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  • Acts
  • 2000
  • Chapter 320 AN ACT RELATIVE TO THE ORGANIZATION AND SUPERVISION OF FRATERNAL BENEFIT SOCIETIES.

Whereas , The deferred operation of this act would tend to defeat its purpose, which is to regulate forthwith fraternal benefit societies, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.


Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:


SECTION 1. Section 1 of chapter 176 of the General Laws, as appearing in the 1998 Official Edition, is hereby amended by striking out the second paragraph and inserting in place thereof the following paragraph:-

As used in this chapter, the following words shall have the following meanings:-

"Benefit contract", the agreement for provision of benefits authorized by section 17.

"Benefit member", an adult member who is designated by the laws of the society to be a member under a benefit contract.

"Certificate", any document issued as written evidence of the benefit contract.

"Commissioner", the commissioner of insurance.

"Fraternal benefit society or society", an incorporated society, order or supreme lodge, without capital stock, conducted solely for the benefit of its members and their beneficiaries, and not for profit, operated on a lodge system with a ritualistic form of work, having a representative form of government, and which makes provision for the payment of benefits in accordance with this chapter. Fraternal benefit societies shall be governed by the provisions of this chapter and shall not be subjected to any provisions of chapter 176P.

"Laws", the society's articles of incorporation, constitution and by-laws however designated.

"Limited society", a domestic society or association that meets the requirements of section 45 or section 46 as in full force and effect immediately preceding August 15, 1958 and as codified in chapter 176P. Limited societies shall not include any society defined in this section. Limited societies shall be governed by said chapter 176P and shall not be subject to this chapter as modified, amended or added after August 15, 1958.

"Premiums", premiums, rates, dues or other required contributions by whatever name known, which are payable under the certificate.

"Rules", all rules, regulations or resolutions adopted by the supreme governing body or board of directors that are intended to have general application to the members of the society.

SECTION 2. Said chapter 176 is hereby further amended by striking out section 3, as so appearing, and inserting in place thereof the following section:-

Section 3. A society has a representative form of government when:

(a) it has a supreme governing body constituted in one of the following ways:

(1) The supreme governing body is an assembly composed of delegates elected directly by the members or at intermediate assemblies or conventions of members or their representatives, together with other delegates as may be prescribed in the society's laws. A society may provide for election of delegates by mail. The elected delegates shall constitute a majority in number and shall not have less than two-thirds of the votes and not less than the number of votes required to amend the society's laws. The assembly shall be elected and shall meet at least once every four years and shall elect a board of directors to conduct the business of the society between meetings of the assembly. Vacancies on the board of directors between elections may be filled in the manner prescribed by the society's laws.

(2) The supreme governing body is a board composed of persons elected by the members, either directly or by their representatives in intermediate assemblies, and any other persons prescribed in the society's laws. A society may provide for election of the board by mail. Each term of a board may be filled in the manner prescribed by the society's laws. Those persons elected to the board shall constitute a majority in number and not less than the number of votes required to amend the society's laws. A person filling the unexpired term of an elected board member shall be considered to be an elected member. The board shall meet at least quarterly to conduct the business of the society.

(b) the officers of the society are elected whether by the supreme governing body or by the board of directors.

(c) only benefit members are eligible for election to the supreme governing body, the board of directors or any intermediate assembly.

(d) each voting member shall have one vote and no vote may be cast by proxy.

SECTION 3. Subsection (1) of section 4 of said chapter 176, as so appearing, is hereby amended by striking out clause (b) and inserting in place thereof the following clause:-

(b) The purposes for which it is being formed and the mode in which its corporate powers are to be exercised. Such purposes shall not include more liberal powers than are granted by this chapter, but any lawful, social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic or religious advantages may be set forth among the purposes of this society. Such purposes may be carried out directly by the society, or indirectly through subsidiary corporations or affiliated organizations; and.

SECTION 4. Said section 4 of said chapter 176, as so appearing, is hereby further amended by striking out, in lines 28 and 29, the words "to exceed the sum of twenty-five thousand dollars" and inserting in place thereof the following words:- less than $300,000 and not more than $1,500,000.

SECTION 5. Said section 4 of said chapter 176, as so appearing, is hereby further amended by striking out, in line 75, the words "twenty-five hundred dollars" and inserting in place thereof the following figure:- $150,000.

SECTION 6. The second paragraph of section 9 of said chapter 176, as so appearing, is hereby amended by striking out the last sentence.

SECTION 7. Said section 9 of said chapter 176, as so appearing, is hereby further amended by adding the following three paragraphs:-

A society shall specify in its laws or rules eligibility standards for each and every class of membership, the process for admission to membership, the process for admission to membership for each membership class, and the rights and privileges of each membership class, but only the benefit members shall have the right to vote on the management of insurance affairs of the society.

Membership rights of a society are personal to the member and are not assignable.

A society may provide in its laws or rules for grievance or complaint procedures for members.

SECTION 8. Said chapter 176 is hereby further amended by striking out section 16, as so appearing, and inserting in place thereof the following section:-

Section 16. (a) The officers and members of the supreme, grand or any subordinate body of a society shall not be personally liable for the payment of any benefits provided by a society.

(b) A person may be indemnified and reimbursed by a society for expenses reasonably incurred by, and liabilities imposed upon, such person in connection with or arising out of any action, suit or proceeding, whether civil, criminal, administrative or investigative, or threat thereof, in which the person may be involved by reason of the fact that the person is or was a director, officer, employee or agent of the society or for any firm, corporation or organization which the person served in any capacity at the request of the society. A person shall not be so indemnified or reimbursed (1) in relation to any matter in such action, suit or proceeding as to which the person shall finally be adjudged to be or have been guilty of breach of a duty as a director, officer, employee or agent of the society; or (2) in relation to any matter in such action, suit or proceeding, or threat thereof, which has been made the subject of a compromise settlement, unless in either such case the person acted in good faith for a purpose the person reasonably believed to be in or not opposed to the best interest of the society and, in a criminal action or proceeding, in addition, had no reasonable cause to believe that the person's conduct was unlawful. The determination of whether the conduct of such person met the standard required in order to justify indemnification and reimbursement in relation to any matter described in clause (1) or (2) of the preceding sentence may only be made by the supreme governing body or board of directors by a majority vote of a quorum consisting of persons who were not parties to such action, suit or proceeding or by a court of competent jurisdiction. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of no contest, as to such person shall not in itself create a conclusive presumption that the person did not meet the standard of conduct required in order to justify indemnification and reimbursement. The foregoing right of indemnification and reimbursement shall not be inclusive of other rights to which such person may be entitled as a matter of law and shall inure to the benefit of the person's heirs, executors and administrators.

(c) A society shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the society, or who is or was serving at the request of the society as a director, officer, employee or agent of any other firm, corporation or organization against any liability asserted against such person and incurred by the person in any such capacity or arising out of the person's status as such, whether or not the society would have the power to indemnify the person against such liability under this section.

(d) No director, officer, employee, member or volunteer of a society serving without compensation, shall be liable, and no cause of action may be brought, for damages resulting from the exercise of judgment or discretion in connection with the duties or responsibilities of such person for the society unless such act or omission involved willful or wanton misconduct.

SECTION 9. Section 17 of said chapter 176, as so appearing, is hereby amended by striking out clause (g) and inserting in place thereof the following clause:-

(g) Such other benefits as authorized for life insurers and which are not inconsistent with this chapter.

SECTION 10. Said section 17 of said chapter 176, as so appearing, is hereby further amended by adding the following paragraph:-

A society shall specify in its rules those persons who may be issues, or covered by, the contractual benefits authorized in clauses (a) to (g), inclusive, consistent with providing benefits to members and their dependents.

SECTION 11. Said chapter 176 is hereby further amended by striking out section 21, as so appearing, and inserting in place thereof the following section:-

Section 21. (a) The owner of a benefit contract shall have the right at all times to change the beneficiary or beneficiaries in accordance with the laws or rules of the society unless the owner waives this right by specifically requesting in writing that the beneficiary designation be irrevocable. A society may, through its laws or rules, limit the scope of beneficiary designations and shall provide that no revocable beneficiary shall have or obtain any vested interest in the proceeds of any certificate unless the certificate has become due and payable in conformity with the provision of the benefit contract.

(b) A society may make provision for the payment of funeral benefits to the extent of such portion of any payment under a certificate as might reasonably appear to be due to any person equitably entitled thereto by reason of having incurred expense occasioned by the burial of the member.

(c) If, at the death of any member, there is no lawful beneficiary to whom the insurance benefits shall be payable, the amount of such benefits, except to the extent that funeral benefits may be paid as provided in subsection (b), shall be payable to the personal representative of the deceased member, but if the owner of the certificate is other than the insured, such proceeds shall be payable to the owner.

SECTION 12. Said chapter 176 is hereby further amended by striking out section 24, as so appearing, and inserting in place thereof the following section:-

Section 24. (a) No certificate shall be delivered or issued for delivery in this commonwealth unless a copy of the form has been filed with the commissioner in the manner provided for like policies issued by life insurers in this commonwealth. Every life, accident, health, or disability certificate and every annuity certificate issued on or after January 1, 2001 shall meet the standard contract provision requirements not inconsistent with this chapter for like policies issued by life insurers authorized to write any of these lines of insurance in this commonwealth, except that a society may provide for a grace period for payment of premiums of one full month in its certificates. The certificate shall also contain a provision stating the amount of premiums which are payable under the certificate and a provision reciting or setting forth the substance of any sections of the society's laws or rules in force at the time of the issuance of the certificate which, if violated, will result in termination or reduction of benefits payable under the certificate.

(b) A society may specify the terms and conditions on which benefit contracts may be assigned.

SECTION 13. Section 26 of said chapter 176 is hereby repealed.

SECTION 14. Section 28 of said chapter 176, as appearing in the 1998 Official Edition, is hereby amended by adding the following paragraph:-

Notwithstanding the first paragraph, a society may reinsure the risks of another society in a consolidation, merger or assumption of reinsurance transaction approved by the commissioner pursuant to section 20 of chapter 175.

SECTION 15. Section 35 of said chapter 176, as so appearing, is hereby amended by inserting after the word "officer", in line 12, the following word:- , member.

SECTION 16. Subsection (1) of said section 35 of said chapter 176, as so appearing, is hereby amended by striking out paragraph (b) and inserting in place thereof the following paragraph:-

(b) Any agent, representative or member of a fraternal benefit society, who devotes, or intends to devote, less than 50 per cent of the person's time to the solicitation and procurement of insurance contracts for such society. Any person who in the preceding calendar year has solicited or procured any of the following contracts of insurance on behalf of any society is presumed to have devoted or intended to devote 50 per cent of the person's time to the solicitation and procurement of insurance contracts:

(1) life insurance contracts that, in the aggregate, exceed $200,000 of coverage for all lives insured for the preceding calendar year;

(2) permanent life insurance contracts offering more than $10,000 of coverage on an individual life;

(3) term life insurance contracts offering more than $50,000 of coverage on an individual life;

(4) insurance contracts other than life that the fraternal benefit society may write that insure the lives of more than 25 individuals;

(5) variable life insurance or variable annuity contracts.

SECTION 17. Section 39 of said chapter 176, as so appearing, is hereby amended by adding the following paragraph:-

A society may, pursuant to resolution of its supreme governing body, establish and operate one or more separate accounts and issue contracts on a variable basis, subject to the law regulating life insurers establishing such accounts and issuing such contracts. To the extent the society deems it necessary in order to comply with the federal or state laws, or any rules issued under such laws, the society may adopt special procedures for the conduct of the business and affairs of such separate accounts. The society may also, for persons having beneficial interests in such accounts, provide special voting and other rights, including without limitation special rights and procedures relating to an investment policy, investment advisory services, selection of a committee to manage the business and affairs of the account and the society may further issue contracts on a variable basis to which the first and fifth paragraphs of section 23 shall not apply.

SECTION 18. Section 41 of said chapter 176, as so appearing, is hereby amended by inserting after paragraph (6) the following paragraph:-

(6>) The minimum standard valuation for certificates issued on or after January 1, 2001, shall be based in the following tables:

(a) for certificates of life insurance - the Commissioner's 1941 Standard Ordinary Mortality Table, the Commissioner's 1941 Standard Industrial Mortality Table, the Commissioner's 1958 Standard Ordinary Mortality Table, the Commissioner's 1980 Standard Ordinary Mortality Table or any more recent table made applicable to life insurers;

(b) for annuity and pure endowment certificates, for total and permanent disability benefits, for accidental death benefits and for noncancellable accident and health benefits - such tables as are authorized for use by life insurers who are authorized to write accident and health insurance in the commonwealth.

All of the above valuations shall be under valuation methods, including interest assumptions, in accordance with the laws of this commonwealth applicable to life insurers issuing policies containing like benefits.

SECTION 19. The General Laws are hereby amended by inserting after chapter 176O the following chapter:- `tuc CHAPTER 176P. LIMITED SOCIETIES.

Section 1. In this chapter, the following words shall have the following meanings:-

"Commissioner", the commissioner of insurance.

"Fraternal benefit society", an incorporated society, order or supreme lodge, without capital stock, conducted solely for the benefit of its members and their beneficiaries, and not for profit, operated on a lodge system with a ritualistic form of work, having a representative form of government, and which makes provision for the payment of benefits in accordance with chapter 176. Fraternal benefit societies shall be governed by said chapter 176 and shall not be subject to this chapter.

"Limited society or society", a domestic society or association that meets the requirements of section 45 or section 46 of chapter 176 as in full force and effect immediately preceding August 15, 1958 and codified in this chapter. Limited societies shall not include any society defined in section 1 of said chapter 176. Limited societies shall be governed by this chapter and shall not be subject to said chapter 176 as modified, amended or added after August 15, 1958.

Section 2. A society shall be deemed to be operating on the lodge system when it has a supreme governing or legislative body, and subordinate lodges or branches, by whatever name known, to which members are elected, initiated and admitted in accordance with its constitution, by-laws, and prescribed ritualistic ceremonies, and the subordinate lodges or branches are required by the by-laws of such society to hold regular or stated meetings at least once in each month.

Section 3. A society shall be deemed to have a representative form of government when it provides in its constitution and by-laws for a supreme legislative or governing body, composed of representatives elected either by the members or by delegates elected directly or indirectly by the members, together with such other members as may be prescribed by its constitution and by-laws if the elective members shall have not less than two-thirds of the votes nor less than the number of votes required to amend its constitution and by-laws, and if (a) the meetings of the supreme governing body and the election of officers, representatives or delegates shall be held as often as once in four years and (b) a complete stenographic record of the proceedings of each such meeting, so far as it relates to matters within the jurisdiction of the commissioner of insurance, shall be filed in the home office of the society within 30 days after the adjournment of such meeting. The constitution and by-laws of any such society may provide that the board of directors appoints a regularly ordained clergyman to act as chaplain, spiritual director or other religious officer, and may also provide that such appointee may serve ex officio as a member of the board of directors. The members, officers, representatives or delegates of a society shall not vote by proxy.

Section 4. A corporation which limits its membership to the members of a particular fraternal beneficiary corporation, fraternity or religious denomination, or to the graduates of a designated professional or vocational school, or to the employees or ex-employees of cities or towns or of the commonwealth or of the federal government, or to the employees or ex-employees of a designated firm, business house or corporation, or to persons of the same foreign extraction retaining common national interests and designation, and their respective husbands and wives, irrespective of racial extraction, or to persons of the same occupation, may be on the lodge system, and if not on the lodge system, shall be governed by a direct vote of its members without the lodge system. A corporation not so limiting its membership shall be on the lodge system, with a representative form of government, as defined in sections 2 and 3.

Section 5. Societies shall be governed by this chapter, and shall be exempt from all other provisions of the insurance laws of the commonwealth except sections 16, 160 to 180, inclusive, and section 185 of chapter 175, not only in governmental relations with the commonwealth, but for every other purpose, and no law hereafter enacted shall apply to them unless they are expressly designated in such laws.

Section 6. Seven or more persons, residents of the commonwealth, may form a corporation for the purposes set forth in this chapter. The agreement of association shall state that the subscribers thereto associate themselves with the intentions of forming a corporation, the corporate name assumed, the purpose for which it is formed, and the city or town, which shall be in the commonwealth, in which it is established or situated. The name shall not so closely resemble the name of any corporation or insurance company already transacting business in the commonwealth so as to mislead the public or lead to confusion. Any lawful social, intellectual, education, charitable, benevolent, moral or religious advantages may be set forth among the purposes of the corporation. If the corporation limits its membership as provided in section 4, the agreement of association shall state the maximum amounts of benefits to be paid, and shall designate to which one of the classes mentioned in said section its membership is restricted.

Section 7. (a) The first meeting of the associates shall be called by a notice, signed by one or more of the subscribers to the agreement, stating the time, place and purpose of the meeting. At least seven days before the day appointed for the meeting, a copy of the notice shall be given to each subscriber, or left at his usual place of business or place of residence, or deposited in the post office, postage prepaid, and addressed to the subscriber at the person's usual place of business or residence. Whoever gives such notice shall make an affidavit of his doings, which shall be recorded in the records of the corporation.

(b) At such first meeting, including any reasonable adjournment thereof, an organization shall be effected by the choice, by ballot, of a temporary clerk, who shall be sworn, and by the adoption of by-laws, and the election by ballot of directors, a president, a secretary and a treasurer, or other such officers, corresponding thereto, with powers and duties similar to those of such officers, and such other officers as the by-laws may provide. At such election no person shall be eligible as a director or other officer who has not subscribed to the agreement of association. The temporary clerk shall make and attest a record of the proceedings until the secretary has been chosen and sworn, including a record of such choice and qualification. The president, secretary and a majority of the directors, or other officers corresponding thereto, shall forthwith make, sign, and swear to a certificate of organization in duplicate, setting forth a true copy of the agreement with the names of the subscribers thereto, the date of the first meeting and of the successive adjournments thereof, if any.

(c) The certificate of organization and duly certified copy of the by-laws, and copies of all proposed forms of benefit certificates, applications therefore and literature to be issued by the corporation shall be filed with the commissioner, who may require such further information as he deems necessary. If the purposes and by-laws of the corporation conform to the requirements of this chapter and all its provisions have been complied with, the commissioner shall so certify, and place on file the agreement of association, one of the duplicate certificates of organization, and a copy of the by-laws approved by the commissioner.

Section 8. (a) The commissioner shall then furnish the incorporators of any such society, if on the lodge plan, with a preliminary license, authorizing it to solicit members for the purpose of completing its organization.

(b) A society shall collect from each applicant the amount of not more than one periodical benefit assessment or payment, in accordance with its tables of rates as provided by its constitution and by-laws, and shall issue to every such applicant a receipt for the amount so collected. But no such society shall incur any liability other than for such advance payments, nor issue any benefit certificate, nor pay or allow or offer or promise to pay or allow, to any person any death or disability benefit until:

(1) actual bona fide applications for death or disability benefit certificates, as the case may be, have been secured from at least 500 persons; and

(2) all such applicants for death benefits have been regularly examined by legally qualified practicing physicians; and

(3) certificates of such examinations have been duly filed and approved by the chief medical examiner of the society; and

(4) ten subordinate lodges or branches have been established in which such 500 applicants have been initiated; and

(5) there has been submitted to the commissioner, on oath of the president and secretary or corresponding officers of such society, a list of such applicants, giving their names, addresses, date of examination, date of approval, date of initiation, name and number of the subordinate branch of which each applicant is a member, amount of benefits to be granted, and rate of regular payments or assessments, which for societies offering death benefits shall not be lower for death benefits than those required by the National Fraternal Congress Table of Mortality as adopted by the National Fraternal Congress on August 23, 1899, or any higher standard at the option of the society, with an interest assumption not higher than 4 per cent per annum; and

(6) it shall be shown to the commissioner, by the sworn statement of the treasurer or corresponding officer of such society, that at least 500 applicants for death benefits have each paid in cash one regular payment or assessment as provided in this section, and the payments in the aggregate shall amount to at least $25,000, all of which shall be credited to the mortuary or disability or hospitalization and medical service fund on account of the applicants, and no part of which may be used for expenses.

(c) Such advance payments shall, during the period of organization, be held in trust for the applicants, and if the organization is not completed within one year as provided in this chapter, shall be returned to them.

(d) The commissioner may make such examination and require such further information, as the commissioner deems advisable, and upon presentation of satisfactory evidence that the society has complied with all the provisions of this chapter, the commissioner shall issue to the society a certificate to that effect.

Section 9. The society shall file a certificate of organization, with the certificate endorsed by the commissioner, and if on the lodge plan, also the certificate required by the preceding section, with the state secretary, who, upon the receipt of $5, shall issue a certificate in a form approved by the state secretary.

The state secretary shall sign the name and cause the seal of the commonwealth to be affixed thereto, and the certificate shall be conclusive evidence of the existence of the corporation at the date of the certificate. He shall also cause a record of the certificate to be made, and a certified copy of the record may be given in evidence with like effect as the original.

Section 10. If a society fails to secure its certificate of incorporation and to begin business within one year after the date of receiving the certificate of the commissioner, as provided in section 7, its agreement of association and all proceedings thereunder shall become null and void. If a domestic corporation subject to this chapter ceases to do business for the period of one year, its charter or certificate of incorporation shall become null and void.

Section 11. A limited society may, with the approval of the commissioner, change the location of its place of business to another location in the commonwealth, or change the purposes for which it was incorporated so as to permit it to transact any business authorized by this chapter. Upon such approval, the presiding financial and recording officers, and a majority of its other officers having the powers of directors, shall file with the state secretary a certificate, with the approval of the commissioner endorsed thereon, setting forth the change in the location of its place of business or in the purposes of the corporation. The state secretary shall, upon receipt of $5, cause such certificate to be filed in his office. Every domestic society may exercise all the rights, powers and privileges conferred by this chapter, including the powers specified in section 32, or its certificate of incorporation or charter, not inconsistent herewith, and shall be subject to this chapter, as if reincorporated hereunder.

Section 12. (a) No domestic society shall merge with or accept the transfer of the membership or funds of any other society, unless 90 days' notice of the proposed merger or transfer is given to the commissioner, who, within such period, shall make such recommendations to each of such societies. The merger or transfer shall be evidenced by a written contract that sets out in full the terms and conditions of the merger or transfer, and shall be filed with the commissioner, together with a sworn statement by the president and secretary, or corresponding officers, of each of such societies of their financial conditions and a sworn certificate of such officers of each of the contracting societies that the merger or transfer has been approved by a vote of two-thirds of the members of the supreme legislative or governing body of each of such societies.

(b) Upon the submission of the contract, financial statements and certificates, the commissioner shall examine them, and if the commissioner finds that the financial statements are correct, and that the contract is in conformity with this section, and that the merger or transfer is just and equitable to the members of each of the societies, the commissioner shall approve the merger or transfer, issue a certificate to that effect, and thereupon the contract of merger or transfer shall be of full force and effect. No such merger proposed by two societies not incorporated in the same state shall go into effect until approved by the commissioner, or corresponding officer, of each state incorporating the societies involved in the proposed transaction, nor until their joint certificate of approval of the contract therefore is issued.

Section 13. A society may create, maintain, invest, disburse and apply a death fund, any part of which may, in accordance with the by-laws of a society, be designated and set apart as an emergency, a surplus or other similar fund, and a disability fund and a hospitalization and medical service fund. Such funds shall be held, invested and disbursed for the use and benefit of the society, and no member or beneficiary shall have or acquire individual rights therein, or become entitled to any part thereof, except as provided in section 16, 17, or 19. The funds from which benefits shall be paid shall be derived and the fund from which the expenses of the society shall be defrayed may be derived from periodical or other payments by the members of the society and accretions of such funds. No society shall be incorporated, and no society not authorized on January 1, 1912 to do business in the commonwealth, shall be admitted to transact business therein, which does not provide for stated periodical contributions sufficient to meet the mortuary obligations contracted, when valued upon the basis of the National Fraternal Congress Table of Mortality as adopted by the National Fraternal Congress on August 23, 1899, or any higher standard, with interest assumption not more than 4 per cent per annum, except societies providing benefits for disability or death from accidents only.

Section 13A. A society, except one organized under section 46, whose rates and benefits are approved by the commissioner, may set up and provide under its by-laws a plan for the payment of hospital and medical expenses and for the services of surgeons, physicians and nurses, or for any one of these services or expenses, in connection with sickness, disease or accidents, or the results therefrom. The by-laws shall also provide that an independent hospitalization and medical service fund be created and maintained, with the accretions thereto, separate and apart from other funds of the society; that no benefits of any kind shall be paid until there is accumulated in the fund an amount not less than that received from three monthly contributions or one quarterly contribution, and that this amount shall be the minimum of surplus below which additional contributions from members shall be required; that there shall be included in the liabilities of the fund reserves for unearned assessments and unpaid claims; and that no benefits shall be paid on any claim for a period exceeding one year.

Section 14. (a) Every provision of the by-laws of the society for payment by its members, in whatever form made, shall distinctly state the purposes of the same and the proportion thereof, which may be used for expenses. No part of the money collected for mortuary, disability, hospitalization, or medical service purposes or the net accretions of either or any of such funds shall be used for expenses. A society having admitted assets as shown by its annual statement filed with the commissioner, in excess of 105 per cent of its entire liabilities, including its required reserves, provided such reserves are at least equivalent to the amount required by the American Experience Table of Mortality with interest at 3 per cent per annum, may transfer or allocate such excess mortuary funds to the expense fund of the society, in accordance with its constitution and by-laws. The amount so transferred in any calendar year shall not exceed whichever is the smaller of (a) 75 per cent of the savings in mortality of the society during the preceding calendar year or (b) 10 per cent of the net mortuary assessments received by the society in the preceding calendar year, but no sum shall be transferred as aforesaid which reduces the actuarial solvency of said society below the aforesaid basis. Any sum thus transferred shall not exceed the incurred insurance expenses hereinafter specified during the preceding calendar year, and the sum shall be expended solely for the following insurance expenses of the society:-

(a) actuarial services;

(b) cost of preparing and mailing dividends;

(c) billing department costs;

(d) machine equipment;

(e) maintaining automatic loan records;

(f) certificates;

(g) actuarial records.

(b) The term "net accretions" shall mean all interest, dividends and other income less the reasonable expenses incident to the investment, care and maintenance of the securities and other assets of such funds.

Section 15. (a) Deferred payments or installments of claims shall be considered as fixed liabilities on the happening of the contingency upon which such payments or installments are thereafter to be paid. Such liability shall be the present value of such future payments or installments upon the rate of interest and mortality assumed by the society for establishing contributions and for valuation. A society shall at once, upon the filing of due proofs of the happening of the contingency, set apart a fund to meet such deferred payments, regardless of proposed future collections to meet any such payments, and hold such funds, with its interest accretions, in trust for the beneficiary entitled thereto.

(b) No society shall provide for such deferred payments or installments unless it possesses the full reserve specified in section 16, or if paying accident benefits only, has assets sufficient to pay all its liabilities.

Section 16. A society which shows by the annual valuation hereinafter provided for that is accumulating and maintaining the tabular reserve required by a table of mortality not lower than the National Fraternal Congress Table of Mortality as adopted by the National Fraternal Congress on August 23, 1899, and 4 per cent interest, and which has provided for state periodical mortuary contributions based on said standard, or which shows that its stated periodical mortuary contributions for the five preceding years at rates at no time higher than those in use following said period, were sufficient to pay the actual claims and maintain the aforesaid reserve for said period without recourse to the reserves released by the lapsing of certificates, and without falling below said standard for any two consecutive years of said period, may grant to its members such extended or paid-up protection or such loans on any certificate of membership or such withdrawal equities as its constitution and by-laws may provide. Such grants shall be equitable, and shall in no case exceed in value the portion of the reserve derived from the payments of the individual member to whom they are made.

Section 17. Whenever it appears by a valuation certified to by a competent actuary that the actual assets of a society exceed its liabilities, including in such liabilities the tabular reserves computed on the basis specified in section 16, by an amount equal to 5 per cent of such reserves, increased by an amount equal to all its other mortuary liabilities, it may, by vote of its officers having the powers of directors, and for such period as its assets are maintained at the levels set forth in this section, waive the further collection of the regular mortuary contributions from its members. A society maintaining a surplus of assets in excess of such amount as enables it to waive contributions under this section may pay to its several members an equitable portion of such surplus in such manner as may be determined by vote of such officers.

Section 18. A society shall invest its funds in securities permitted by chapter 175 for the investment of the capital of insurance companies, except that it may invest an amount not exceeding 10 per cent of its funds in the shares of federal savings and loan associations located in the commonwealth, and in addition, invest and deposit in paid-up shares and accounts of and in co-operative banks chartered by the commonwealth, and may deposit any of its funds in any savings bank or savings department of a trust company, chartered under the laws of the commonwealth. A foreign society permitted or seeking to do business in the commonwealth may invest its funds in accordance with the laws of the state where it is incorporated, but a part of such funds, not exceeding 20 per cent of its death fund, may be invested in a building for use and occupation by the society as its home office. A society having branches situated in the Dominion of Canada may invest a part of its death fund in the public funds of the Dominion of Canada, or of any province of the Dominion of Canada, not exceeding in the aggregate an amount equal to the sum of its collected premiums for the four months last past.

Section 19. (a) Every society may provide for the payment of death benefits; may issue to its members, term, life, endowment and annuity certificates and combinations thereof; and may provide for the payment of benefits in case of temporary or permanent physical disability, either as the result of disease, accident or old age, and provide further for hospitalization and medical service, but the period of life at which the payment of benefits for disability on account of old age shall commence shall not be under 70 years of age. Such society may give a member, when permanently disabled, or on attaining the age of 70, all or such portion of the face value of his certificate as the by-laws of the society may provide. This chapter shall not prevent the issuing of benefit certificates, for a term of years less than the whole of life, which are payable upon the death or permanent disability of the member occurring within the term of which the benefit certificate is issued.

(b) Such society may, upon written application of a member, accept a part of the periodical contribution for mortuary purposes in cash and charge the remainder, not exceeding one-half of the periodical contribution, against the certificate, with interest payable or compounded annually at a rate not lower than 4 per cent per annum. This privilege shall not be exercised except by societies which have readjusted or may hereafter readjust their rates or contributions, and then only as to contracts affected by such readjustment. The yearly amount and the amount in the aggregate of such charges against the certificates of members, including interest charged, as cannot be collected on account of the lapsing of members against whose certificates such charges have been made, shall be stated in the records of the proceedings of the annual or other regular meetings of the society.

(c) Such society providing on January 1, 1912 for tombstones to the memory of deceased members may continue such provision, but not at an expense in excess of $100 for any member.

Section 19A. A society operating on the lodge system which provides for stated periodic contributions of its members based upon a table of mortality not lower than the National Fraternal Congress Table of Mortality, as adopted by the National Fraternal Congress on August 23, 1899, and 4 per cent interest, may provide that the amount of the death benefit payable by it shall be payable as an annuity. The annuity payments under this section shall be based upon a table not lower than "McClintock's Table of Mortality among Annuitants", or on such higher table as the commissioner may from time to time prescribe, with interest at not more than 4 per cent per annum. In no case shall the amount payable to the beneficiary or to the beneficiary's estate be less than the amount of the death benefit specified in the certificate issued to the member.

Section 20. A certificate issued by any society shall specify the amount of death benefit provided by it. The certificate, the charter of the articles of organization, or, if it is a voluntary association, the articles of association, the constitution and by-laws of the society, the application for membership, the medical examination, if any, signed by the applicant, and all amendments to each thereof, shall constitute the agreement between the society and the members. Copies of such documents, certified by the secretary of the society or corresponding officer, shall be received as evidence of the terms and conditions thereof. Any changes, additions or amendments to the charter, articles of incorporation, or articles of association, constitution or by-laws duly made or enacted subsequent to the issuance of a benefit certificate shall bind the member and his beneficiaries, and shall govern and control the agreement in all respects in the same manner as if such changes, additions or amendments had been made prior to and were in force at the time of the application for membership. The language in the preceding sentence shall be incorporated in substance in every benefit certificate hereafter issued.

Section 21. Death or annuity benefits shall be payable to any beneficiary designated by the member, but the society may by its by-laws make restrictions as to whom may be beneficiaries. Each member shall have the right to change his beneficiary from time to time in accordance with the by-laws of the society. No beneficiary shall have or obtain any vested interest in such benefits until the same have become due and payable upon the death of the member. No contract under this chapter, except where an incorporated charitable institution or home is made a beneficiary in accordance with the by-laws of the society, shall be valid that is conditioned upon an agreement or understanding that the person to whom the death or annuity benefit is made payable shall pay the periodic or other contributions of the member.

Section 22. A society may provide in its by-laws that a part of the amount payable as a death benefit may be used to pay the funeral expenses of the insured, but the amount so paid shall not exceed $300 and shall be deducted from the amount payable as a death benefit.

Section 22A. No society shall by its by-laws or by any contract or policy made or issued by it in the commonwealth restrict the payment of benefits or any part thereof accruing under such by-laws, contract or policy upon the death of a member or of the person insured, as the case may be, to a designated funeral director or group of funeral directors. No society shall in any way deprive the personal representative or family of the deceased of freedom of choice in procuring and purchasing supplies and services in connection with the burial of the deceased. Such benefits or any part thereof shall be paid to such funeral director as the person or persons entitled to such benefits or the personal representative of the deceased shall direct. Every limited society shall be subject to this section notwithstanding any special law to the contrary.

Section 23. A society operating on the lodge system may provide in its constitution and by-laws, in addition to other benefits provided for therein, for the payment of death, endowment or annuity benefits upon the lives of children less than 18 years of age, and may loan upon the security of the value of certificates of such benefits a sum not exceeding the legal reserve which it is required to maintain thereon. Any such society may at its option organize and operate branches for such children, and membership in local lodges and initiation therein shall not be required for such children, nor shall they have any voice in the management of the society.

Section 24. No death benefit certificate as to any child shall be issued unless the society shall simultaneously put in force at least 500 such certificates, on each of which at least one assessment has been paid, and so long as the number of lives presented by such certificates does not fall below 500. A society that has so put in force at least 500 certificates on each of which at least one assessment has been paid may, during the year after first putting in force said number of certificates, continue to issue certificates notwithstanding withdrawals reducing the number of certificates in force to less than 500, if the number of such certificates does not remain below 500 for a period exceeding 90 days. The death benefit contributions to be made upon such certificate shall be based upon the Standard Industrial Mortality Table or the English Life Table Number Six, with a rate of interest not greater than 4 per cent per annum, or upon a higher standard. Contributions may be waived or returns may be made from any surplus held in excess of reserve and other liabilities, as provided in the by-laws, but extra contributions shall be made if the reserves provided for in the following section become impaired. Such society may grant to the holder of such a certificate extended or paid-up protection or such withdrawal equities as its constitution and by-laws may provide, but in no case to exceed in value the reserve held against the individual certificate.

Section 25. A society entering into insurance agreements under section 23 shall maintain on all such contracts the reserve required by the standard of mortality and interest adopted by the society for computing contributions as provided in section 24. The funds representing the benefit contributions and all accretions thereto shall be kept as separate and distinct funds, independent of the other funds of the society, and shall not be liable for nor used for payment of the debts and obligations of the society other than the benefits authorized in sections 23 and 24. A society may provide that when a juvenile member reaches the minimum age for initiation into membership in such society, any benefit certificate issued under sections 23 to 28, inclusive, may be surrendered for cancellation and exchanged for any other form of certificate issued by the society. If it does not mature or expire prior to the attainment of such minimum age, any such benefit certificate may, notwithstanding any limitation in section 23, be continued in force, if in either case, such juvenile members shall present themselves for initiation as provided in the society's by-laws relative to the admission of adult members. All reserve accumulated under the certificate prior to the admission of any juvenile member to adult membership shall be transferred to the adult department to the credit of the transferring member. After the transfer of membership, the member shall have the sole right to designate a beneficiary, subject, however, to the by-laws of the society.

Section 26. The separation of assets, funds and liabilities required by section 25 shall not be terminated, rescinded or modified, nor shall the funds be diverted for any use other than as specified in section 25, as long as any certificates issued under sections 23 to 28, inclusive, remain in force. This requirement shall be recognized and enforced in any liquidation, reinsurance, merger or other change in the condition or status of the society.

Section 27. A society may provide in its by-laws and in the certificate issued under sections 23 to 28, inclusive, for specified payments on account of the expense or general fund, which may be mingled with the general fund of the society as its constitution and by-laws may provide.

Section 28. In case of the termination of membership in the society by the person responsible for the support of any child on whose account a certificate has been issued under sections 23 to 28, inclusive, the certificate may be continued for the benefit of the estate of the child, or for the benefit of any other person responsible for the support and maintenance of such child if the contributions are continued.

Section 29. The beneficiary under a certificate issued by any society may maintain an action thereon in his own name.

Section 30. Money or other benefit, charity, or relief or aid, to be paid, provided or rendered by any society, shall not be attached or taken upon execution or other process or by operation of law to pay any debt or liability of a member or beneficiary, or of any other person who may have a right thereunder, either before or after payment. This section shall not be applicable to any indebtedness charged against the member's certificate under the authority of section 16.

Section 31. Except as provided in sections 23 to 28, inclusive, a society may admit to beneficial membership any person, not less than 16 and not more than 60 years of age, who has been examined by a legally qualified physician, if the examination has been supervised and approved in accordance with the by-laws of the society. A member of such society under 40 years of age who shall apply for a certificate providing for death benefits not exceeding the total sum of $500, and a member of such society who shall apply for a certificate providing for benefits on account of disability from sickness or injury, hospitalization, medical service or death by accident only, need not be required to pass a medical examination therefore. Such society may accept, without medical examination, for a face amount of life insurance not more than $3,000 on any one life, any person not more than 45 years of age who shall make acceptable declaration of the person's insurability. This section shall not prevent such society from accepting general or social members.

Section 32. (a) A society may, subject to this chapter, make a constitution and by-laws for its government, admission of members, management of its affairs, and the fixing and readjusting of the rates and contributions of its members from time to time, and may amend its constitution and by-laws. A society shall have such other powers as are necessary or incidental to carry into effect its objects and purposes.

(b) The constitution and by-laws may prescribe the officers and elected members of standing committees, who may be ex officio directors or other officers corresponding thereto, and may, with the approval of the commissioner, provide for a system of absentee voting, other than proxy voting, under which absent members entitled to vote may vote in the election of officers and directors or similar governing body and on the adoption of amendments to the constitution and by-laws. The commissioner shall not approve any provision for such a system of absentee voting unless:

(1) the society submitting such provision for approval satisfies the commissioner that absentee voting is necessary in order to have an adequate representation of the membership of the society at its election;

(2) not less than 30 days advance notice, with copies of the proposed amendments to the constitution and by-laws which are to be balloted upon, is forwarded to each member of the society; and

(3) the commissioner is satisfied that the proposed absentee voting system requires the ballots to be carefully guarded against any disclosure of their contents until the same have been counted at the central meeting place.

Section 32A. Whoever with fraudulent intent alters, defaces, mutilates, destroys or conceals any record of a fraternal benefit society made by or in the custody of the secretary thereof shall be punished by a fine of not more than $1,000 or by imprisonment for not more than one year, or by both such fine and imprisonment.

Section 33. A domestic society may provide that the meetings of its legislative or governing body may be held in any state or province wherein such society has subordinate branches, and all business transacted at such meetings shall be as valid in all respects as if such meetings were held in the commonwealth. Its principal office shall, however, be situated in this commonwealth.

Section 34. The constitution and by-laws of the society shall be binding on it, on its members, and on all beneficiaries of members, and shall provide that no subordinate body or any of its subordinate officers or members shall have power or authority to waive any provision thereof. There shall be no waiver except as the constitution and by-laws of the supreme body shall specifically permit.

Section 35. The recording officer of a society shall file with the commissioner a duly certified copy, in English, of any amendments of or additions to its constitution and by-laws, within 90 days after their adoption. Printed copies of the constitution and by-laws, as amended, changed or added to, and certified by the secretary or corresponding officer of the society, shall be prima facie evidence of the same and of the legal adoption thereof.

Section 36. (a) The commissioner, or any person designated by him, may examine the affairs of any domestic society. The commissioner may employ assistants for the purpose of such examination and he or any person designated by him shall have free access to all the books, papers and documents relating to the business of the society, and may summon and qualify as witnesses on oath and examine its officers, agents and employees and other persons in relation to the affairs, transactions and condition of the society. The latest report of each examination made by the commissioner shall be read at the next succeeding convention of any society on the lodge system, as defined in section 2, and thereafter a copy thereof shall be filed at the home office of the society. Whoever, without justifiable cause neglects, when duly summoned, to appear and testify before the commissioner or his authorized representative, or whoever obstructs the commissioner or his representative in making an examination under this section, shall be punished by a fine of not more than $1,000 or by imprisonment for not more than one year.

(b) Whenever the commissioner is satisfied that any domestic society (1) has failed to comply with any provision of this chapter; (2) has exceeded its powers; (3) is not carrying out its contracts in good faith; (4) is transacting business fraudulently; (5) that its management or condition is such as to render its further transaction of business hazardous to the public, its members or creditors; (6) that such a society after the existence of one year or more, has a membership of less than 400, or determines to discontinue its business; or (7) whenever any such society, or any of its officers or agents, has refused to submit to an examination under this section or to perform any legal obligation relative thereto, the commissioner may present the relative facts to the attorney general, who shall, if he deems the circumstances warrant, begin a quo warranto proceeding in the supreme judicial court. The court may forthwith issue a temporary injunction restraining the society from further transacting any business. After a full hearing, if it then appears that the society should be dissolved, the court may make the injunction permanent, and appoint one or more receivers to take possession of the books, papers, moneys and other assets of the society, to settle its affairs and to distribute its funds to those entitled thereto, subject to such rules and orders as the court may prescribe.

(c) No such proceedings shall be begun by the attorney general until after the commissioner has given written notice to the chief executive officers of the society and has afforded a reasonable opportunity, on a date named in such notice, to show cause why such a proceeding should not be begun. Such a proceeding shall be entertained only if brought by the attorney general.

Section 37. (a) After an examination of any society, either domestic or foreign, has been begun, the commissioner shall not make public any financial statement, report or finding affecting the status, standing or rights of the society until a copy thereof has been served upon the society at its home office, and the society has been afforded a reasonable opportunity to be heard regarding the financial statement, report or finding. The commissioner may use such facts as come to his knowledge for the purpose of securing an injunction as provided in section 36.

(b) A report of an examination made under section 36 or 44 may, as far as material and relevant, be admitted, in the discretion of the court, in any judicial proceeding under section 36 or 43, as prima facie evidence of the facts set forth in such report. Nothing in this subsection shall be construed to require the commissioner to make an examination of a domestic society under said section 36 before presenting the facts to the attorney general under said section 36, or to make an examination of a foreign society under section 44 before refusing to issue a license to such a society under section 41 or revoking the license of such a society under section 43.

Section 37A. No society shall make any disbursements of $15 or more, except disbursements on account of the return of dues paid in advance, unless: (1) such disbursements are evidenced by a voucher signed by or on behalf of the person receiving the money and correctly describing the consideration for the payment; and (2) an itemized statement of the disbursements is made if the disbursements are for services and disbursements setting forth the services rendered; and (3) a voucher is signed that correctly describes the nature of the matter and the interest of a society therein if the disbursements are in connection with any matter pending before any legislature or public body, or before any department, board, commission or officer of any government, whether local, state or national; or (4) an affidavit is executed stating the reason for not obtaining a voucher, and setting forth the information in the preceding clauses if such voucher cannot be obtained.

Section 38. A society shall annually, on or before March 1, file with the commissioner, in such form as he may require, a statement on oath of its president, secretary, treasurer and chief accountant, or corresponding officers, of its condition and standing on December 31 of the preceding calendar year, and of its transactions for the year ending on that date. A society shall also furnish such other information as the commissioner may deem necessary. The commissioner may at other times require any further statement relating to such society as the commissioner deems necessary.

Section 39. (a) In addition to the annual statement required by section 38, a society on the lodge system authorized to pay benefits in the commonwealth upon the death of its members, except those societies which do not pay benefits for death from natural causes, shall annually report to the commissioner a valuation of its certificates providing for death benefits in force on December 31 of the preceding calendar year. The report shall show, as contingent liabilities, the present mid-year value of the death benefits promised in the outstanding contracts of the society, and as contingent assets, the present mid-year value of the future net mortuary contributions as provided in the constitution and by-laws as the same are in practice actually collected, not including therein any value for the right to make extra assessments.

(b) At the option of any such society, in lieu of the method in subsection (a), the valuation may show the net mid-year value of the outstanding contracts. The net value, when computed in case of monthly contributions, may be the mean of the terminal values for the end of the preceding and of the current insurance years, the right to make extra assessments being excluded from consideration. The valuation shall be certified by a competent accountant or actuary, or at the request and expense of the society, verified by the actuary of the department of insurance of the home state of the society, and shall be filed with the commissioner on or before April 30 following the submission of the most recent annual statement. The legal minimum standard of valuation shall be the National Fraternal Congress Table of Mortality as adopted by the National Fraternal Congress on August 23, 1899; or at the option of the society, any higher mortality table; or, at its option, it may use a mortality table based on the society's own experience of at least 20 years, and covering not less than 100,000 lives with interest assumption not higher than 4 per cent per annum, whichever mortality table is adopted. Every such report shall set forth clearly and fully the mortality and interest basis and the method of valuation. A society providing for disability or accidental death benefits, or both, shall keep the net contributions for such benefits in a fund separate and apart from all other benefit funds and from expense funds. The valuation provided for in this section shall not be considered or regarded in any action that may arise as a test of the financial solvency of the society, but each society shall be held to be legally solvent so long as the funds in its possession are equal to or in excess of its liabilities, not including in the term "liabilities" any charge for reserve computed as required by this section.

(c) Such report of valuation and an explanation of the facts concerning the condition of the society thereby disclosed shall be sent to each member of the governing body of the society not later than June 1 of each year, or in lieu thereof, such report of valuation and showing of the society's condition as thereby disclosed may be published in the society's official paper, and the issue containing the same shall be mailed to each beneficiary member of the society.

Section 39A. A society may, in the annual statement required by section 38, value its bonds or other evidences of debt having a fixed term and rate and not in default as to principal or interest and if amply secured, in accordance with the following rule:- if purchased at par, at the par value; if purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield meantime the effective rate of interest at which the purchase was made. The purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, and a society may return such bonds or other evidences of debt at either their market or their book value, but in no event at any aggregate value exceeding the aggregate of the values calculated according to the foregoing rule.

Section 40. (a) If the stated periodical contributions of the members of any society subject to section 39 are insufficient to pay all reported death, disability, hospitalization and the medical service claims in full, and to provide for the creation and maintenance of the funds required by its by-laws or by this chapter, additional contributions or additional, increased or extra rates of contribution shall be collected from its members to meet the deficiency, as the by-laws of the society shall so provide. Such by-laws may provide that upon the written application or consent of the members, their certificates may be charged with its proportion of any deficiency disclosed by valuation, with interest not exceeding 5 per cent per annum.

(b) In rerating its members or for the purpose of placing itself on a sounder financial basis, any domestic society and any foreign society now admitted to this commonwealth, if it be not in conflict with the laws of its domicile, may, if "legally solvent" as set forth in section 39, establish by its constitution and by-laws a separate class of members who shall make mortuary contributions on the basis prescribed in section 8. All new members who from time to time join the society shall be assigned to such class, unless the new members elect otherwise. All present members may at their option be transferred at the prescribed rates to such class. The mortuary contributions of such class shall be placed in a separate account and used only for the benefit of the members of that class or of their beneficiaries. In the case of a society which has established such higher rate class whose contributions are held and used as set forth, the "additional contributions" or "extra rates" specified in this section shall be required only of the members of the class or classes respectively where the deficiency in contributions is apparent, and each class shall provide for its own deficiency. A class of a domestic society failing to do so shall be subject to the receivership provisions set forth in section 36. If a society can show, by an annual valuation, as provided in this section, that it is accumulating and maintaining for all of its members, who are not included in the separate class of members referred to in the tabular reserve required by a table of mortality not lower than the National Fraternal Congress Table of Mortality as adopted at the National Fraternal Congress on August 23, 1899, and 4 per cent interest, and which has provided for stated periodical mortuary contributions on said standard, then such society may abolish the segregation of members and funds required by this section. A foreign society which has legally established such a class in its home state and whose constitution or by-laws require the segregation and use of the mortuary contributions of its members as set forth in this section may be admitted to this commonwealth with respect to such class upon compliance with the laws of the commonwealth not in conflict with this provision.

Section 41. (a) No foreign society shall transact any business in the commonwealth without a license from the commissioner. Such society applying for such a license shall file with the commissioner a duly certified copy of its charter or articles of association; a copy of its constitution and by-laws, certified by its secretary or corresponding officer; a power of attorney to the commissioner, as provided in section 42; a statement of its business and the names and addresses of its officers and agents, on oath of its president and secretary, or corresponding officers, in the form required by the commissioner, duly verified by an examination made by the supervising insurance official of its home state or other state satisfactory to the commissioner; a copy of its certificate of membership; and a certificate from the proper official of its home state, territory, district or country that the society is legally organized.

(b) The society shall also show that the benefits are provided for by periodical or other payments by persons holding similar contracts; that its assets are invested in accordance with the laws of the state or country where it is organized; and that it has the qualifications required of domestic societies on the lodge system incorporated under this chapter. A society which grants benefits for disability arising from accidental injury or from sickness or hospitalization or medical services shall be required to show that it has accumulated funds, usable only for the payment of such benefits and in excess of accrued claims for such benefits, not less in amount than three monthly contributions or one quarterly contribution from members entitled to such benefits. Such society shall further be required, as a condition for the maintenance of its authority to do business in this commonwealth, to maintain at all times after admission, as regards disability, hospitalization and medical service benefits, funds in amount as set forth in the preceding sentence, and shall furnish the commissioner such other information as he may deem necessary for the proper exhibit of its business and plan of working.

(c) Upon compliance with these requirements, such foreign society shall be entitled to a license to transact business in the commonwealth until July 1 of the following year, and such license shall, in compliance with this chapter, be renewed annually, but in all cases to terminate on July 1 of the following year, except that it shall continue in full force and effect until the new license is issued, or is refused after notice and hearing. For every such license or renewal the society shall pay to the commissioner $20.

Section 42. A foreign society applying for admission to the commonwealth shall, by duly executed instrument filed with the commissioner, as provided in the third paragraph of section 151 of chapter 175, appoint the commissioner as its attorney for the service of process upon it, which shall be served in accordance with said paragraph and section 154 of said chapter 175. All process against a foreign society shall be served at least 30 days before the return day named in the process.

Section 42A. (a) A foreign society, if formed under the law of any government or state other than of the United States, shall not be admitted and authorized to transact business in the commonwealth until, in addition to complying with the conditions of sections 41 and 42, it has satisfied the commissioner that it has made a deposit, as provided in this section, with (1) the state treasurer; (2) the proper board or officer of some other state of the United States; or (3) trustees who are citizens or corporations of the United States and approved by the commissioner, appointed under a deed of trust executed in a form approved by the attorney general and the commissioner and who have filed with the commissioner a bond, in a form approved by the attorney general and the commissioner, with a surety company authorized to transact business in the commonwealth as surety, and in such sum as the commissioner may require, conditioned upon the faithful performance of their duties and running to the commissioner, or his successor for the benefit of all the members, certificate holders and creditors within the United States of such society.

(b) Such deposit shall be in an amount not less than the reserves with respect to all its outstanding certificates of membership held by residents of the United States and may be made in the securities and subject to the limitations specified in sections 63 and 66 of chapter 175, or in cash or such other securities as the commissioner may approve. If made with the state treasurer, such deposit shall not be returned to the society until it has ceased to transact business in the commonwealth, nor until the commissioner is satisfied that the society is under no obligation to members, certificate holders or other persons in this commonwealth or in any other state of the United States for whose benefit such deposit was made, nor until he has given his written consent to such return. The commissioner may, in any case, authorize in writing the return to the society of any excess of any such deposit over the amount required by this section if he is satisfied that such return will not be prejudicial to the interests of its members, certificate holders or creditors.

Section 43. (a) Whenever the commissioner is satisfied that any foreign society (1) has exceeded its powers; (2) has failed to comply with any provision of this chapter; (3) is conducting businesses fraudulently; (4) is not carrying out its contracts in good faith; (5) that its condition or management is such as to render its further transaction of business hazardous to the public, to members or creditors; or (6) that it or its officers or agents have refused to submit to an examination under section 44 or to perform any legal obligation relative thereto, the commissioner shall notify the society of his findings, and state in writing the grounds of his dissatisfaction, and, after reasonable written notice to the society, shall require it, on a date named in such notice, to show cause why its license should not be revoked. If on said date the society does not present to the commissioner good and sufficient reasons why its license to transact business in the commonwealth should not be revoked, he may revoke such license.

(b) Whenever the commissioner refuses to issue a license to a foreign society under section 41, or revokes its license under this section, he shall reduce his ruling, order or decision to writing and file it in the division of insurance. He shall also furnish a copy thereof, together with a statement of the reasons for his action, to the officers of the society upon request.

(c) Any such society aggrieved by the refusal of the commissioner to issue a license to it, or by the revocation of its license, may, within 30 days after receiving written notice of such refusal or revocation, file a petition in the supreme judicial court for the county of Suffolk for a review of the commissioner's action. The court shall summarily hear and determine the case and may make an appropriate order or decree. If the order or decree is adverse to the petitioning society, it may appeal to the full court within ten days. In case of such an appeal, the refusal or revocation of the license shall continue in full force and effect until the final determination of the question by the full court.

(d) The termination of the license of such a society shall not prevent it from continuing in good faith all contracts made by it in the commonwealth during the time when it was legally authorized to transact business therein.

Section 44. The commissioner or his designee may examine any foreign society transacting business in the commonwealth or applying for admission. For this purpose, the commissioner or his designee shall have the powers given by section 36 relative to domestic societies. He may accept, in lieu of such examination, the examination of the insurance department of the state or country where the society is organized. The actual expenses of the examiners making any such examination shall be paid by the society, upon a statement furnished by the commissioner.

Section 45. (a) Domestic societies governed by direct vote of their members and limiting their membership as provided in section 4 and domestic fraternal benefit corporations limiting their membership to the permanent employees of cities or towns, the commonwealth or the federal government, and not paying death benefits, but paying annuities or gratuities contingent upon disability or long service, may continue to transact business in the commonwealth. Such corporations and like societies incorporated under this chapter shall be governed by sections 4 to 11, inclusive, sections 14, 18 and 21, so far as the same are applicable, sections 22, 29, 30, 32, 36 to 38, inclusive, sections 47, 47A, 48 and 49 of this chapter and section 5 of chapter 59, and in addition by the following provisions:

(1) the officers of such limited corporations shall be elected by ballot by the members as often as once in two years;

(2) proxies shall not be used in voting;

(3) no person under 16 years of age shall be admitted to membership;

(4) the recording officer of such a corporation shall file with the commissioner amendments to its by-laws, in English, within 30 days after their adoption and shall likewise file forthwith a duly certified copy of its by-laws whenever the commissioner requires in writing;

(5) such equitable assessments, either periodical or otherwise, shall be made upon the members as shall be necessary to carry out the purposes of the organization;

(6) paid agents shall not be employed in soliciting or procuring members, except that corporations which limit their certificate holders to a particular fraternity or which provide for stated periodical contributions sufficient to meet the mortuary obligations contracted, when valued upon the basis of the National Fraternal Congress Table of Mortality as adopted by the National Fraternal Congress on August 23, 1899, or any higher standard, with interest assumption not more than 4 per cent per annum, may pay members for securing new members, and any corporation may pay local collectors.

(b) A corporation subject to this section may furnish physicians and nurses for its members and their families or pay for the services of physicians or nurses engaged by its members for the care of themselves or their families. The expense incurred under this section by any such corporation in any year shall not exceed $5,000 in the aggregate, and shall not exceed $100 in the case of any member thereof and his family.

(c) No corporation formed after January 1, 1912, unless it confines its membership to that of a particular fraternity in any one country, or to a lodge of some fraternity, or to the employees or ex-employees of cities or towns or of the commonwealth or of the federal government, shall contract to pay benefits to its members until it shall satisfy the commissioner that it has received at least 500 bona fide applications for membership. With the written approval of the commissioner and the consent of each corporation expressed by vote at a duly-called meeting, any corporation governed by this section may transfer its membership and funds to any other domestic society organized under this chapter.

(d) Whoever violates any provision of this section shall be punished as provided in section 50.

Section 46. (a) A domestic society which limits its membership as provided in section 4, or which limits its membership to the members and ex-members of any social organization having a lodge system and secret form of work; or a secret order or fraternity which operates on the lodge system with a representative form of government and grants insurance benefits as incidental only to the work of the order or fraternity; or a purely charitable association or corporation existing on May 23, 1901, any one of which pays a death or funeral benefit limited to not more than $200 disability benefits not exceeding $10 a week, or any or all of such benefits, or a domestic society which limits its membership as provided in said section 4 to the employees of a designated firm, business house or corporation, or any department thereof, and pays disability benefits not exceeding $15 a week, and which is not conducted as a business enterprise or for profit, and a subordinate lodge of a secret fraternity or order as defined in this section which is not conducted as a business enterprise or for profit, which pays death benefits to families or dependents of deceased members as fixed by its by-laws, but not more than $200 if the lodge membership is 200 or less, and if over 200 not in excess of the amount of an assessment of $1 upon each member thereof in good standing at the time of the death of the member, and a society, either domestic or foreign, which confines its membership to members of organizations defined in the second sentence of section 29 of chapter 175, and which embraces therein only persons of the same occupation, may transact business in the commonwealth without conforming to the provisions of this chapter except this section and sections 29, 30, 36, 47, 47A and 49, or to said chapter 175. No proceeding shall be instituted under section 36 because such society has a membership of less than 400. Clause Seventh of section 5 of chapter 59 shall apply to such a society.

(b) A society transacting business under this section may, in the event of the death of the wife of a member, pay to the member a part of the amount payable at the member's death. The amount so paid shall be deducted from the amount payable at the member's death, and the total amount so paid, both at the death of the member and of the member's wife, shall not exceed the amount allowed by this section to be paid at the death of a member. Such society may also furnish physicians and nurses for its members and their families.

(c) Such limited society may be incorporated, and limited societies may be formed, in the manner prescribed in and subject to this section and to sections 6, 7, 9, 10, 11, 29, 30, 32, 36, 47A and 49 and clause Seventh of section 5 of chapter 59, but no proceeding shall be instituted under section 36 because such society has a membership of less than 400.

(d) With the written approval of the commissioner and the consent of each society expressed by a vote at a duly called meeting, any society subject to this section may transfer its membership and funds to any other domestic society organized under this chapter. A society to which the membership and funds of another society have been transferred as aforesaid may continue to transact business subject to this section, but may have a special class of members consisting of those persons who held membership in each of such societies immediately prior to the transfer, which members shall be entitled to dual benefits and shall pay dual membership dues and assessments. The class of membership shall not be expanded or replaced and shall not in any event receive disability benefits of more than $20 per week and death benefits of more than $400. Benefits not exceeding such amounts may be paid notwithstanding any other provisions of law to the contrary.

(e) The recording officer of any society subject to this section shall forthwith file with the commissioner, whenever he requires in writing, a duly certified copy of its by-laws.

(f) A society subject to this section shall within 30 days after a written request therefore by the commissioner file with him a financial statement, in such form and detail and of such date as he may prescribe, signed and sworn to by its president and secretary and treasurer. A society shall also annually on or before March 1 file with the commissioner a financial statement, in such form and detail as he shall prescribe, and as of December 31 of the preceding calendar year, certified to by its president and secretary and treasurer, showing its assets and liabilities, the names of banks used as depositories, and its total membership.

(g) A person violating any provision of this section, and any such society, or any officer or agent thereof, paying or agreeing to pay death or disability benefits in excess of the amounts prescribed in this section or collecting dues or assessments therefore, shall be punished as provided in section 50.

Section 46A. A subordinate lodge of a society with ritualistic form of work and representative form of government duly authorized to transact business in the commonwealth under this chapter may pay disability benefits not exceeding $10 a week without conforming to this chapter or chapter 175.

Section 46B. An incorporated domestic society formed or transacting business under section 45 or 46 may acquire, hold, manage and dispose of real estate in the city or town in which its principal office is located, to such amount as the commissioner may, by certificate filed in his office, approve. All property so held and the income derived therefrom shall be used for the purposes of the corporation as set forth in its charter or certificate of incorporation or in any amendment thereof.

Section 46C. A society subject to section 45 and section 46 may provide for the payment of any part or all of the benefits payable to its members by such society by agreement in writing with an insurance company for the payment of such benefits. The premiums or charge for such insurance may be paid from the periodical or other payments by members of such society.

Section 46D. A grand or district lodge of a secret order or fraternity which operates on the lodge system with a representative form of government and doing business in this commonwealth under any provision of section 46 may pay a death or funeral benefit not exceeding $2,000 without conforming to the provisions of this chapter except this section and section 46 if no such benefit is paid by the supreme or parent body of the organization or by the subordinate lodges under the jurisdiction of such grand or district lodge and if no assessments for any such benefit are levied or collected by the supreme or parent body of the organization.

Section 47. The superior court shall have jurisdiction in equity, upon an information filed by the attorney general at the request of the commissioner, to restrain all violations of this chapter and to endorse compliance with the provisions thereof and payment of all fines, forfeitures or penalties provided thereby. The remedy herein provided shall be in addition to all other remedies otherwise provided by law or by this chapter, and not in substitution thereof.

Section 47A. A contract of insurance or a benefit certificate made, issued or delivered by any society in violation of any provision of this chapter, or any provision of its charter, articles of association, constitution or by-laws, shall nevertheless be valid and binding upon it and its members, but the rights, duties and obligations of the parties thereto shall be determined by the provisions of this chapter and of the charter, articles of association, constitution and by-laws of the society.

Section 48. A person, officer, member or examining physician of any society who shall knowingly or willfully make any false or fraudulent statement or representation in or with reference to any application for membership, or in order to obtain money from or benefit in any society, shall be punished by a fine of not less than $100 nor more than $500 or by imprisonment in a house of correction for not less than 30 days or more than one year, or by both such fine and imprisonment. A person willfully making a false statement of any material fact or thing in a sworn statement as to the death or disability of a certificate holder in any society for the purpose of procuring payment of a benefit in the certificate of such holder shall be guilty of perjury. A person who willfully makes any false statement in any verified report or declaration on oath required or authorized by this chapter shall be punished by a fine of not more than $5,000 or by imprisonment for not more than two and one-half years, or by both such fine and imprisonment.

Section 49. (a) Whoever solicits membership in any society not duly authorized to transact business in the commonwealth, or, whoever, for a person other than himself, or as an agent, solicitor, organizer, officer or other representative of any such society or of any local or subordinate lodge thereof, acts or aids in any manner in the issue, delivery, negotiation or continuance or renewal of any contract of insurance or benefit certificate in such society, or whoever, as such agent, solicitor, organizer, officer or other representative, acts or aids in any manner in the transaction of any business on behalf of such society or of any local or subordinate lodge or branch thereof, by the collection or transmission of dues or assessments, the calling or holding of meetings, or otherwise, shall be punished by a fine of not less than $50 nor more than $500.

(b) Whoever, by the means of cards, circulars, letterheads, advertisements, signs or other methods, represents or holds himself out to the public as being an agent, solicitor, organizer, officer or other representative of any such society or of any local or subordinate lodge or branch thereof shall be punished by a fine of not less than $20 nor more than $500.

Section 49A. A society operating on the lodge system with a representative form of government whose rates are on a basis of mortality not lower than the National Fraternal Congress Table as adopted by the National Fraternal Congress on August 23, 1899, or any society formed under section 45, if its constitution and by-laws so provide, may pay a pension to any employee who has been continuously in the service of the society for ten years or more and who has become incapacitated for further service by reason of physical or mental disability, and may pay a pension to any employee who has been continuously in the service of the society for 15 years or more and who is retired by reason of the infirmities of age or has attained the age of 65 years. All moneys expended for the purposes of this section shall be paid from the expense fund of the society. This section shall not apply to any society formed under section 46.

Section 50. Whoever violates any provision of this chapter for which a specific penalty is not provided shall be punished by a fine of not more than $200.

SECTION 20. This act shall take effect as of January 1, 2001.

Approved November 16, 2000.