515.20 Guaranty capital. 1. A mutual company organized under this chapter may establish and maintain guaranty capital of at least fifty thousand dollars made up of multiples of ten thousand dollars, dividedinto shares of not less than fifty dollars each, to be invested as provided for the investment ofinsurance capital and funds by section 515.35. 2. Guaranty shareholders shall be members of the corporation, and provision may be made for representation of the shareholders of the guaranty capital on the board of directorsof the corporation. The representation shall not exceed one-third of the membership of theboard. Guaranty shareholders in a mutual company are subject to the same regulations oflaw relative to their right to vote as apply to its policyholders. 3. The guaranty capital shall be applied to the payment of the legal obligations of the corporation only when the corporation has exhausted its assets in excess of the unearnedpremium reserve and other liabilities. If the guaranty capital is thus impaired, the directorsmay restore the whole, or any part of the capital, by assessment on the corporation’spolicyholders as provided for in section 515.18. 4. lities. If the guaranty capital is thus impaired, the directorsmay restore the whole, or any part of the capital, by assessment on the corporation’spolicyholders as provided for in section 515.18. 4. By a legal vote of the policyholders of the corporation at any regular or special meeting of the policyholders of the corporation, the guaranty capital may be fully retired or maybe reduced to an amount of not less than fifty thousand dollars, if the net surplus of thecorporation together with the remaining guaranty capital is equal to or exceeds the amountof minimum assets required by this chapter for such companies, and if the commissionerof insurance consents to the action. Due notice of the proposed action on the part of thecorporation shall be included in the notice given to policyholders and shareholders of anyannual or special meeting and notice of the meeting shall also be given in accordance withthe corporation’s articles of incorporation. 5. A company with guaranty capital, which has ceased to do business, shall not distribute among its shareholders or policyholders any part of its assets, or guaranty capital, until ithas fully performed, or legally canceled, all of its which has ceased to do business, shall not distribute among its shareholders or policyholders any part of its assets, or guaranty capital, until ithas fully performed, or legally canceled, all of its policy obligations. Shareholders of theguaranty capital are entitled to interest on the par value of their shares at a rate to be fixed bythe board of directors and approved by the commissioner, cumulative, payable semiannually,and payable only out of the surplus earnings of the company. However, the surplus account ofthe company shall not be reduced by the payment of the interest below the figure maintainedat the time the guaranty capital was established. In addition, the interest payment shall notbe made unless the surplus assets remaining after the payment of the interest at least equalthe amount required by the statutes of Iowa to permit the corporation to continue in business. 6. In the event of the dissolution and liquidation of a corporation having guaranty capital under this section, the shareholders of the capital are entitled, after the payment of all validobligations of the company, to receive the par value of their respective shares, together withany unpaid interest on ction, the shareholders of the capital are entitled, after the payment of all validobligations of the company, to receive the par value of their respective shares, together withany unpaid interest on their shares, before there may be any distribution of the assets of thecorporation among its policyholders. 7. The provisions of this section are in addition to and independent of the provisions contained in section 515.19. [C35, §8912-f1; C39, §8912.1; C46, 50, 54, 58, 62, 66, 71, 73, 75, 77, 79, 81, §515.20]86 Acts, ch 1038, §1; 87 Acts, ch 115, §64; 2023 Acts, ch 66, §122Referred to in §515.12, 515G.1Section amended Sat Dec 23 00:46:37 2023 Iowa Code 2024, Section 515.20 (21, 1)
Iowa Legal Code