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304.29-301 Injunction -- Liquidation -- Receivership of domestic society.
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If the commissioner, upon investigation, finds that a domestic society:
(a) Has exceeded its powers;
(b) Has failed to comply with any provision of this subtitle;
(c) Is not fulfilling its contracts in good faith;
(d) Has a membership of less than four hundred (400) after an existence of one
(1) year or more; or
(e) Is conducting business fraudulently or in a manner hazardous to its members,
creditors, the public or the business,
the commissioner shall notify the society of the deficiency or deficiencies and state
in writing the reasons for his or her dissatisfaction. The commissioner shall issue a
written notice to the society requiring that the deficiency or deficiencies which exist
be corrected. After the notice, the society shall have a thirty (30) day period in
which to comply with the commissioner's request for correction; and if the society
fails to comply, the commissioner shall notify the society of the findings of
noncompliance and require the society to show cause on a date named why it should
not be enjoined from carrying on any business until the violation complained of
shall have been corrected, or why an action in Franklin Circuit Court should not be
commenced against the society.
If on that date the society does not present good and sufficient reasons why it should
not be so enjoined or why such action should not be commenced, the commissioner
may present the facts to the Attorney General who shall, if he or she deems the
circumstances warrant, commence an action to enjoin the society from transacting
business.
The court shall notify the officers of the society of a hearing. If after a full hearing it
appears that the society should be so enjoined or liquidated or a receiver appointed,
the court shall enter the necessary order. No society so enjoined shall have the
authority to do business until:
(a) The commissioner finds that the violation complained of has been corrected;
(b) The costs of the action shall have been paid by the society, if the court finds
that the society was in default as charged;
(c) The court has dissolved its injunction; and
(d) The commissioner has reinstated the certificate of authority.
If the court orders the society liquidated, it shall be enjoined from carrying on any
further business. The receiver of the society shall take possession of the books,
papers, money and other assets of the society, and, under the direction of the court,
close the affairs of the society and distribute its funds to those entitled to them.
No action under this section shall be recognized in any court of this state unless
brought by the Attorney General upon request of the commissioner. If a receiver is
to be appointed for a domestic society, the court shall appoint the commissioner as
receiver.
The provisions of this section relating to hearing by the commissioner, action by the
Attorney General at the request of the commissioner of insurance, hearing by the
court, injunction and receivership shall be applicable to a society which shall
voluntarily determine to discontinue business.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1401, effective July 15, 2010. -- Created
1988 Ky. Acts ch. 310, sec. 30, effective January 1, 1989.
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