S.D. Codified Laws § 58-37A-10

Current through the 2024 Legislative Session

Section 58-37A-10 - Procedure for formation of a society-Transaction by unincorporated society is a misdemeanor

A domestic society organized on or after January 1, 1991, shall be formed according to this section.

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 sign and acknowledge before some officer competent to take acknowledgment of deeds, articles of incorporation, in which shall be stated the proposed corporate name of the society, which may not so closely resemble the name of any society or insurance company as to be misleading or confusing; the purposes for which it is being formed and the mode in which its corporate powers are to be exercised; and the names and residences of the incorporators and the names, residences and official titles of all the officers, trustees, directors, or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which all the officers shall be elected by the supreme governing body, which election shall be held not later than one year from the date of issuance of the permanent certificate of authority.

The articles of incorporation, duly certified copies of the society's bylaws and rules, copies of all proposed forms of certificates, applications therefor, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year shall be filed with the director, who may require more information as the director considers necessary. The bond with sureties approved by the director shall be in an amount, not less than four hundred thousand dollars nor more than one million five hundred thousand dollars as required by the director. All documents filed are to be in the English language. If the purposes of the society conform to the requirements of this chapter and all provisions of the law have been complied with, the director shall certify, retain and file the articles of incorporation and furnish the incorporators a preliminary certificate of authority authorizing the society to solicit members.

No preliminary certificate of authority granted under the provisions of this section is valid after one year from its date or after a further period, not exceeding one year, as may be authorized by the director upon cause shown, unless the five hundred applicants as required by this chapter are secured and the organization is completed. The articles of incorporation and all other proceedings are void in one year from the date of the preliminary certificate of authority, or at the expiration of the extended period, unless the society completes its organization and receives a certificate of authority to do business.

Upon receipt of a 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. No society may incur any liability other than for the return of the advance premium, nor issue any certificate, nor pay, allow, or offer or promise to pay or allow, any benefit to any person until:

(1) Actual bona fide applications for benefits have been secured on five hundred applicants, and any necessary evidence of insurability has been furnished to and approved by the society;

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

(3) There has been submitted to the director, under oath of the president or secretary, or corresponding officer of the society, a list of applicants, giving their names, addresses, date each was admitted, name and number of the subordinate lodge of which each applicant is a member, amount of benefits to be granted and premiums therefor; and

(4) It is shown to the director, by sworn statement of the treasurer, or corresponding officer of the society, that five hundred applicants have each paid in cash at least one regular monthly premium, which premiums 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 and if the society does not qualify for a certificate of authority within one year, the premiums shall be returned to the applicants.

The director may make an examination and require further information. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, the director shall issue to the society a certificate of authority to that effect and that the society is authorized to transact business pursuant to the provisions of this chapter. The certificate of authority is prima facie evidence of the existence of the society at the date of the certificate. The director shall cause a record of the certificate of authority to be made. A certified copy of the record may be given in evidence with like effect as the original certificate of authority.

No incorporated society authorized to transact business in this state on January 1, 1991, may be required to reincorporate.

It is a Class 2 misdemeanor for an unincorporated or voluntary association to transact business in the state as a fraternal benefit society.

SDCL 58-37A-10

SL 1990, ch 410, § 10.