This chapter may be cited as the Alaska BIDCO Act.
A licensee may not purchase all or substantially all of the business of another person unless the purchase is approved by the department.
A licensee may not engage in a business other than providing financing assistance and management assistance to businesses.
The department may provide to an interested person a declaratory ruling on a provision of this chapter.
A licensee shall post the license in a conspicuous place in the licensee's principal office.
This chapter shall be liberally construed to accomplish its purposes.
A licensee may not transfer or assign its license.
A licensee is not subject to the provisions of AS 06.
A licensee may not merge with another corporation unless the merger is approved by the department, and, if the licensee is not the surviving corporation, the surviving corporation is a licensee.
A fee for filing an application with the department shall be paid at the time the application is filed with the department and is not refundable.
A licensee may not buy back or obligate itself to buy back a share of equity interest from a shareholder without the prior approval of the department.
Article 03. TRANSACTION OF BUSINESS
A person may not acquire control of a licensee without the prior approval of the department.
A licensee may not sell all or substantially all of the licensee's business or of the business of an office of the licensee to another person unless the purchaser is a licensee and the sale is approved by the department.
A final order, decision, license, or other official act of the department under this chapter is subject to judicial review by the superior court under the applicable rules of court.
If the department denies a license the department shall provide the applicant with a written statement explaining the reasons for the denial.
A licensee may determine the form, terms, and conditions for the financing assistance that it will provide.
If the department is authorized to make service of process in connection with a noncriminal administrative proceeding under this chapter, the department may make the service by registered or certified mail.
Financing assistance and management assistance provided by a licensee to a business may only be for the business purposes of the business.
The provisions of this chapter relating to conflicts of interest do not limit the authority of the department to determine that an act involves a conflict of interest and is therefore an unsafe or unsound act.
When providing management assistance, a licensee may provide management advice, management services, technical advice, and technical services.
When the department issues an order or license under this chapter, the department may impose conditions that the department determines are necessary to carry out the purposes of this chapter.
A licensee may not directly or indirectly provide financing assistance to an associate of the licensee.
A person having custody of all or part of the books, accounts, or other records of a licensee may not knowingly refuse to allow the department, upon request, to inspect or make copies of the records.
(a) The board of directors of a licensee must have at least seven directors.
(b) The board of directors shall hold at least one meeting each calendar quarter.
If a person fails to comply with a subpoena issued by the department under this chapter or to testify with respect to a matter covered by this chapter, the superior court may issue an order requiring the attendance of the person and the giving of testimony or production of evidence.
A corporation that is licensed under this chapter may apply for and be issued a license under another law of the state, federal government, or of another state in the United States unless the transaction of business by the corporation as a licensee under the other license would violate this chapter or would be contrary to the purposes of this chapter.
Except as otherwise provided in this section, the provisions of the law under which a licensee is incorporated apply to the licensee. If a provision of the licensee's incorporating law conflicts with a provision of this chapter, this chapter controls.
The department may make public or private investigations inside or outside the state that the department considers necessary to determine whether to approve an application for a license, to determine whether a person has violated or is about to violate this chapter, to aid in the enforcement of this chapter, or to aid in issuing an order or adopting a regulation under this chapter.
With the approval of the department, a licensee may acquire and hold control of another business that is engaged only in the business of providing financing assistance and management assistance to businesses.
If the department determines that the results of a department communication or order addressed to the licensee or to a subject person of the licensee should be disclosed to the licensee's shareholders, the department may require the licensee to make the disclosure in the form and manner determined by the department.
For the purposes of an investigation, examination, or other proceeding under this chapter, the department may administer oaths and affirmations, subpoena witnesses, compel the attendance of witnesses, take evidence, and require the production of books, papers, correspondence, memoranda, agreements, and other documents or records that the department considers relevant or material to the proceeding.
The department shall administer this chapter. The department may issue orders and may adopt regulations that, in the opinion of the department, are necessary to execute, enforce, and achieve the purposes of this chapter. Adoption of regulations under this chapter is subject to AS 44.62 (Administrative Procedure Act).
When applying for a license, an applicant shall provide the information required by the department in the form required by the department. The information must include information on the directors, officers, and controlling persons of the applicant, the applicant's business plan, including at least 10 years of detailed financial projections and other relevant information, and additional information considered relevant by the department.
In AS 10.13.250 - 10.13.280, 'hold control' means to directly or indirectly own, of record or beneficially, 50 percent or more of a business's outstanding voting equity interests.
Within 30 days of each of the following events, the licensee shall notify the department in writing of the event and provide any additional information that the department requires:
(1) the death, resignation, or removal of a director or officer;
(2) the election of a director; or
(3) the appointment of an officer.
The department may determine that it is not reasonable to believe that an applicant would comply with this chapter if licensed. Bases the department may use to make that determination include proof that the applicant has been convicted of a crime involving fraud or dishonesty, including a conviction based on a guilty plea or plea of nolo contendere.
A licensee may not hold control of another business, except as provided under AS 10.13.260 - 10.13.280. In this section, 'licensee' includes the licensee in concert with a director, officer, controlling person, or affiliate of the licensee.
(a) A licensee may participate in a federal, state, or local government program for which the licensee is eligible and that has as the program's function the provision or facilitation of financing assistance or management assistance to businesses.
(b) If a licensee participates in a program referred to in (a) of this section, the licensee shall comply with the requirements of the program.
(a) Except as otherwise provided in AS 10.13.120 , a person transacting business in the state who is not a licensee may not knowingly use a name or title that indicates that the person is a BIDCO or otherwise represent that the person is a BIDCO or a licensee.
(b) A licensee may not knowingly misrepresent the meaning or effect of its license.
A licensee may not directly or indirectly provide financing assistance to discharge, or to free money for use in discharging, part or all of an obligation to an associate of the licensee. This section does not apply to a transaction of an associate of a licensee in the normal course of the associate's business involving a line of credit or financing assistance with a term of not more than five years.
(a) A licensee shall maintain at least one office in this state.
(b) A licensee may not maintain an office outside this state.
(c) The location of each office of a licensee must be reasonably accessible to the public.
(d) A licensee shall post in a conspicuous place at each of the licensee's offices a sign that bears the corporate name of the licensee.
(e) If a licensee establishes, relocates, or closes an office, the licensee shall give the department written notice within 30 days of the event.
A person shall disclose a potential conflict of interest that occurs in a transaction in the financing documents of the transaction or, if the transaction does not involve financing assistance, in another appropriate document, if the person
(1) participates in a decision of a licensee relating to the transaction; and
(2) knows of a potential conflict of interest involving the transaction.
After notice and a hearing, if the department determines that a licensee or subject person of a licensee has engaged in or that there is a reasonable cause to believe that the licensee or subject person is about to engage in an unsafe or unsound act with respect to the business of the licensee, the department may order the licensee or subject person to cease and desist from the action. The order may require the licensee or subject person to take affirmative action to correct a condition resulting from the action.
A proceeding under AS 10.13.830 is subject to AS 44.62 (Administrative Procedure Act). Except as otherwise provided in this chapter, other proceedings and actions under this chapter are exempt from AS 44.62.
If, in the opinion of the department, a person has violated this chapter, or if there is reasonable cause to believe that a person is about to violate this chapter, the department may bring an action in superior court to enjoin the violation or to enforce compliance with this chapter. Upon a proper showing, a restraining order, preliminary or permanent injunction, or writ of mandamus shall be granted, and a receiver or a conservator may be appointed for the defendant or the defendant's assets.
After notice and a hearing, if the department determines that a licensee or a subject person of a licensee has violated or is violating, or that there is reasonable cause to believe that the licensee or subject person is about to violate this chapter, the department may order the licensee or subject person to cease and desist from the action. The order may require the licensee or subject person to take affirmative action to correct a condition resulting from the action.
The financing assistance that a licensee may provide includes
(1) loans;
(2) purchase of debt instruments;
(3) straight equity investments including the purchase of common stock or preferred stock;
(4) debt with equity features including warrants to purchase stock, convertible debentures, or receipt of a percent of net income or sales;
(5) royalty-based financing;
(6) debt guarantees;
(7) property leasing.
If a licensee provides financing assistance to a business or engages in another business transaction, and if the assistance or transaction involves a potential conflict of interest, the terms and conditions under which the licensee provides the assistance or engages in the transaction may not be less favorable to the licensee than the terms and conditions that would be required by the licensee in the ordinary course of business if the assistance or transaction did not involve a potential conflict of interest.
If the department finds that a person has violated or that there is reasonable cause to believe that the person is about to violate AS 10.13.120(b) or 10.13.610(a), the department may order the person to cease and desist from the violation unless and until the person is issued a license under this chapter.
(a) If the department finds that the exemption is in the public interest and that the regulation of the person or transaction is not necessary for the purposes of this chapter, the department may exempt a person or transaction from AS 10.13.630 - 10.13.660 for the purposes of a particular transaction.
(b) The exemption may be unconditional or upon specified terms and conditions and for specified periods.
Article 07. ENFORCEMENT
A final order of an administrative proceeding under AS 10.13.710 - 10.13.760, 10.13.800, 10.13.810, or 10.13.830 may be appealed to the superior court.
(a) A licensee may not pay or obligate itself to pay a cash dividend or dividend in kind to the licensee's shareholders unless the payment is consistent with a dividend policy that has been adopted by the licensee and approved by the department.
(b) When approving dividend policies under this section, the department shall consider the special characteristics of BIDCOs and the diverse range of dividend policies that are potentially appropriate for a BIDCO, without allowing the licensee to engage in unsafe or unsound acts that could threaten the viability of the licensee as an ongoing BIDCO by eroding its capital base.
(c) The department may at any time withdraw a previous approval of a dividend policy if the department determines that the withdrawal is necessary to prevent unsafe or unsound acts.
Each year the department shall publish and provide to the legislature information on the effect of this chapter on promoting economic development in the state. The information must include aggregate statistics on
(1) the number and dollar amount of the financing assistance made by licensees to businesses; the amounts shall be organized into broad categories based on the types of industry involved; the standard industrial classification manual may be used for the categories;
(2) the number and dollar amount of the financing assistance made by licensees to minority-owned businesses and to businesses owned by women; and
(3) estimates of the number of jobs created or retained.
(a) If the department considers it expedient, the department may call a meeting of the board of directors or of the shareholders of a licensee.
(b) The department shall send notification of the time, place, and purpose of the meeting not less than five days before the meeting to each director, if a directors' meeting, or to each shareholder, if a shareholders' meeting, either by personal service or by registered or certified mail sent to the person's last known address as shown in the records of the department.
(c) The licensee shall pay the notice and meeting expenses for a meeting of shareholders called under (a) of this section.
(a) If a person other than a licensee makes or keeps all or part of the books, accounts, or other records of the licensee, this chapter applies to the person with respect to the books, accounts, and other records to the same extent as if the person were the licensee.
(b) If a person other than an affiliate or subsidiary of a licensee makes or keeps all or part of the books, accounts, or other records of the affiliate or subsidiary, this chapter applies to the person with respect to the books, accounts, and other records to the same extent as if the person were the affiliate or subsidiary.
(c) If the department considers it expedient, the department may require a licensee to obtain the approval of the department before permitting another person to make or keep all or part of the books, accounts, or other records of the licensee.
The purposes of this chapter are to
(1) promote economic development by encouraging the formation of one or more BIDCOs to help meet the financing assistance and management assistance needs of businesses in the state;
(2) establish a system of licensing, regulation, and enforcement to enable a BIDCO to satisfy the eligibility requirements for participating in programs that further the purposes of the BIDCO;
(3) encourage capital sources to invest in and lend money to BIDCOs by providing for BIDCOs a system of licensing, regulation, and enforcement designed to prevent fraud, conflict of interest, and mismanagement, and to promote competent management, accurate record keeping, and appropriate communication with shareholders;
(4) safeguard the general reputation of BIDCOs in order to increase the confidence of prospective equity investors in and prospective debt sources for BIDCOs.
(a) The department shall approve an application to acquire control of a licensee under AS 10.13.400 if the department determines that
(1) the applicant and the directors and officers of the applicant are of good character and sound financial standing;
(2) it is reasonable to believe that the applicant will comply with this chapter; and
(3) the plans, if any, of the applicant to make a major change in the business, corporate structure, or management of the licensee are not detrimental to the safety and soundness of the licensee.
(b) If, after notice and a hearing, the department determines that the criteria for approval in (a) of this section have not been satisfied, the department shall deny the application.
(a) A licensee that has provided financing assistance to a business may acquire and hold control of the business to the extent it becomes necessary to protect the licensee's interest as a creditor of, or investor in, the business.
(b) Unless the department approves a longer period, a licensee holding control of a business under this section shall divest itself of the control as soon as practicable, or within five years after acquiring the interest, whichever is sooner.
(c) Within 30 days after a licensee exercises its authority to acquire and hold control of a business under this section, the licensee shall notify the department of the action. The notification must include the reasons why it is necessary for the licensee to acquire and hold control of the business and the length of time the licensee anticipates that it may be necessary to hold control of the business.
(a) If after notice and a hearing the department finds that a person has violated this chapter, the department may order the person to pay to the department a civil penalty in the amount the department specifies. The civil penalty may not exceed $1,000 for each violation, or in the case of a continuing violation, $1,000 for each day the violation continues.
(b) This section does not apply to an act committed or omitted in good faith in conformity with an order, regulation, declaratory ruling, or written interpretative opinion of the department, even if the order, regulation, declaratory ruling, or written interpretative opinion is later amended, rescinded, or repealed, or determined by judicial or other authority to be invalid.
(c) The provisions of (a) of this section are in addition to, and not alternative to, the other provisions of this chapter that authorize the department to issue orders or to take other action on account of a violation of this chapter.
Article 08. GENERAL PROVISIONS
(a) The corporate name of a licensee must include the word 'BIDCO' or 'Bidco' and must be distinguishable on the records of the department from the name of any other organized entity and from a reserved or registered name. A licensee may not transact business under a name other than its corporate name. In this subsection, 'organized entity' and 'reserved or registered name' have the meanings given in AS 10.35.040.
(b) Before being issued a license, a corporation that proposes to apply for a license or that applies for a license may perform, under a name that indicates that the corporation is a corporation licensed under this chapter, the acts necessary to apply for and obtain a license and otherwise prepare to begin business as a licensee. The corporation may not represent that it is a licensee until after the license has been obtained.
The department may not approve a merger, purchase, or sale under AS 10.13.430 - 10.13.450 unless the department determines that
(1) the merger, purchase, or sale will be safe and sound with respect to the acquiring licensee;
(2) upon consummation of the merger, purchase, or sale, it is reasonable to believe that the acquiring licensee will comply with this chapter;
(3) the merger, purchase, or sale will not have a major detrimental effect on competition in the providing of financial assistance or management assistance to businesses, or, if there will be a detrimental effect, the merger, purchase, or sale is necessary in the interests of the safety and soundness of a party to the merger, purchase, or sale, or is otherwise, on balance, in the public interest.
Article 05. REGULATION, REPORTING, AND EXAMINATION
(a) An associate of a licensee may not directly or indirectly receive from a person to whom the licensee provides financing assistance
(1) compensation in connection with the providing of the financing assistance; or
(2) other things of value for procuring, influencing, or attempting to procure or influence the licensee's action with respect to providing the financing assistance.
(b) This section does not apply to the receipt of fees by an associate of a licensee for bona fide services performed by the associate if
(1) the associate, with the consent and knowledge of the person to whom the financing assistance is provided, is designated by the licensee to perform the services;
(2) the services are appropriate and necessary under the circumstances;
(3) the fees for the services are approved as reasonable by the licensee; and
(4) the fees for the services are collected by the licensee, and the licensee pays the associate.
(a) With the approval of the department, a licensee may acquire and hold control of a business not otherwise allowed under AS 10.13.250 - 10.13.270.
(b) The department may not approve an application under (a) of this section unless the department determines that
(1) the acquisition and control will not cause the amount of the licensee's investments in businesses covered by this section to exceed 15 percent of the assets of the licensee; and
(2) in the department's judgment the approval will promote the purposes of this chapter.
(c) An approval under (a) of this section may not be for a period of more than three years, unless the department determines that a longer period is necessary and consistent with the purposes of this chapter.
(a) The department may apply to the superior court for the appointment of a receiver for a licensee, if the department determines that the licensee should be liquidated because
(1) the licensee is insolvent;
(2) the licensee has suspended payment of the licensee's obligations, has made an assignment for the benefit of the licensee's creditors, or has admitted in writing the licensee's inability to pay the licensee's debts as the debts become due;
(3) the licensee has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under a bankruptcy, reorganization, insolvency, or moratorium law;
(4) a person has applied for the relief described under (3) of this subsection against a licensee and the licensee has by an affirmative act approved of or consented to the action or the relief has been granted; or
(5) the licensee is in a condition that makes it unsafe or unsound for the licensee to transact business.
(b) If a receiver is appointed under (a) of this section, the receiver shall liquidate the property and business of the licensee.
(a) When the department is reviewing an application under AS 10.13.410, the department may determine that an
(1) applicant or a director or officer of an applicant is not of good character if the person has been convicted of a crime involving fraud or dishonesty, including a conviction based on a guilty plea or plea of nolo contendere;
(2) applicant's plan to make a major change in the management of a licensee is detrimental to the safety and soundness of the licensee if the plan provides for a person to become a director or officer of the licensee and the person has been convicted of a crime involving fraud or dishonesty, including a conviction based on a guilty plea or plea of nolo contendere.
(b) The conditions described in (a) of this section are not the only conditions upon which the department may determine that an applicant or a director or an officer of an applicant is not of good character or that an applicant's plan to make a major change in the management of a licensee is detrimental to the safety and soundness of the licensee.
If the department determines that a factor set out in AS 10.13.720 - 10.13.730 is true with respect to a licensee or subject person of a licensee and that the action or violation is likely to cause the insolvency or substantial dissipation of the assets or earnings of the licensee, is likely to seriously weaken the condition of the licensee, or is likely to otherwise seriously prejudice the interests of the licensee before the completion of proceedings conducted under AS 10.13.720 - 10.13.730, the department may order the licensee or subject person to cease and desist from the action or violation. The order may require the licensee or subject person to take affirmative action to correct a condition resulting from the action or violation.
The department shall issue a license to operate as a BIDCO to a corporation that is incorporated under AS 10.06, or that has been issued a certificate of authority under AS 10.06 to transact business in the state, and that submits an application to the department, if the department determines that
(1) the applicant has the net worth required under AS 10.13.040 ;
(2) the directors, officers, and controlling persons of the applicant satisfy the criteria under AS 10.13.050 ;
(3) it is reasonable to believe that the corporation will comply with this chapter;
(4) the applicant has a reasonable promise of being a viable, ongoing BIDCO, satisfying the basic objectives of the corporation's business plans, and achieving long-term financial success.
(a) If the terms on which a licensee provides financing assistance to a business are less favorable to the licensee than the terms on which an associate of the licensee provides financing assistance to the business, the licensee may not directly or indirectly provide the assistance to the business within one year before or after the associate provides assistance.
(b) If the financing assistance provided by the licensee's associate is of a different kind from the financing assistance provided by the licensee, the burden is on the licensee to prove that the terms on which the licensee provided the financing assistance were at least as favorable to the licensee as the terms on which the associate provided the assistance.
(c) This section does not apply
(1) if the associate is a controlling person of the licensee and is also the only shareholder of the licensee;
(2) if the associate is a subsidiary of the licensee;
(3) to a transaction of an associate of a licensee in the normal course of the associate's business involving either a line of credit or financing assistance with a term of not more than five years.
(a) A license may only be issued if the department determines that each director, officer, and controlling person of the applicant is
(1) of good character and sound financial standing;
(2) competent to perform the director's or officer's functions for the applicant; and
(3) when considered collectively with the other directors, officers, and controlling persons, adequate to manage the business of the applicant as a BIDCO.
(b) The department may determine that a director, officer, or controlling person of an applicant is not of good character. Bases the department may use to make that determination include proof that the director, officer, or controlling person, or a director or officer of a controlling person has
(1) had an administrative sanction imposed under 31 U.S.C. 3801 - 3812 (Program Fraud Civil Remedies Act of 1986) for an offense under 15 U.S.C. 645; or
(2) been convicted of a crime involving fraud or dishonesty, including a conviction for an offense under 15 U.S.C. 645; in this paragraph, 'conviction' includes a conviction based on a guilty plea or plea of nolo contendere.
A person shall pay the department
(1) $2,500 for filing an application for a license;
(2) $1,250 for filing an application for approval to acquire control of a licensee;
(3) $1,250 for filing an application for approval for a merger, purchase, or sale under AS 10.13.430 - 10.13.460; if two or more applications relating to the same merger, purchase, or sale are filed, the fee for filing each application is the figure resulting from dividing $1,250 by the number of the applications;
(4) $2,500 each calendar year at the time established by the department, if the person is a licensee;
(5) a fee established by the department for the examination of a licensee or a subsidiary of a licensee; the fee shall be paid within 30 days after receiving a statement from the department; a fee established under this paragraph must include
(A) the proportionate part of the salaries and cost of employee benefits of the examiners while conducting the examination and while preparing the examination report; and
(B) the transportation costs and per diem costs of each examiner while away from the examiner's duty station.
(a) A licensee shall make and keep books, accounts, and other records in the form and manner, at the place, and for the period of time that the department establishes.
(b) A licensee, affiliate of a licensee, and a subsidiary of a licensee shall file with the department the reports that the department requires. A report must be in the form and contain the information that the department requires.
(c) The department may require by order that a licensee include an asset on the licensee's books and records at a valuation that represents the current value of the asset.
(d) Not later than 90 days after the close of the calendar year, or a longer period if established by the department, a licensee shall file with the department an audit report containing
(1) financial statements, including a balance sheet, statement of income or loss, statement of changes in capital accounts, and statement of changes in financial position for, or as of the end of, the calendar year, prepared with an audit by an independent certified public accountant in accordance with generally accepted accounting principles;
(2) a report, certificate, or opinion of the independent certified public accountant who performs the audit, stating that the financial statements were prepared in accordance with generally accepted accounting principles; and
(3) other information that the department may require.
(a) A licensee shall transact its business in a safe and sound manner and shall maintain itself in a safe and sound condition.
(b) In determining whether a licensee is transacting business in a safe and sound manner, the department may not consider the risk of providing financing assistance to a business, unless the department determines that the risk is great enough to demonstrate gross mismanagement when compared with the return that can be realistically expected.
(c) Notwithstanding the other provisions of this section, the department may
(1) if the amount of the financing assistance is unduly large in relation to the total assets or the total shareholder equity of the licensee, determine that a licensee's financing assistance to a single business or group of affiliated businesses violates (a) of this section or constitutes an unsafe or unsound act;
(2) require that a licensee maintain a reserve in the amount of anticipated losses;
(3) require that a licensee have in effect a written financing assistance policy approved by the licensee's board of directors, including credit evaluation and other matters; the department may not require that a licensee adopt a financing assistance policy that contains standards that prevent the licensee from exercising needed flexibility in evaluating and structuring financing assistance to businesses on an individual basis.
(a) In order to receive a license, an applicant must demonstrate to the satisfaction of the department that the applicant has raised sufficient capital so that
(1) the net worth of the BIDCO is expected to be adequate, in the context of its business plan, to support the BIDCO's management team and to achieve an appropriate spreading of the risk involved in the BIDCO's provisions of financing assistance; and
(2) the BIDCO has a reasonable promise of being a viable, ongoing BIDCO, satisfying the basic objectives of its business plan and achieving long-term financial success.
(b) Unless the BIDCO receives a loan under AS 37.17.500 - 37.17.690, the department may not establish a minimum net worth for a BIDCO under this section of less than $1,500,000. If the BIDCO, as part of its initial capitalization, receives a loan under AS 37.17.500 - 37.17.690, the minimum net worth of the BIDCO may be $500,000, excluding organization costs paid for or owed by the BIDCO.
(a) The commissioner, deputies, and other employees of the department may not disclose information acquired by them in the discharge of their duties under this chapter except to the extent disclosure of the information is required by law, other than the public records provisions of AS 40.25.110 - 40.25.220, or is required by court order.
(b) Notwithstanding (a) of this section, the department may disclose information that is confidential under (a) of this section if the department determines that disclosure of the information is necessary to promote the public interest. This subsection does not authorize the disclosure of information acquired by the department in the course of an examination of a licensee.
(c) Notwithstanding (a) of this section, the department may furnish information that is confidential under (a) of this section to the Alaska Industrial Development and Export Authority if the information is related to a BIDCO that has received assistance under former AS 37.17.200 - 37.17.390.
(d) A BIDCO may provide to a current or prospective creditor or shareholder of the BIDCO a copy of an examination report on the BIDCO made by the department under this chapter.
(a) The department may at any time examine a licensee or a subsidiary of a licensee. Licensure under this chapter constitutes implied consent to examination by the department.
(b) The department shall examine a licensee at least once during each calendar year.
(c) At the department's request the following persons shall provide to the department the books, accounts, and records of a licensee or a licensee's subsidiary and shall otherwise facilitate the department's examination of the licensee to the fullest extent possible:
(1) a director, officer, or employee of a licensee being examined by the department;
(2) a director, officer, or employee of a subsidiary of a licensee being examined by the department;
(3) a person having custody of the books, accounts, or records of a licensee being examined by the department;
(4) a person having custody of the books, accounts, or records of a subsidiary of a licensee being examined by the department.
(d) The department may retain a certified public accountant, attorney, appraiser, or other person to assist the department in the examination of a licensee or a subsidiary of a licensee if the department determines that the assistance is necessary. Within 10 days after receipt of a statement from the department, the licensee being examined shall pay the fees of a person retained by the department under this subsection.
Article 06. PROHIBITED ACTIVITIES
(a) Upon approval by a two-thirds vote of its board of directors and after complying with (b) and (c) of this section, a licensee may apply to the department to have the department accept the surrender of the licensee's license. If the department determines that the requirements of this section have been satisfied, the department shall approve the application unless the department determines that the purpose of the application is to evade a current or prospective action by the department under AS 10.13.700 - 10.13.830.
(b) Not less than 60 days before filing an application under (a) of this section, a licensee shall notify all of its shareholders and creditors of its intention to file the application. Each creditor shall be notified of the right to comment to the department. Each shareholder shall be notified of the right to file with the licensee an objection to the proposed surrender of the license within the 60-day period and shall be advised that, if the shareholder files an objection, the shareholder may also send a copy of the objection to the department.
(c) If shareholders representing 20 percent of the outstanding voting securities of the licensee file an objection with the licensee, the licensee may not proceed with the application unless the application is approved by a vote of shareholders representing two-thirds of the outstanding voting securities of the licensee.
Article 02. CORPORATE MATTERS
(a) If the department finds that a factor in AS 10.13.800 is true with respect to a licensee and that it is necessary for the protection of the interests of the licensee or of the public, the department may take immediate possession of the property and business of the licensee and appoint a conservator for the licensee.
(b) The department may appoint as conservator one of the employees of the division of banking, securities, and corporations of the department or another competent and disinterested person. The division shall be reimbursed out of the assets of the conservatorship for all money expended by the division in connection with the conservatorship. Upon the approval of the department, the expenses of the conservatorship paid for by the division shall be paid out of the assets of the licensee. Payment of the division expenses shall take priority over other payments from the assets and shall be fully paid before a final distribution is made.
(c) Under the direction of the department, the conservator shall take possession of the books, records, and assets of the licensee and shall take other action that is necessary to conserve the assets of the licensee or to ensure payment of obligations of the licensee pending further disposition of the licensee's business.
(d) At an appropriate time, the department may terminate the conservatorship and permit the licensee to resume the transaction of the licensee's business subject to the terms, conditions, restrictions, and limitations the department prescribes.
In addition to the other powers given by this chapter and the powers conferred on the licensee by the laws under which it is incorporated that are not inconsistent with this chapter, a licensee may
(1) borrow money and otherwise incur indebtedness for the licensee's purposes, including the issuing of corporate bonds, debentures, notes, and other evidence of indebtedness; a licensee's indebtedness may be secured or unsecured, and may involve equity features, including provisions for conversion to stock and warrants to purchase stock;
(2) make contracts;
(3) incur and pay necessary and incidental operating expenses;
(4) purchase, receive, hold, lease, acquire, sell, convey, mortgage, pledge, or otherwise acquire or dispose of real or personal property, and the rights and privileges that are incidental and appurtenant to the transactions, if the real or personal property is for the licensee's use in operating the licensee's business or if the real or personal property is acquired by the licensee from time to time in satisfaction of debts or the enforcement of obligations;
(5) make donations for charitable, educational, research, or similar purposes;
(6) provide financing assistance and management assistance to businesses and establish the terms and conditions of the assistance;
(7) implement a reasonable and prudent policy for conserving and investing the licensee's money before the money is used to provide financing assistance to businesses or to pay the expenses of the licensee;
(8) exercise the incidental powers that are necessary, convenient, or reasonably related to providing financing assistance and management assistance to businesses.
(a) In AS 10.13.300 - 10.13.320 and 10.13.630 - 10.13.660, a person who is an associate within six months before or after a licensee provides financing assistance shall be considered to be an associate as of the date the licensee provides the assistance.
(b) If a licensee, in order to protect the licensee's interests, designates a person to serve as a director of, officer of, or in a management capacity of a business to which the licensee provides financial assistance, the person may not, on that account, be considered to be an associate under AS 10.13.300 - 10.13.310 or 10.13.630 - 10.13.660. This subsection does not apply if the person has, directly or indirectly, another financial interest in the business or if the person, at any time before the licensee provides the financing assistance, served as a director of, officer of, or in another capacity in the management of the business for a period of 30 days or more.
(a) If the department determines that a subject person of a licensee has been indicted by a grand jury or has been bound over for trial by a court for a crime involving dishonesty or breach of trust, and that the continuation of the person as a subject person of the licensee may threaten the interests of the licensee or may threaten to impair public confidence in the licensee, the department may issue an order suspending the person from the person's office, if any, with the licensee and prohibiting the person from further participating in any manner in the conduct of the business of the licensee until the person's charge has been disposed of.
(b) If the department determines that a subject person or former subject person of a licensee to whom an order was issued under (a) of this section, or another subject person of a licensee, has been convicted of a crime involving dishonesty or breach of trust, and that the continuation or resumption of the person as a subject person of the licensee may threaten the interests of the licensee, the department may issue an order suspending or removing the person from the person's office, if any, with the licensee and prohibiting the person from further participating in any manner in the conduct of the business of the licensee, except with the prior consent of the department.
(c) The failure to convict a subject person who is charged with a crime involving dishonesty or breach of trust does not prevent the department from issuing an order to the person under another provision of this chapter.
(d) In this section, 'office' has the meaning given in AS 10.13.750 .
(a) In AS 10.13.300 - 10.13.310, licensee transactions that involve a potential conflict of interest include
(1) providing financing assistance to a principal shareholder of the licensee, to a person controlled by a principal shareholder of the licensee, or to a director, officer, partner, relative, controlling person, or affiliate of a principal shareholder of the licensee;
(2) providing financing assistance to a business to which one or more of the following provides or plans to provide contemporaneous financing assistance:
(A) a principal shareholder of the licensee;
(B) a director, officer, partner, relative, controlling person, or affiliate of a principal shareholder of a licensee;
(C) an affiliate of a principal shareholder of a licensee; or
(D) a person controlled by a principal shareholder of the licensee;
(3) providing financing assistance to a business that has or is expected to have a substantial business relationship with another business that has a director, officer, or controlling person who is also
(A) a director, officer, or controlling person of the licensee; or
(B) the spouse of a director, officer, or controlling person of the licensee;
(4) providing financing assistance to a business if the business, or a director, officer, or controlling person of the business contemporaneously has lent or will lend money to an associate of the licensee;
(5) providing financing assistance for the purchase of property of an associate or principal shareholder of the licensee;
(6) selling or otherwise transferring an asset of the licensee to an associate or principal shareholder of the licensee.
(b) In this section, 'relative' means a parent, child, sibling, spouse, grandparent, grandchild, nephew, niece, aunt, or uncle, or a relative of the same degree through marriage.
Article 04. MERGERS AND ACQUISITIONS
(a) Within 30 days after an order is issued under AS 10.13.710 , 10.13.740, 10.13.750(c), or 10.13.760, the licensee or subject person of a licensee to whom the order is directed may file with the department an application for a hearing on the order.
(b) If the department fails to promptly notify the office of administrative hearings (AS 44.64.010 ) of the application and the office fails to begin a hearing within 15 business days after the application is filed or within a longer period to which the licensee or subject person consents, the order shall be considered rescinded.
(c) After the hearing, the department shall affirm, modify, or rescind the order.
(d) A person to whom an order is issued under this section may apply to the department to modify or rescind the order. The department may not modify or rescind the order unless the department determines that it is in the public interest to do so and that it is reasonable to believe that the person will comply with this chapter.
(e) The right of a licensee or subject person to whom an order is issued under AS 10.13.710 , 10.13.740, 10.13.750(c), or 10.13.760 to an interlocutory review of the order is not affected by the failure of the licensee or subject person to apply to the department for a hearing on the order issued under this section.
(a) The department may issue an order directing a licensee to refrain from providing additional financing assistance to businesses if, in the opinion of the department, the order is necessary to protect the interests of the licensee or the public, and if, after notice and a hearing, the department determines that
(1) the licensee or a controlling person, subsidiary, or affiliate of the licensee has violated this chapter or another applicable law;
(2) the licensee is conducting the licensee's business in an unsafe and unsound manner;
(3) the licensee is in a condition that makes it unsafe or unsound for the licensee to transact business;
(4) the licensee has ceased to transact business as a BIDCO;
(5) the licensee is insolvent;
(6) the licensee has suspended payment of the licensee's obligations, has made an assignment for the benefit of the licensee's creditors, or has admitted in writing the licensee's inability to pay the licensee's debts as the debts become due;
(7) the licensee has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under a bankruptcy, reorganization, insolvency, or moratorium law, an involuntary petition in bankruptcy against the person has not been dismissed in 90 days, or a person has applied for the relief under the law against a licensee and the relief has been granted or the licensee has by an affirmative act approved of or consented to the action; or
(8) a fact or condition exists that would have been grounds for denying the licensee a license if the fact or condition had existed when the licensee applied for the license.
(b) If the department determines that a factor in (a) of this section is true with respect to a licensee and that it is necessary for the protection of the interests of the licensee or the public that the department immediately prevent the licensee from providing additional financing assistance to businesses, the department may issue the order without a hearing.
(c) If the department consents, a licensee that has been the subject of an order under (a) or (b) of this section may resume providing financing assistance to businesses under the conditions that the department prescribes.
(d) A person to whom an order is issued under (a) or (b) of this section may apply to the department to modify or rescind the order. The department may not grant the application unless the department determines that it is in the interest of the public to do so and that it is reasonable to believe that the person will comply with this chapter.
(a) The department may issue an order removing a subject person of a licensee from office with the licensee and prohibiting the subject person from further participating in any manner in the conduct of the business of the licensee if the department determines after notice and a hearing that
(1) the person has violated this chapter or another applicable law, has engaged in an unsafe or unsound act with respect to the business of the licensee, or has engaged in an act that constitutes a breach of the person's fiduciary duty;
(2) the act, violation, or breach of fiduciary duty has caused or is likely to cause substantial financial loss or other damage to the licensee, has seriously prejudiced or is likely to seriously prejudice the interest of the licensee, or the person has received financial gain by reason of the act, violation, or breach of fiduciary duty; and
(3) the act, violation, or breach of fiduciary duty involves dishonesty on the part of the person, demonstrates the person's gross negligence with respect to the business of the licensee, or demonstrates the person's wilful disregard for the safety and soundness of the licensee.
(b) The department may issue an order removing a subject person of the licensee from office with the licensee and prohibiting the subject person from further participating in any manner in the conduct of the business of the licensee, except with the prior consent of the department if, after notice and a hearing, the department determines that, by engaging or participating in an act with respect to a financial or other business institution that resulted in substantial financial loss or other damage, the subject person of a licensee demonstrated
(1) dishonesty or a wilful or continuing disregard for the safety and soundness of the financial or other business institution; and
(2) unfitness to continue as a subject person of the licensee or to participate in conducting the business of the licensee.
(c) The department may immediately issue an order suspending a subject person of a licensee from the person's office, if any, with the licensee and prohibiting the subject person from further participating in any manner in the conduct of the business of the licensee except with the consent of the department, if the department determines that
(1) the factors in (a) or (b) of this section are true with respect to the person; and
(2) an immediate order is necessary to protect the interests of the licensee or the public.
(d) In this section, 'office' means, when used with respect to a licensee, the position of director, officer, or employee of the licensee or of a subsidiary of the licensee.
In this chapter,
(1) 'affiliate' means, if used with respect to a nonnatural person, a person who controls the nonnatural person, who is controlled by the nonnatural person, or who is controlled by a person who also controls the nonnatural person;
(2) 'associate' means, if used with respect to a licensee,
(A) a controlling person, director, or officer of the licensee;
(B) a director, officer, or partner of a person referred to in (A) of this paragraph;
(C) a person who controls, is controlled by, or is under common control with a person referred to in (A) of this paragraph, directly or indirectly through an intermediary;
(D) a close relative of a person referred to in (A) of this paragraph; in this subparagraph, 'close relative' means a parent, child, sibling, or spouse, or a relative of the same degree through marriage;
(E) a person of which a person referred to in (A) - (D) of this paragraph is a director or officer;
(F) a person in which a person referred to in (A) - (D) of this paragraph, or a combination of the persons acting in concert, owns or controls, directly or indirectly, a 20 percent or greater equity interest;
(3) 'BIDCO' means a corporation that is licensed under this chapter to provide financial and management assistance to businesses;
(4) 'business' means a person who transacts or proposes to transact business on a regular and continual basis;
(5) 'control' means, if used with respect to a specific person, the power to direct or cause the direction of, directly or indirectly through an intermediary, the management and policies of the person, through the ownership of voting interests, by contract other than a commercial contract for goods or nonmanagement services, or by other means; a natural person is not considered to control another person solely because the natural person is a director, officer, or employee of the other person; a person is rebuttably presumed to control a corporation if the person directly or indirectly owns of record, holds beneficially with power to vote, or holds proxies with discretionary authority to vote, 20 percent or more of the then outstanding voting securities issued by a corporation;
(6) 'controlling person' means, if used with respect to a specific person, a person who controls the specific person, directly or indirectly through an intermediary;
(7) 'corporate name' means the name of a corporation in its articles of incorporation;
(8) 'department' means the Department of Commerce, Community, and Economic Development;
(9) 'insolvent' means not paying debts in the ordinary course of business, not paying debts as they become due, or liabilities exceeding assets;
(10) 'interests of the licensee' includes the interests of the shareholders of the licensee;
(11) 'license' means a license issued under this chapter;
(12) 'licensee' means a corporation that is licensed under this chapter;
(13) 'officer' means
(A) with respect to a corporation, a person appointed or designated as an officer of the corporation by or under applicable law or the corporation's articles of incorporation or bylaws, or a person who performs with respect to the corporation the functions usually performed by an officer of a corporation;
(B) with respect to a specific person other than a natural person or a corporation, a person who performs for the specific person the functions usually performed by an officer of a corporation for a corporation;
(14) 'order' means an approval, consent, authorization, exemption, denial, prohibition, or requirement applicable to a specific case and issued by the department, including a license condition and an agreement made by a person with the department under this chapter;
(15) 'person' includes a government and an agency of a government; when used with respect to acquiring control of or controlling a specific person, 'person' includes a combination of two or more persons acting in concert;
(16) 'principal shareholder' means a person who owns, directly or indirectly, of record or beneficially, securities representing 10 percent or more of the outstanding voting securities of a corporation;
(17) 'subject person' means
(A) a controlling person, subsidiary, or affiliate of a licensee;
(B) a director, officer, or employee of a licensee or of a controlling person, subsidiary, or affiliate of a licensee;
(C) another person who participates in the conduct of the business of a licensee; or
(D) if used with respect to a licensee, a company or business of which the licensee holds control under AS 10.13.260 - 10.13.280.
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