may solicit members for the purpose of
completing its organization, shall collect from each applicant the
amount of not less than one semiannual payment or six monthly
payments, in accordance with its table of rates as provided by its
constitution and laws, and shall issue to each such applicant a
receipt for the amount so collected. No society shall incur any
liability other than for the return of such advance payment, nor
issue any certificate, nor pay, allow, or offer or promise to pay or
allow any death or disability benefit to any person until:
   (a) Actual bona fide applications for death benefits have been
secured aggregating at least five hundred thousand dollars ($500,000)
on not less than 500 lives.
   (b) All such applicants for death benefits shall have been
regularly examined by qualified practicing physicians or shall have
made acceptable declarations of insurability.
   (c) Certificates of examinations or acceptable declarations of
insurability meeting the established underwriting standards of the
society have been duly filed and approved by the society.
   (d) Ten subordinate lodges or branches have been established into
which the 500 applicants have been admitted.
   (e) There has been submitted to the commissioner, under oath of
the president or secretary, or corresponding officer of the society,
a list of such applicants, giving their names, addresses, date each
was admitted, name and number of the subordinate branch of which each
applicant is a member, amount of benefits to be granted and rates
therefor.
   (f) It shall have been shown to the commissioner, by sworn
statement of the treasurer, or corresponding officer of such society,
that at least 500 applicants have each paid in cash at least one
semiannual payment or six monthly payments as herein provided, which
payments in the aggregate shall amount to at least five thousand
dollars ($5,000), all of which shall be credited to the fund or funds
from which benefits are to be paid, and no part of which may be used
for expenses. Said advance payments shall be held in trust during
the period of organization and if the organization has not qualified
for a certificate of authority within one year or within the extended
period, as provided in Section 11012, such payments shall be
returned to said applicants.

11014.  The commissioner may make such examination and require such
further information as he deems advisable. Upon presentation of
satisfactory evidence that the society has complied with all the
provisions of law, he shall issue to the society a certificate to
that effect and that the society is authorized to transact business
pursuant to the provisions of this chapter. The certificate shall be
prima facie evidence of the existence of the society at the date of
such certificate. The commissioner shall cause a record of such
certificate to be made. A certified copy of such record may be given
in evidence with like effect as the original certificate.

11015.  Every such society shall have the power to make a
constitution and by-laws for the government of the society, the
admission of its members, the management of its affairs, and the
fixing and readjusting of the rates of its members from time to time.
It shall have the power to change, alter, add to or amend such
constitution and by-laws and shall have such other powers as are
necessary and incidental to carrying into effect the objects and
purposes of the society.

11016.  A society shall operate for the benefit of its members and
their beneficiaries by:
   (a) Providing benefits under Section 11041, and
   (b) Operating for one or more social, intellectual, educational,
charitable, benevolent, moral, fraternal, patriotic, or religious
purposes for the benefit of its members, and, if desired, for others.
The society's purposes may be carried out directly by the society or
indirectly through subsidiary or affiliated entities established in
furtherance of the purposes of the society.
   Any incorporated society authorized to transact business in this
state on January 1, 1996, may thereafter exercise all the rights,
powers, and privileges prescribed in this chapter and in its charter
or articles of incorporation as far as consistent with this chapter.
A domestic society shall not be required to reincorporate.

11017.  After September 21, 1952, no unincorporated or voluntary
association shall be permitted to transact business in this State as
a fraternal benefit society under this chapter.
   Any domestic voluntary association now authorized to transact
business in this State may incorporate when:
   (a) It shall have completed its conversion to an incorporated
society, not later than one year after the effective date of this
chapter;
   (b) It has filed its articles of incorporation and has satisfied
the other requirements prescribed in this article; and
   (c) The commissioner shall have made such examination and procured
whatever additional information he shall deem advisable.
   Every voluntary association so incorporated shall incur the
obligations and enjoy the benefits thereof the same as though
originally incorporated, and such corporation shall be deemed a
continuation of the original voluntary association. The officers
thereof shall serve through their respective terms as provided in its
original articles of association, but their successors shall be
elected and serve as provided in its articles of incorporation.
Incorporation of a voluntary association shall not affect existing
suits, claims or contracts.

11018.  Any domestic society may provide that the meetings of its
legislative or governing body may be held in any state, district,
province or territory wherein such society has at least five
subordinate branches, and all business transacted at such meetings
shall be as valid in all respects as if such meetings were held in
this State. However, its principal office shall be located in this
State.

11019.  No domestic society shall consolidate or merge with any
other society unless it files with the commissioner the papers and
evidence specified in this section and pays the sum of one hundred
sixty-two dollars ($162) in lawful money of the United States to the
commissioner in advance as a filing fee therefor. The papers and
evidence herein required to be filed with the commissioner in such
instance are:
   (a) A certified copy of the written contract containing in full
the terms and conditions of the consolidation or merger;
   (b) A sworn statement by the president and secretary or
corresponding officers of each society showing the financial
condition thereof on a date not earlier than December 31, next
preceding the date of the contract;
   (c) A certificate of such officers, duly verified by their
respective oaths, that the consolidation or merger has been approved
by a two-thirds vote of the supreme legislative or governing body of
each society; and
   (d) Evidence that at least 60 days prior to the action of the
supreme legislative or governing body of each society, the text of
the contract has been furnished to all members of the society by
being sent by mail or by being published in full in the official
organ of the society and the issue containing the text of the
contract being mailed to each member of the society.

11020.  If the commissioner finds that such contract is in
conformity with the provisions of this chapter, that the financial
statements are correct, that under it the interests of the
certificate holders of the parties are properly protected and that
the consolidation or merger is just and equitable to the members of
each society, he shall approve the contract and issue his certificate
to such effect. Upon such approval, the contract shall be in full
force and effect unless any society which is a party to the contract
is incorporated under the laws of any other state or territory. In
such event the consolidation or merger shall not become effective
unless and until it has been approved as provided by the laws of such
state or territory and a certificate of such approval filed with the
commissioner of this State or, if the laws of such state or
territory contain no such provision, then the consolidation or merger
shall not become effective unless and until the supervising
insurance official of such state or territory has advised the
commissioner that he has no objection to such consolidation or
merger.

11021.  Upon the consolidation or merger becoming effective, all the
rights, franchises and interests of the consolidated or merged
societies in and to every species of property, real, personal or
mixed, and things in action thereunto belonging shall be vested in
the society resulting from or remaining after the consolidation or
merger without any other instrument, except that conveyances of real
property may be evidenced by proper deeds, and the title to any real
estate or interest therein, vested under the laws of this State in
any of the societies consolidated or merged, shall not revert or be
in any way impaired by reason of the consolidation or merger, but
shall vest absolutely in the society resulting from or remaining
after such consolidation or merger.

11022.  The affidavit of any officer of the society or of any one
authorized by it to mail any notice or document, stating facts which
show that same has been duly addressed and mailed, shall be prima
facie evidence that such notice or document has been furnished the
addressees.

11023.  A society may admit to benefit membership any person not
less than 15 years of age at nearest birthday who has been examined
by a legally qualified physician, and whose examination has been
supervised and approved in accordance with the laws of the society,
or who has made declaration of insurability acceptable to the society
in accordance with its established underwriting standards. Any such
member who shall apply for additional benefits more than six months
after becoming a benefit member shall pass an additional medical
examination or make an additional declaration of insurability as
required by the society.

11024.  Any person admitted to benefit membership in such society
prior to attaining the full age of 21 years shall be bound by the
terms of the application and certificate and by all the laws and
rules of the society, and shall be entitled to all the rights and
privileges of membership therein, to the same extent as though the
age of majority had been attained at the time of application.

11025.  A society may accept general or social members who shall
have no voice or vote in the management of its insurance affairs.

11026.  A domestic society may amend its articles of incorporation,
constitution, or laws, in accordance with the provisions thereof, by
action of its supreme legislative or governing body at any regular or
special meeting. If the articles of incorporation, constitution, or
laws so provide, amendment may be made by referendum. A referendum
may be held in accordance with the provisions of the society's
articles of incorporation, constitution, or laws by the vote of the
voting members of the society, by the vote of delegates or
representatives of voting members or by the vote of local lodges or
branches. No amendment submitted for adoption by referendum shall be
adopted unless, within six months from the date of the amendment's
submission, a majority of the members of the society have signified
their consent to the amendment by one of the methods herein
specified.

11027.  No amendment to the articles of incorporation, constitution
or laws of any domestic society shall take effect unless approved by
the commissioner who shall approve such amendment if he finds that it
has been duly adopted and is not inconsistent with any requirement
of the laws of this State or with the character, objects and purposes
of the society. Unless the commissioner shall disapprove any such
amendment within 60 days after the filing of same, such amendment
shall be considered approved. The approval or disapproval of the
commissioner shall be in writing and mailed to the secretary or
corresponding officer of the society at its principal office. In case
he disapproves such amendment, the reasons therefor shall be stated
in such written notice.

11028.  Within 90 days from the approval thereof by the
commissioner, all such amendments, or a synopsis thereof, shall be
furnished to all members of the society either by being published in
the official organ of the society or by being sent by mail. The
affidavit of any officer of the society or of anyone authorized by it
to mail any amendments or synopsis thereof, stating facts which show
that same has been duly addressed and mailed, shall be prima facie
evidence that such amendments or synopsis thereof have been furnished
the addressee.

11029.  Every foreign society transacting business under this
chapter shall file with the commissioner a duly certified copy of all
amendments of, or additions to, its constitution and laws within 90
days after the enactment of the same.

11030.  Printed copies of the constitution or laws of any domestic
or foreign society as amended, certified by the secretary or
corresponding officer of the society shall be prima facie evidence of
the legal adoption thereof.

11031.  A society may create, maintain and operate hospitals,
asylums, homes, sanitariums or other charitable or benevolent
institutions for the benefit of its sick, disabled, aged or
distressed members and their families and dependents in accordance
with the provisions of its laws; and for such purpose it may own,
hold or lease personal property or real property located within or
without this State, with necessary buildings thereon. Such property
shall not be deemed an admitted asset of the society.

11032.  Maintenance, treatment and proper attendance in any such
institution may be furnished free or a reasonable charge may be made
therefor, but no such institution shall be operated for profit.
Excepting a society relieved of the requirement of maintaining a
separation of funds pursuant to the provisions of Section 11120, no
part of the cost or expense of creating, maintaining or operating
such institution shall be defrayed or paid out of the mortuary, sick
or disability funds of a society. The society shall maintain a
separate accounting of any disbursements under this section and
report them in its annual statement. No society shall own or operate
funeral homes or undertaking establishments.

11033.  A society maintaining special funds of the nature set forth
in Section 11122 may make payments from such funds to its members
compatible with the type thereof; provided that, if such payments are
of such a nature that they could constitute benefits within the
classes of insurance set forth in Section 11041, the society making
such payments may not:
   (a) Make any separate charge therefor;
   (b) Issue any certificate, policy or other document promising such
payments;
   (c) Provide in its constitution, by-laws or any other document
that such payments may be received by any member of such society as a
matter of right; nor
   (d) Advertise such payments as insurance or as payments to which
the member has any right.
   No such special funds shall be an admitted asset of the society in
excess of the amount of the liabilities of such special fund. The
society shall maintain a separate accounting of any disbursements
under this section and report them in its annual statement.