Cal. INS § 4097.06

(a) The commissioner shall examine the plan submitted pursuant to subdivision (b) of Section 4097.02. If the plan provides for the establishment of a mutual holding company under Section 4097.05, the mutual insurer shall demonstrate that the issuance of stock:

(1) Will not require members to pay additional funds to retain their rights in surplus, but nothing herein is intended to prohibit or restrict a mutual insurer that is converting to a stock insurer by establishing a mutual holding company from offering to its members subscription rights that are in addition to the rights in surplus to be held in the mutual holding company.

(2) Issued to officers, directors, employees, or employee benefit plans for their benefit, if any, will be fair, just and equitable and not hazardous to policyholders, stockholders, or creditors.

(3) Provides sufficient means for the accumulated earnings, cash, and other non-operating assets held by the mutual holding company to inure to the exclusive benefit of its members.

(b) As part of the examination the commissioner shall order a public hearing on the plan after written notice of the hearing to the mutual company, its members, and the public. Members of the mutual company, their representatives, and the public shall have the right to appear at the public hearing and to submit written comments to the commissioner. The hearing shall occur before the policyholder vote. The commissioner may require as a condition of consent that the mutual company make modifications of the proposed plan that the commissioner finds necessary for the protection of policyholders. The commissioner shall consent to the plan if he or she finds all of the following:

(1) For the conversion of a mutual insurer, the plan is fair, just, and equitable to the insurer and its policyholders.

(2) For the conversion of a mutual holding company, the plan is fair, just, and equitable to the company, its members, and the policyholders of the converted insurer.

(3) The plan does not violate the law.

(4) The converted insurer will, after the conversion, satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed.

(c) For the conversion of a mutual company, the commissioner may appoint one or more actuarial, financial, or other consultants, including legal counsel, as the commissioner finds necessary to advise the commissioner in making the determination of whether the proposed plan of conversion meets the applicable requirements of this article. The mutual company is responsible for the reasonable fees and expenses of any actuarial, financial, or other consultants, including legal counsel, appointed, and for the mailing and publication of notices to the mutual company and its members.