| (a) The board finds and declares that mutual assessment companies, local mutual aid associations and burial associations shall operate in the following manner and under the following conditions. (1) The operation of such companies shall be mutual in character. (2) The operation of such companies shall be on a nonprofit basis. (3) The board of directors of the company shall maintain its control over the operations of such company and shall not divest itself of its duties and responsibilities to manage the affairs of such company for the benefit of the policyholders or members thereof. (4) The board of directors of the company shall determine the amount of compensation to be paid to officers, directors, employees, agents, and managers, which compensation shall be reasonable and shall be only for personal services rendered and reimbursement for actual and necessary expenses incurred, and the board
of directors shall also fix and determine the length of time such officers, directors, employees, agents and managers shall be so engaged and compensated. (5) Any employment, general agency or general manager contract with the company shall have a reasonable cancellation provision whereby either the company or the employee, general agent, or general manager may cancel such contract for good cause. (6) All persons who hold a general management or general agency contract and perform any services or functions thereunder, shall be bonded in an amount not less than that required of an officer responsible for the handling of funds. (7) No officer, director, agent, manager or employee of a company shall pay or receive, directly or indirectly, for his personal use or benefit, anything of value as consideration or partial consideration for the resignation or election of an officer or director of any such company, or for transferring or
assigning proxies or appointing a substitute in connection with any proxies, or for the sale of any asset of whatever kind or character belonging to such company or association. (b) A copy of every management contract, amendment thereto, or assignment thereof shall be filed with the commissioner of insurance within 10 days from the date of its execution; or in the case of an assignment, within 10 days from the date on which notice of assignment was received by the association or company. (1) The term "management contract" refers to any agreement for the rendition of services to the company or association, except such contracts as are to be performed within one year from the making thereof. (2) The commissioner shall neither approve nor disapprove such filed contracts, amendments, or assignments; but if he finds them to be contrary to law, he will take such action as he deems appropriate under the law.
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