Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 1280)
The main purpose of Presidential Decree No. 1280 is to amend Title 17, Chapter III of Presidential Decree No. 612 (the Insurance Code) to provide provisions for the mutualization of domestic stock life insurance companies, enabling them to convert into incorporated mutual life insurers despite possible disapproval from a minority of stockholders.
When ninety percent of the outstanding shares have already been acquired and transferred to the trustees under the plan, the insurer may, by a majority vote of the directors and with the permission of the Commissioner, make an offer to acquire all remaining shares not yet acquired at a specified fair value.
The insurer must send a written offer by registered mail to each shareholder whose shares have not been acquired, offering to purchase their shares at the specified price. Shareholders must accept in writing within thirty days after mailing.
Shareholders not accepting the offer within thirty days must apply to the Secretary of Finance within fifteen days after the offer period ends for a determination of the fair value of their shares as of the offer date.
The Secretary of Finance may determine the fair value after a notice and hearing or appoint three impartial appraisers to appraise the shares. The appraisers submit a written report, and the Secretary hears objections before issuing an order adopting, modifying, or rejecting the appraisal.
The order has the force and effect of a judgment and is appealable on questions of law. The order becomes final and executory fifteen days after receipt if no appeal is filed, and the shareholder must then transfer the shares and surrender certificates to the insurer for payment.
The Secretary of Finance may compel the shareholder by order to surrender the certificates. The order may specify that failure to surrender the certificates will be deemed as their cancellation and transfer to the insurer.
Shares acquired by the insurer are assigned and transferred to the trustees under the plan and held as shares acquired pursuant to the mutualization plan.
All laws, decrees, and regulations inconsistent with the provisions of this decree are repealed or modified accordingly.
The decree took effect immediately upon its signing on January 6, 1978.