A plan of exchange shall be adopted and become effective in the following manner:

1. (1) APPROVAL OF THE BOARDS OF DIRECTORS. - The boards of directors of each corporate party to the plan of exchange by resolution shall adopt the plan of exchange which shall set forth the terms and conditions of the exchange and the mode of carrying the same into effect and such other provisions with respect to the exchange as may be deemed necessary or desirable.

2. (2) APPROVAL OF COMMISSIONER. - Every plan of exchange, before being submitted to vote of the stockholders pursuant to subdivision (3) of this section, shall be submitted for approval to the commissioner in accordance with the following procedure:

   1. a. After the approval required by subdivision (1) of this section is obtained, the domestic company shall submit to the commissioner three copies of the plan of exchange and any other information which the commissioner may require with respect to such plan;
   2. b. Upon the submission of the plan, the commissioner shall schedule a public hearing to determine if the terms and conditions of the plan of exchange are fair, to be held within 30 days after such submission. Each corporation which is a party to the plan shall give notice of the time and place of such hearing to each stockholder of record of the corporation, as of a date 15 days prior to the date of the hearing, by letter mailed not later than 10 days prior to the hearing. Each corporation which is a party to the plan shall further cause notice of the hearing to be published in a newspaper of general circulation in the city wherein is located the principal place of business of the corporation, once a week for two consecutive weeks, the last publication of such notice to be not more than two weeks prior to the hearing date. Each stockholder of any corporation which is a party to the plan and each policyholder of the domestic company or any other domestic insurance company which is a party to the plan shall be entitled to appear and be heard in said hearing and said notices shall so state; and

   3. c. After conclusion of the hearing and not later than 60 days after submission of the plan, the commissioner shall issue a written order approving the terms and conditions of the plan of exchange as delivered to him and such modifications therein as the board of directors of each corporation which is a party to the plan shall approve, only if he finds: 1. That the terms and conditions of the plan, including modifications, if any, if effected, will not tend adversely to affect the financial stability or management of the domestic company or any other domestic insurance company which is a party to the plan; 2. That the interests of the policyholders of the domestic company and any other domestic insurance company which is a party to the plan are protected; and 3. That the terms and conditions of the plan and the proposed issuance and exchange are fair to all stockholders to whom it is proposed to issue stock or other securities of the holding company by the terms of the plan.

      If the commissioner fails to approve the plan, he shall state his reasons therefor in writing. Any party in interest may appeal from the ruling of the commissioner to the circuit court in the circuit where the insurance company maintains its home office by giving notice of such appeal to the commissioner within two weeks after such ruling. All expenses of the commissioner relating to the hearing shall be paid by the domestic company.

3. (3) APPROVAL OF STOCKHOLDERS. - The plan of exchange as approved by the commissioner pursuant to the provisions of subdivision (2) of this section shall then be submitted to a vote of the stockholders of the domestic company at an annual or special meeting of the stockholders. Written or printed notice shall be given to each stockholder of record entitled to vote at such meeting, not less than 20 days before such meeting, in the manner provided in the Alabama Business Corporation Act for the giving of notice of meetings of stockholders, and shall state the purpose of the meeting, whether the meeting be an annual or a special meeting. A copy or a summary of the plan of exchange shall be included in or enclosed with such notice. At such meeting, a vote of the stockholders shall be taken on the proposed plan of exchange. Each outstanding share of the domestic company shall be entitled to vote on the proposed plan of exchange, whether or not such share has voting rights under the provisions of the certificate of incorporation of the domestic company. The plan shall be approved upon receiving the affirmative vote of the holders of at least two thirds of the outstanding shares of the domestic company, unless any class of shares of the domestic company is entitled to vote as a class therein, in which event, the plan of exchange shall be approved upon receiving the affirmative vote of the holders of at least two thirds of the outstanding shares for each class of shares entitled to vote as a class thereon and of the total outstanding shares. Any class of shares of the domestic company shall be entitled to vote as a class if the plan of exchange contains any provision which, if contained in a proposed amendment to the certificate of incorporation, would entitle such class of shares to vote as a class. After such approval of the plan of exchange, and at any time prior to the filing of the certificate setting forth the plan of exchange pursuant to this subdivision, the plan of exchange may be abandoned pursuant to a provision for such abandonment, if any, contained in the plan of exchange. Stockholder approval by the stockholders of any other corporate party to the plan of exchange shall be governed by the laws otherwise applicable to the transactions involved in the plan.

4. (4) RIGHTS OF DISSENTING STOCKHOLDERS. - If any stockholder of the domestic company shall file with such corporation prior to, or at the meeting of, stockholders at which the plan of exchange is submitted to a vote a written objection to such plan and shall not vote in favor thereof and such stockholder, within 10 days after the date on which the vote was taken, shall make written demand on the domestic company for payment of the fair value of his shares as of the day prior to the date on which the vote was taken approving the plan, then, if the plan is effected, the domestic company or surviving corporation, if a merger is included in the plan, shall pay to such stockholder, upon surrender of his certificate, or certificates, representing such shares, the fair value thereof. Such demand shall state the number and class of the shares owned by such dissenting stockholder. Any stockholder failing to make demand within the 10-day period shall be bound by the terms of the plan of exchange.

   Within 10 days after the plan is effected, the domestic company or surviving corporation, as the case may be, shall give notice thereof to each dissenting stockholder who has made demand as provided for in this subdivision the payment of the fair value of his shares.

   If within 30 days after the date on which such plan was effected the value of such shares is agreed upon between the dissenting stockholder and the domestic company or surviving corporation, payment therefor shall be made within 90 days after the date on which such plan was effected from the fund established pursuant to the provisions of subdivision (5) of this section or, if the fund is not sufficient for such payment, from other cash assets, upon the surrender of the dissenting stockholder’s certificate, or certificates, representing such shares. Upon payment of the agreed value, the dissenting stockholder shall cease to have any interest in such shares or in the corporation.

   If within such period of 30 days the stockholder and the domestic company or the surviving corporation do not so agree, then the dissenting stockholder may, within 60 days after the expiration of the 30-day period, file a petition in any circuit court, asking for a finding and determination of the fair value of such shares, and shall be entitled to judgment against the domestic company or surviving corporation for the amount of such fair value as of the day prior to the date on which such vote was taken approving such plans, together with interest thereon to the date of such judgment. The judgment shall be payable only upon, and simultaneously with, the surrender to the domestic company or surviving corporation of the certificate or certificates representing such shares and shall be payable from the fund established pursuant to the provisions of subdivision (5) of this section or, if the fund is not sufficient for such payment, from other cash assets. Upon payment of the judgment, the dissenting stockholder shall cease to have any interest in such shares, or in the domestic company or surviving corporation. Unless the dissenting stockholder shall file such petition within the time limited in this subdivision, such stockholder and all persons claiming under him shall be bound by the terms of the plan of exchange.

   Shares acquired by the domestic company or the surviving corporation pursuant to the payment of the agreed value thereof or of the judgment entered therefor, as in this subdivision provided, shall be treasury shares and may be held and disposed of by such corporation as in the case of other treasury shares.

   A nominee of a corporate fiduciary holding shares of stock for more than one fiduciary account may dissent as to less than all of the shares registered in his name. In that event, his rights shall be determined as if the shares as to which he has dissented and his other shares were registered in the names of different stockholders.

   The dissenting rights of stockholders of any other corporate party to the plan of exchange shall be governed by the laws otherwise applicable to the transactions involved in the plan.

5. (5) FILING PLAN OF EXCHANGE. - After the date of the meeting of stockholders of the domestic company at which the plan of exchange was submitted to such stockholders, a certificate setting forth:

   1. a. The plan of exchange;
   2. b. The vote by which such plan was adopted by the stockholders of the domestic company and any other corporate party to the plan whose stockholders approved the plan under the laws otherwise applicable;
   3. c. The number of shares of the domestic company for which a dissenting right has been preserved and for which no payment has been made pursuant to subdivision (4) of this section; or
   4. d. That the plan of exchange has been abandoned shall be executed on behalf of the domestic company by its president, or a vice-president, and attested by its secretary, or an assistant secretary, under the corporate seal, and shall then be presented in triplicate to the commissioner. If the certificate indicates that the plan of exchange has been approved by stockholders as required by subdivision (3) of this section and that the facts otherwise conform to the law, he shall require the domestic company, prior to the time the plan becomes effective, to create a fund in cash distinct from its other assets to provide for the payment for all shares with respect to which a dissenting right has been preserved and for which no payment has been made pursuant to subdivision (4) of this section. The amount of said fund shall not limit the amount to be paid to dissenting stockholders under the provisions of subdivision (4) of this section, nor shall the amount of the fund be used as evidence in any proceeding to establish the fair value of shares for which dissenting rights are asserted. Thereafter, upon the creation of such a fund, the commissioner shall endorse his approval on the certificate and the same shall then be filed in the Office of the Secretary of State. Upon such filing of such certificate, the plan of exchange shall become effective unless a later date and time is specified in the plan of exchange, in which event, the plan of exchange and issuance and exchange provided for therein shall become effective upon such later date and time.

6. (6) EFFECT OF EXCHANGE. - Upon the plan of exchange becoming effective, the exchange, or exchanges, provided for therein shall be deemed to have been consummated, each stockholder of the domestic company shall cease to be a stockholder of such company and the ownership of all shares of the issued and outstanding stock of the domestic company shall vest in the holding company automatically without any physical transfer or deposit of certificates representing such shares.

   1. a. Shall specify that all certificates representing shares of stock of the domestic company may, after the plan of exchange becomes effective, be exchanged by any stockholder for shares of stock or other securities issued by the holding company; and
   2. b. May require that all certificates representing shares of stock of the domestic company shall, after the plan of exchange becomes effective, represent only the right to receive shares of stock or other securities issued by the holding company as shall be specified in the plan of exchange.

   Certificates representing shares of the domestic company prior to the plan of exchange becoming effective shall after the plan of exchange becomes effective automatically represent shares of the issued and outstanding capital stock or other securities issued by the holding company, provided that the plan of exchange:

(Acts 1971, No. 1449, p. 2472.)