2010 Arizona Revised Statutes
Title 20 - Insurance
20-869 Organization

20-869. Organization

Beginning on January 1, 1995, a domestic fraternal benefit society may be organized as follows:

1. Seven or more citizens of the United States, 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 who is competent to take acknowledgement of deeds. The articles of incorporation shall state all of the following:

(a) The proposed corporate name of the society. The proposed name shall not so closely resemble the name of any society or insurance company as to be misleading or confusing.

(b) The purposes for which the society is being formed and the mode in which its corporate powers will be exercised. The purposes shall not include powers that are more liberal than those granted by this article.

(c) The names and residences of the incorporators and the names, residences and official titles of all of the officers, trustees, directors or other persons who are to have and exercise the general control and the management of the affairs and funds of the society for the first year or until the ensuing election at which all of the officers shall be elected by the supreme governing body and that shall be held not later than one year from the date of issuance of the permanent certificate of authority.

2. The applicants shall file with the director the articles of incorporation, duly certified copies of the constitution and laws and rules, copies of all proposed forms of certificates, applications and circulars to be issued by the society and a bond conditioned on the return to the applicants of the advance payments if the organization is not completed within one year. The bond with sureties approved by the director shall be in an amount determined by the director of not less than three hundred thousand dollars or more than one million five hundred thousand dollars. All of the documents that are filed with the director shall be in English. If the purposes of the society conform to the requirements of this article and if all applicable provisions of law have been complied with, the director shall certify, retain and file the articles of incorporation and shall furnish to the incorporators a preliminary certificate of authority authorizing the society to solicit members pursuant to this section.

3. A preliminary certificate of authority is not valid after one year from its date of issuance or after a further period of time of not more than one year that is authorized by the director for good cause unless the five hundred applicants as required by this section have been secured and the organization has been completed pursuant to this article. The articles of incorporation and all proceedings authorized by the articles of incorporation become null and void one year from the date of the preliminary certificate or at the expiration of the extended period, unless the society has completed its organization and received a final certificate of authority to do business pursuant to this section.

4. On receipt of the preliminary certificate of authority from the director, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates and shall issue to each applicant a receipt for the amount collected. A society shall not incur liability other than for the return of the advance payment, issue any certificate or 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 benefits have been secured on not less than five hundred applicants and any necessary evidence of insurability has been furnished to and approved by the society.

(b) At least ten subordinate lodges have been established into which the five hundred applicants have been admitted.

(c) The treasurer or other corresponding officer of the society submits to the director a sworn statement showing that at least five hundred applicants have each paid in cash at least one regular monthly payment pursuant to this section and that the payments in the aggregate amount to at least one hundred fifty thousand dollars. The advance premiums shall be held in trust during the period of organization. If the society does not qualify for a certificate of authority within one year, the premiums shall be returned to the applicants.

5. The director may make any examination and require further information as the director deems advisable. After the society presents satisfactory evidence that it has complied with any applicable provisions of law, the director shall issue a certificate of authority to that effect. The certificate of authority is prima facie evidence of the existence of the society at the date of the certificate. The director shall record the certificate of authority. A certified copy of the record may be given in evidence.

6. An incorporated society that is authorized to transact business in this state, on or before January 1, 1995 is not required to reincorporate.