The mutual holding company must keep a majority of the voting shares, and the initial shares must be issued to it. Those shares cannot be transferred or encumbered in the ways listed.
Sec. 826.205. CAPITAL STOCK HELD BY MUTUAL HOLDING COMPANY. (a) In this section: (1) "Intermediate holding company" means a holding company that: (A) is a subsidiary of a mutual holding company formed to reorganize a mutual insurance company; and (B) directly or through a subsidiary intermediate holding company, owns the resulting company. (2) "Majority of the voting shares of the capital stock" means shares of the capital stock of a company that carry the right to cast a majority of the votes entitled to be cast by all of the outstanding shares of the capital stock of the company on all matters submitted to a vote of the shareholders of the company. (b) All of the initial shares of the capital stock of the resulting company shall be issued to the mutual holding company. (c) The mutual holding company shall at all times own a majority of the voting shares of the capital stock of the resulting company or of an intermediate holding company established to hold the voting shares of the resulting company. The requirements of this subsection may be satisfied by indirect ownership through one or more intermediate holding companies in a corporate structure approved by the commissioner. (d) The mutual holding company or intermediate holding company may not convey, transfer, assign, pledge, subject to a security interest or lien, encumber, or otherwise hypothecate or alienate the majority of the voting shares of the capital stock that is required to be owned under Subsection (c). (e) A violation of Subsection (d) is void in inverse chronological order from the date of the conveyance or activity as to the shares necessary to constitute a majority of the voting shares of the capital stock. Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1, 2003.