§ 8-402. Society deemed fraternal benefit society

   (a) In general. --

   (1) An incorporated society, order, or supreme lodge without capital stock is deemed to be a fraternal benefit society if it:

      (i) is conducted solely for the benefit of its members and their beneficiaries;

      (ii) is not conducted for profit;

      (iii) is operated on a lodge system with ritualistic form of work;

      (iv) has a representative form of government; and

      (v) provides for benefits to be paid in accordance with this subtitle.

   (2) An incorporated or unincorporated society, order, or supreme lodge without capital stock that is exempted under § 8-404(a)(2) of this subtitle is deemed to be a fraternal benefit society.

(b) Lodge system. -- A society is deemed to be operating on a lodge system if it operates under a system by which the society:

   (1) has a supreme legislative or governing body and subordinate lodges or branches, by whatever name known;

   (2) by its laws, requires the subordinate lodges or branches to hold regular meetings at least once each month in furtherance of the purposes of the society; and

   (3) elects, initiates, or admits members in accordance with its laws, rituals, and rules.

(c) Representative form of government. -- A society is deemed to have a representative form of government if:

   (1) (i) the society provides in its laws for a supreme legislative or governing body composed of:

         1. representatives elected by the members of the society or by delegates elected directly or indirectly by the members; and

         2. any other individuals required by the laws of the society;

      (ii) election of delegates may be accomplished by mail;

      (iii) the elected representatives of the society:

         1. are a majority of the supreme legislative or governing body;

         2. have at least two-thirds of the votes; and

         3. have at least the number of votes required to amend the laws of the society;

      (iv) at least once every 4 years:

         1. the supreme legislative or governing body of the society meets; and

         2. officers, representatives, or delegates of the society are elected;

      (v) each insured member is eligible for election to act or serve as a delegate to the meeting;

      (vi) the society has a board of directors that:

         1. is responsible for the management of the affairs of the society between meetings of the supreme legislative or governing body;

         2. is subject to control by the supreme legislative or governing body;

         3. except when a vacancy is filled between meetings of the supreme legislative or governing body, is elected by the supreme legislative or governing body; and

         4. has powers and duties delegated by the laws of the society;

      (vii) the officers of the society are elected by the supreme legislative or governing body or by the board of directors; and

      (viii) the members, officers, representatives, or delegates of the society may not vote by proxy; or

   (2) (i) the society provides in its laws for a supreme legislative or governing body composed of:

         1. a board composed of individuals elected by the members, either directly or by their representatives in intermediate assemblies; and

         2. any other individuals required by the laws of the society;

      (ii) election of the board may be accomplished by mail;

      (iii) the term of an elected board member may not exceed 4 years;

      (iv) the individuals elected to the board:

         1. are a majority of the board; and

         2. have at least the number of votes required to amend the laws of the society;

      (v) vacancies on the board between elections are filled as prescribed by the laws of the society;

      (vi) an individual filling the unexpired term of an elected board member is considered to be an elected member; and

      (vii) the board meets at least quarterly to conduct the business of the society.

HISTORY: An. Code 1957, art. 48A, § 302, 303, 304; CA § 6-401; 1995, ch. 36; 1997, ch. 183, § 1.