USA Statutes : nevada
Title : Title 57 - INSURANCE
Chapter : CHAPTER 692B - FORMATION AND CAPITALIZATION OF DOMESTIC STOCK AND MUTUAL INSURERS; FINANCING OF INSURERS AND HOLDING COMPANIES
This chapter applies to the formation, after
January 1, 1972, of domestic stock and mutual insurers, to the
capitalization of domestic stock insurers, and to the financing of
domestic insurers of all types and of insurance holding corporations
thereof.
(Added to NRS by 1971, 1782)
1. The general corporation laws of this state govern the
incorporation of domestic stock and mutual insurers formed after January
1, 1972, where not in conflict with the express provisions of this Code.
In case of such conflict the express provisions of this Code govern.
2. A domestic insurer must be incorporated by not less than three
natural persons. The articles of incorporation must set forth the name
and residence address of each of the true incorporators, and dummy
incorporators must not be used.
3. The articles of incorporation must also set forth:
(a) The names and addresses of each proposed director or officer
who is not an incorporator;
(b) The kind or kinds of insurance proposed to be transacted, in
accordance with the definitions thereof contained in NRS 681A.010 to 681A.080 , inclusive;
(c) If to be a stock insurer, the amount of authorized capital, the
number of shares into which divided, and the par value of each share,
which par value must not be less than $1. Shares without nominal or par
value must not be authorized. All authorized shares must be of one class,
with one vote per outstanding share and equal rights between outstanding
shares as to dividends and distributions, and in all other respects; and
(d) If to be a mutual insurer, the contingent liability of
policyholders for payment of losses and expenses of the insurer, which
liability must not be less than one or more than six times the
policyholder’s premium at the annual rate for a term of 1 year, as
specified in the articles of incorporation. Such contingent liability may
be rendered inoperative pursuant to the provisions of NRS 693A.250 .
4. The articles of incorporation of a proposed stock insurer must
require that all shares be issued at a price not less than par value, and
must not provide for stock options.
(Added to NRS by 1971, 1782; A 1991, 2204)
1. An amendment of articles of incorporation of a domestic insurer
shall not be filed or accepted for filing with the Secretary of State
unless first submitted to and approved by the Commissioner.
2. The insurer shall deliver executed quadruplicate originals of
the proposed articles of amendment to the Commissioner. If the
Commissioner finds the same to be in accordance with law, he shall
endorse his approval on each set of the articles of amendment and return
the same to the insurer. The insurer shall then file the original set
with the Secretary of State, one set with the Commissioner, and otherwise
as required by law. If the Commissioner does not so find, he shall not
approve the proposed articles of amendment, but shall return all sets to
the insurer together with his written statement of the reasons for
nonapproval.
3. After January 1, 1972, no existing domestic stock or mutual
insurer shall amend its articles of incorporation in any way which would
conflict with the requirements of this Code as to a newly formed similar
domestic insurer; but an existing domestic stock insurer with preferred
stock already as part of its authorized capital shall have the right to
increase or decrease the amount of the same or modify the rights and
priorities thereof as otherwise permitted by law.
(Added to NRS by 1971, 1783)
1. A person forming or proposing to form a domestic insurer, or
insurance holding corporation thereof, or corporation to be
attorney-in-fact for a domestic reciprocal insurer, or proposing to
secure funds for the formation or financing of a domestic insurer, or
production of insurance business therefor, or for an insurance holding
corporation holding or proposing to hold securities of a domestic
insurer, or for an attorney-in-fact corporation of a domestic reciprocal
insurer, or for the formation or financing of a syndicate, association,
firm, partnership or organization for any such purposes, shall not in
this state advertise or offer for sale any securities or policies, or
solicit or receive any funds, subscriptions, applications, premiums or
memberships, except as authorized by a currently effective permit, in
this chapter sometimes referred to as a “solicitation permit,” issued by
the Commissioner.
2. A person who violates the provisions of this section is guilty
of a category D felony and shall be punished as provided in NRS 193.130
.
(Added to NRS by 1971, 1783; A 1979, 1492; 1995, 1319)
1. As used in this Code, an insurance holding corporation is a
corporation, whether or not incorporated under the laws of this state,
owning or holding, or proposing to own or hold, a controlling stock
interest in a domestic stock insurer. Shares owned directly or indirectly
by the corporation or by its subsidiary or affiliate corporation, firm or
organization, or by its officers, directors or principal stockholders,
shall be deemed to be owned or held by the corporation for the purposes
of this section.
2. For the purposes of this chapter that type of organization
known as a “Massachusetts trust” shall be deemed to be a corporation.
(Added to NRS by 1971, 1784)
NRS 692B.040 does not apply to:
1. Sales of securities not involving a public offering, and under
a plan filed with and not disapproved by the Commissioner; that is, sales
on which no commission or other compensation is payable resulting from
offers privately made to not over 20 persons (other than banks, savings
associations, investment companies registered as such under the
Investment Company Act of 1940, registered securities dealers, investment
houses and other financial institutions) within a 12-month period, and
where all persons (including such banks, associations, companies,
dealers, houses and institutions) so acquiring such securities do so for
investment purposes only and not with a view to further distribution. The
Commissioner shall disapprove any such plan within 10 days after filing,
or within such reasonable additional period as the Commissioner may
request within such 10 days, if found by him to be:
(a) Unfair to any existing or proposed other holders of securities
of the insurer; or
(b) Unlawful.
2. Sales of securities by an insurance holding corporation for
purposes which do not include the financing, directly or indirectly, of a
domestic insurer.
3. Stock of the insurer or insurance holding corporation to be
offered and sold (without payment of commission thereon) exclusively to
directors, employees and agents of the insurer or corporation, or any of
them, under stock options granted pursuant to a written lawful plan
therefor adopted by the board of directors, approved by a majority of the
stock of the issuer corporation having voting rights, and filed with and
approved by the Commissioner. The Commissioner shall approve such a plan
unless found by him to be inequitable to other personnel of the insurer
or other persons financially interested in the insurer.
4. Securities issued or proposed to be issued pursuant to any
merger, consolidation, bulk reinsurance, conversion, mutualization or
corporate affiliation approved by the Commissioner pursuant to chapter
693A of NRS.
5. Securities issued in exchange for outstanding securities of the
issuer, or partly in exchange for such outstanding securities and partly
for cash, in connection with a recapitalization of the issuer or the
exercise of conversion or exchange rights under such outstanding
securities.
6. Securities issued and distributed to existing holders of
securities of the insurer as a dividend paid in securities.
7. Fractional share interests in stock of the issuer offered and
sold for the purpose of rounding out to whole shares in connection with
any stock dividend or other distribution of shares to existing security
holders of the issuer.
(Added to NRS by 1971, 1784)
[Effective until
the date of the repeal of the federal law requiring each state to
establish procedures for withholding, suspending and restricting the
professional, occupational and recreational licenses for child support
arrearages and for noncompliance with certain processes relating to
paternity or child support proceedings.]
1. A written application for any permit required under NRS
692B.040 must be filed with the
Commissioner. The application must include or be accompanied by:
(a) The name, type and purposes of the insurer, corporation,
syndicate, association, firm or organization formed or proposed to be
formed or financed;
(b) On forms furnished by the Commissioner, for each person
associated or to be associated as incorporator, director, promoter,
manager or in other similar capacity in the enterprise, or in the
formation of the proposed insurer, corporation, syndicate, association,
firm or organization, or in the proposed financing:
(1) His name, residential address and qualifications;
(2) His business background and experience for the preceding
10 years; and
(3) A complete set of his fingerprints which the
Commissioner may forward to the Central Repository for Nevada Records of
Criminal History for submission to the Federal Bureau of Investigation
for its report;
(c) A full disclosure of the terms of all pertinent understandings
and agreements existing or proposed among any persons or entities so
associated or to be associated, and a copy of each such agreement;
(d) Executed quadruplicate originals of the articles of
incorporation of a proposed domestic stock or mutual insurer;
(e) The original and one copy of the proposed bylaws of a proposed
domestic stock or mutual insurer;
(f) The plan according to which solicitations are to be made and a
reasonably detailed estimate of all organization and sales expenses to be
incurred in the proposed organization and offering;
(g) A copy of any security, receipt or certificate proposed to be
offered, and a copy of any proposed subscription agreement or application
therefor;
(h) A copy of any prospectus, offering circular, advertising or
sales literature or material proposed to be used;
(i) A copy of the proposed form of any escrow agreement required;
(j) A copy of:
(1) The articles of incorporation of any corporation, other
than a proposed domestic insurer, proposing to offer its securities,
certified by the public officer having custody of the original thereof;
(2) Any syndicate, association, firm, organization or other
similar agreement, by whatever name called, if funds for any of the
purposes referred to in subsection 1 of NRS 692B.040 are to be secured through the sale of any
security, interest or right in or relative to such syndicate,
association, firm or organization; and
(3) If the insurer is, or is to be, a reciprocal insurer,
the power of attorney and of other agreements existing or proposed
affecting subscribers, investors, the attorney-in-fact or the insurer;
(k) If the applicant is a natural person, the statement required
pursuant to NRS 692B.193 ; and
(l) Such additional pertinent information as the Commissioner may
reasonably require.
2. The application must be accompanied by a deposit of the fees
required under NRS 680B.010 for the
filing of the application and for issuance of the permit, if granted.
3. If the applicant is a natural person, the application must
include the social security number of the applicant.
4. In lieu of a special filing thereof of information required by
subsection 1, the Commissioner may accept a copy of any pertinent filing
made with the Securities and Exchange Commission relative to the same
offering.
(Added to NRS by 1971, 1785; A 1997, 2203; 1999, 520 , 543 ; 2003, 2870 )
[Effective on
the date of the repeal of the federal law requiring each state to
establish procedures for withholding, suspending and restricting the
professional, occupational and recreational licenses for child support
arrearages and for noncompliance with certain processes relating to
paternity or child support proceedings.]
1. A written application for any permit required under NRS
692B.040 must be filed with the
Commissioner. The application must include or be accompanied by:
(a) The name, type and purposes of the insurer, corporation,
syndicate, association, firm or organization formed or proposed to be
formed or financed;
(b) On forms furnished by the Commissioner, for each person
associated or to be associated as incorporator, director, promoter,
manager or in other similar capacity in the enterprise, or in the
formation of the proposed insurer, corporation, syndicate, association,
firm or organization, or in the proposed financing:
(1) His name, residential address and qualifications;
(2) His business background and experience for the preceding
10 years; and
(3) A complete set of his fingerprints which the
Commissioner may forward to the Central Repository for Nevada Records of
Criminal History for submission to the Federal Bureau of Investigation
for its report;
(c) A full disclosure of the terms of all pertinent understandings
and agreements existing or proposed among any persons or entities so
associated or to be associated, and a copy of each such agreement;
(d) Executed quadruplicate originals of the articles of
incorporation of a proposed domestic stock or mutual insurer;
(e) The original and one copy of the proposed bylaws of a proposed
domestic stock or mutual insurer;
(f) The plan according to which solicitations are to be made and a
reasonably detailed estimate of all organization and sales expenses to be
incurred in the proposed organization and offering;
(g) A copy of any security, receipt or certificate proposed to be
offered, and a copy of any proposed subscription agreement or application
therefor;
(h) A copy of any prospectus, offering circular, advertising or
sales literature or material proposed to be used;
(i) A copy of the proposed form of any escrow agreement required;
(j) A copy of:
(1) The articles of incorporation of any corporation, other
than a proposed domestic insurer, proposing to offer its securities,
certified by the public officer having custody of the original thereof;
(2) Any syndicate, association, firm, organization or other
similar agreement, by whatever name called, if funds for any of the
purposes referred to in subsection 1 of NRS 692B.040 are to be secured through the sale of any
security, interest or right in or relative to such syndicate,
association, firm or organization; and
(3) If the insurer is, or is to be, a reciprocal insurer,
the power of attorney and of other agreements existing or proposed
affecting subscribers, investors, the attorney-in-fact or the insurer; and
(k) Such additional pertinent information as the Commissioner may
reasonably require.
2. The application must be accompanied by a deposit of the fees
required under NRS 680B.010 for the
filing of the application and for issuance of the permit, if granted.
3. In lieu of a special filing thereof of information required by
subsection 1, the Commissioner may accept a copy of any pertinent filing
made with the Securities and Exchange Commission relative to the same
offering.
(Added to NRS by 1971, 1785; A 1997, 2203; 1999, 520 , 543 ; 2003, 2870 , effective on the date of the repeal of
the federal law requiring each state to establish procedures for
withholding, suspending and restricting the professional, occupational
and recreational licenses for child support arrearages and for
noncompliance with certain processes relating to paternity or child
support proceedings)
Written application for any permit required under NRS
692B.040 in connection with the
formation of a domestic mutual insurer by the securing of qualifying
applications for insurance as provided in NRS 692B.200 shall be filed with the Commissioner. The
application shall contain such information and be accompanied by such of
the documents and the fees required under NRS 692B.070 as may be applicable, and in addition shall
be accompanied by:
1. A copy of each policy for which applications are proposed to be
solicited;
2. A copy of the proposed insurance application form, consistent
with the requirements of NRS 692B.220
(qualifying applications for insurance); and
3. A schedule of the premiums or premium rates proposed to be
charged in connection with such insurance applications.
(Added to NRS by 1971, 1786)
1. Upon completion of the application for a permit under NRS
692B.070 and 692B.080 , the Commissioner shall promptly cause an
investigation to be made of:
(a) The identity, character, reputation, experience, financial
standing and motives of the persons proposing to organize, promote or
finance the insurer or organization;
(b) The character, financial responsibility, insurance management
experience and business qualifications of the officers, directors and
managers of the insurer or organization existing or proposed; and
(c) Such other aspects of the insurer, organization or proposed
financing as the Commissioner deems advisable.
2. The Commissioner may, in his discretion, waive investigation
with respect to the further financing of a domestic insurer already duly
authorized to transact insurance in this state.
(Added to NRS by 1971, 1786)
1. The Commissioner shall expeditiously examine an application for
a solicitation permit and complete the investigation as called for.
Subject to subsection 2, if the Commissioner finds on such examination
and investigation that:
(a) The application is complete;
(b) The documents therewith filed are proper in form; and
(c) The proposed financing is reasonable and adequate in amount for
the purposes intended and the applicant is otherwise entitled to the
permit,
Ê he shall give notice to the applicant that he will issue the permit
upon the filing of any bond required by NRS 692B.150 or 692B.210 , or deposit in lieu thereof, and the filing
of an executed copy of any escrow agreement required in connection
therewith. If quadruplicate executed originals of articles of
incorporation of a proposed domestic stock or mutual insurer have been
filed with him as required under paragraph (d) of subsection 1 of NRS
692B.070 , he shall inscribe his
approval on each copy thereof and return them to the applicant for filing
with the Secretary of State and otherwise as required by law.
2. If the Commissioner does not so find, or finds that:
(a) The proposed sale of securities would be or tend to be unfair
or inequitable as to present or proposed security holders or investors;
(b) Any of the individuals associated or to be associated in the
insurer, corporation, syndicate, association, firm, organization or
financing are not of good reputation as to business affairs or financial
responsibility;
(c) The proposed insurer would not be able to qualify for a
certificate of authority in this state by virtue of the provisions of
subsection 2 of NRS 680A.090
(ownership, management);
(d) If an insurance holding corporation, its plan of capitalization
or security options, or financing are such as would be prohibited under
this Code as to a newly formed domestic stock insurer; or
(e) There is material variance, adverse to the applicant, as
between the information furnished by the applicant in connection with the
application and that determined by the Commissioner on investigation,
Ê he shall give notice to the applicant that a permit will not be
granted, stating the particulars of the grounds for such denial, and
refund to the applicant all sums deposited in connection with the
application other than the fee for the filing of the application.
(Added to NRS by 1971, 1787)
1. Upon filing any bond (or making the deposit in lieu of bond)
required under NRS 692B.150 or
692B.210 , and upon filing with the
Commissioner an executed copy of any required escrow agreement, the
Commissioner shall issue a permit to the applicant if the applicant is
entitled thereto under NRS 692B.100 .
2. Every such permit shall contain provisions, as applicable, as
follows:
(a) It shall state the securities which are to be offered, the
number and selling price; or identify the insurance policy or policies
for which applications are to be solicited in the case of the formation
of a new domestic mutual insurer.
(b) It shall require that all premiums and the purchase price of
securities shall be payable only in lawful money of the United States of
America, or, in the case of sale of securities, in such other securities
as may be specified by class or description in the permit.
(c) It shall require that all securities to be offered or sold
shall be so offered and sold at the same price to all parties, subject,
at the option of the issuer in the case of subscriptions to be paid in
installments, to a reasonable additional charge to cover expenses and
loss of interest earnings attributable to such installment subscriptions.
(d) It shall limit the portion of funds received on account of the
sale of securities under the permit which may be used for organization,
securities sales and promotion expenses to such amount as the
Commissioner deems reasonably adequate under the proposed plan of
solicitation, but in no event to exceed 15 percent of such funds as and
when the funds are actually received.
(e) If the Commissioner believes the same desirable for the
protection of the public or for any other reasonable purpose, the permit
may:
(1) Require the founders, promoters, incorporators or other
persons directly involved in the proposed offering, to subscribe and pay
for immediately and in cash, at the proposed public offering price, a
reasonable proportion of the same securities as proposed to be offered
under the permit.
(2) Prohibit, limit or control the granting of options, to
such founders, promoters, incorporators or other persons, to buy the
securities.
(3) Prohibit, by any founder, promoter, incorporator or
other person associated or to be associated under the permit, the resale
or transfer for a period terminating 1 year after expiration or other
termination of the permit, of his interest in any security, right or
interest of the kind proposed to be offered under the permit, or of any
other security, interest or right which he may have in or as to the same
issuing entity, or the granting of any option or lien as to any such
security, right or interest. The Commissioner may, in his discretion,
require that any security, right or interest the resale or transfer of
which is prohibited in this subparagraph, shall be deposited and held in
escrow for the prescribed period. This subparagraph does not prohibit the
sale or transfer of any such security, right or interest by the personal
representative of a deceased founder, promoter or incorporator, or of any
other deceased person associated under the permit.
(4) Contain other reasonable provisions.
(f) If the permit is issued in connection with the solicitation of
qualifying applications for insurance policies of a proposed mutual
insurer, it shall limit the portion of funds received therefor which may
be used for organization and sales expense to a reasonable commission
related to the kind of insurance policy involved, and provide that no
such commissions shall be deemed earned or be paid until the insurer has
received its certificate of authority and the policies so applied for
have been actually issued, delivered to and accepted by the respective
insureds.
(g) The permit shall expire at the expiration of a period stated
therein, which period shall be not more than 2 years after its date of
issue, unless earlier terminated by the Commissioner, but subject to the
right of the Commissioner, for good cause shown, to grant an extension
for an additional reasonable period.
(h) The permit shall contain such other reasonable conditions
relative to accounting, reports, deposits and other matters consistent
with this chapter as the Commissioner deems advisable for the protection
of existing or prospective investors or policyholders.
3. The holder of the permit, and its directors, officers,
employees, agents, founders, promoters, incorporators and representatives
shall comply with the terms of the permit.
(Added to NRS by 1971, 1787)
1. The granting of a solicitation permit is permissive only and
shall not constitute an endorsement by the Commissioner of any person or
thing related to any such insurer, corporation, syndicate, association,
firm, organization or financing, or constitute evidence of the
completeness or accuracy of information presented in any prospectus or
other sales literature. The existence of the permit shall not be
advertised or used as an inducement in any solicitation.
2. The Commissioner shall place the substance of this section in
conspicuous type at the top of each such permit issued.
(Added to NRS by 1971, 1789)
1. An offering of securities, or of insurance policies (in case of
qualifying applications for insurance in the formation of a domestic
mutual insurer), shall be made only by a written prospectus as filed with
the Commissioner and delivered to the prospective investor or
policyholder.
2. The prospectus shall disclose all facts relative to the issuer
and the offered security or policy which are reasonably material thereto,
and shall not omit a material fact necessary to make the statements made,
in the light of the circumstances under which made, not misleading. The
Commissioner may make reasonable rules and regulations concerning the
form and contents of prospectuses, not inconsistent with the provisions
of this Code.
3. The Commissioner may accept, as a compliance with this section,
a prospectus or offering circular covering securities to be offered in
this state under an existing registration thereof with the Securities and
Exchange Commission or under an existing exemption from such registration
pursuant to Regulation A of the general rules and regulations of the
Securities and Exchange Commission under the Securities Act of 1933, as
amended.
4. As to securities covered by a solicitation permit, no sales
literature or visual sales material other than the prospectus or offering
circular shall be used in solicitations unless a copy thereof has been
filed with the Commissioner in advance of such use and not disapproved by
him in writing mailed or delivered to the filing party within 10 days
after the date of such filing. The Commissioner shall disapprove any such
literature or material found by him to be untrue or misleading. This
subsection does not modify or affect any applicable requirement or
prohibition under or pursuant to the Securities Act of 1933, as amended.
(Added to NRS by 1971, 1789)
The
Commissioner may for cause modify a solicitation permit theretofore
issued; and may after a hearing thereon revoke the permit for a violation
of law or the terms of the permit, of any proper order of the
Commissioner, or for material misrepresentation in the offering or sale
of securities or policies under the permit.
(Added to NRS by 1971, 1790)
1. Except as otherwise provided in this section, the Commissioner
shall not issue a solicitation permit until the applicant has filed with
the Commissioner a bond in favor of the State of Nevada, in the penal sum
of $50,000 and issued by a surety insurer authorized to transact such
insurance in this state.
2. The bond shall be conditioned upon:
(a) The payment of costs incurred by the State of Nevada in the
event of any proceeding for liquidation or dissolution of the proposed
organization before completion or organization, or, if to be an insurer,
a certificate of authority is not granted;
(b) Compliance with terms of the permit and with applicable laws of
this state; and
(c) A full accounting for all funds received in transactions under
the permit until the proposed insurer has been granted its certificate of
authority or until the corporation, syndicate, association, firm or
organization or financing has been completed within the terms of the
permit.
3. In lieu of filing such a bond the applicant may deposit with
the Commissioner cash in the amount of $50,000 or securities of the
United States Government or of the State of Nevada in market value of at
least $50,000, and the Commissioner shall hold such deposit in trust for
the same purposes as apply to a bond under subsection 2. The amount so
deposited may, in the Commissioner’s discretion, be credited toward
payment of subscriptions to securities by founders, promoters and
incorporators if required under subparagraph (1) of paragraph (e) of
subsection 2 of NRS 692B.110 , (terms
of permit) but subject to such diminution of such credit as may result
from actual application of the deposit to the purposes for which made.
4. The Commissioner may, in his discretion, waive the requirement
for a bond or deposit in lieu thereof if the securities are to be issued
in connection with subsequent financing as provided for in NRS 692B.260
.
5. The Commissioner shall release and discharge the bond or
deposit or remaining portion thereof held under this section upon
settlement of all liabilities, if any, against it.
6. This section does not apply to solicitation of initial
qualifying applications for insurance in a proposed domestic mutual
insurer pursuant to NRS 692B.200
except as provided in NRS 692B.210 .
(Added to NRS by 1971, 1790)
Upon issuance to it by the
Commissioner of its solicitation permit, a newly formed proposed domestic
stock or mutual insurer shall file with the Commissioner a copy of its
articles of incorporation as filed with the Secretary of State and
proceed to the offer and sale of its securities and insurance policies as
provided for in the permit.
(Added to NRS by 1971, 1791)
1. The holder of the solicitation permit shall promptly deposit
all money except as provided in paragraph (a) of subsection 2, received
from an offering of securities in this state pursuant to the permit,
other than advance premiums for insurance which are subject to NRS
692B.230 , in escrow in a bank, credit
union or trust company located in this state and under an agreement
consistent with this chapter filed with and approved by the Commissioner.
2. No part of the money may be withdrawn from the deposit, except:
(a) For payment of organization, sales and promotion expenses as
earned and as authorized by the permit, and money for such purposes, up
to the applicable expense limit on money as received, may be withheld
from the deposit;
(b) For the purpose of making any deposit with the Commissioner
required for the issuance of a certificate of authority to an insurer, or
if the organization is not, or is not to be, an insurer, upon completion
of payments on securities subscriptions made under the permit and deposit
or appropriation of such money to the purposes specified in the permit; or
(c) For the making of refunds as provided in NRS 692B.240 .
3. Money while so held in escrow may be invested in certificates
of deposit or savings accounts. Interest accruing thereon becomes part of
the money released as provided in paragraph (b) of subsection 2, or must
be applied toward the cost of making refunds under paragraph (c) of
subsection 2, or to supplement the bond or deposit in lieu thereof if the
bond or deposit is called on pursuant to NRS 692B.150 .
4. When the Commissioner has issued a certificate of authority to
a proposed insurer he shall release to the insurer any money remaining in
escrow for its account.
5. The Commissioner may in his discretion waive compliance with
this section as to money to be received under a subsequent financing
permit pursuant to NRS 692B.260 , or
in other circumstances where he deems such an escrow to be unnecessary
for the protection of investors or the public.
(Added to NRS by 1971, 1791; A 1999, 1553 )
1. No form of subscription contract to sell securities under a
solicitation permit shall be used unless the form has been filed with the
Commissioner not less than 10 days prior to use and not disapproved by
him. The Commissioner shall disapprove any such form found by him, either
within or after such 10-day period, to be:
(a) Prolix or unduly complicated as to terms;
(b) In any material part, printed in such a manner as to be
difficult to read;
(c) Unfair to the subscriber in its terms; or
(d) Contrary to law or the terms of the solicitation permit.
2. No such disapproval shall be retroactively effective.
3. Every such contract providing for payment of the subscription
price in installments shall:
(a) Require payment in full prior to expiration of the permit; and
(b) Provide for the forfeiture, at the option of the corporation,
of all payments theretofore made if the subscriber fails to cure all
delinquencies of payments thereunder within 45 days after written notice
of such delinquencies and of such forfeiture requirement has been mailed
by the permit holder to the subscriber at his address last of record with
the permit holder.
(Added to NRS by 1971, 1791)
[Effective until the date
of the repeal of the federal law requiring each state to establish
procedures for withholding, suspending and restricting the professional,
occupational and recreational licenses for child support arrearages and
for noncompliance with certain processes relating to paternity or child
support proceedings.]
1. No person may in this State solicit subscription to or purchase
of any security covered by a solicitation permit issued under this
chapter, unless then licensed therefor by the Commissioner.
2. Such a license may be issued only to natural persons, and the
Commissioner shall not license any person found by him to be:
(a) Dishonest or untrustworthy;
(b) Financially irresponsible;
(c) Of unfavorable personal or business history or reputation; or
(d) For any other cause, reasonably unsuited for fulfillment of the
responsibilities of such a licensee.
3. The applicant for such a license must file his written
application therefor with the Commissioner, on forms and containing
inquiries as designated and required by the Commissioner. The application
must include or be accompanied by:
(a) The social security number of the applicant;
(b) An endorsement by the holder of the permit under which the
securities are proposed to be sold;
(c) A complete set of the fingerprints of the applicant on forms
furnished by the Commissioner; and
(d) The application fee specified in NRS 680B.010 .
4. The Commissioner:
(a) May forward the complete set of fingerprints to the Central
Repository for Nevada Records of Criminal History for submission to the
Federal Bureau of Investigation for its report; and
(b) Shall promptly cause an investigation to be made of the
identity and qualifications of the applicant.
5. The license, if issued, must be for the period of the permit,
and must automatically be extended if the permit is extended.
6. The Commissioner shall revoke the license if at any time after
issuance he has found that the license was obtained through
misrepresentation or concealment of facts, or that the licensee is no
longer qualified therefor, or that the licensee has misrepresented the
securities offered, or has otherwise conducted himself in or with respect
to transactions under the license in a manner injurious to the permit
holder or to subscribers or prospects or the public.
7. This section does not apply to securities broker-dealers
registered as such under the Securities Exchange Act of 1934, or with
respect to securities the sale of which is underwritten, other than on a
best efforts basis, by such a broker-dealer.
8. With respect to solicitation of subscriptions to or purchase of
securities covered by a solicitation permit issued by the Commissioner,
the license required by this section is in lieu of a license or permit
otherwise required of the solicitor under any other law of this State.
(Added to NRS by 1971, 1792; A 1997, 2204; 1999, 520 , 544 ; 2003, 2871 )
[Effective on the date of
the repeal of the federal law requiring each state to establish
procedures for withholding, suspending and restricting the professional,
occupational and recreational licenses for child support arrearages and
for noncompliance with certain processes relating to paternity or child
support proceedings.]
1. No person may in this state solicit subscription to or purchase
of any security covered by a solicitation permit issued under this
chapter, unless then licensed therefor by the Commissioner.
2. Such a license may be issued only to natural persons, and the
Commissioner shall not license any person found by him to be:
(a) Dishonest or untrustworthy;
(b) Financially irresponsible;
(c) Of unfavorable personal or business history or reputation; or
(d) For any other cause, reasonably unsuited for fulfillment of the
responsibilities of such a licensee.
3. The applicant for such a license must file his written
application therefor with the Commissioner, on forms and containing
inquiries as designated and required by the Commissioner. The application
must include or be accompanied by:
(a) An endorsement by the holder of the permit under which the
securities are proposed to be sold;
(b) A complete set of the fingerprints of the applicant on forms
furnished by the Commissioner; and
(c) The application fee specified in NRS 680B.010 .
4. The Commissioner:
(a) May forward the complete set of fingerprints to the Central
Repository for Nevada Records of Criminal History for submission to the
Federal Bureau of Investigation for its report; and
(b) Shall promptly cause an investigation to be made of the
identity and qualifications of the applicant.
5. The license, if issued, must be for the period of the permit,
and must automatically be extended if the permit is extended.
6. The Commissioner shall revoke the license if at any time after
issuance he has found that the license was obtained through
misrepresentation or concealment of facts, or that the licensee is no
longer qualified therefor, or that the licensee has misrepresented the
securities offered, or has otherwise conducted himself in or with respect
to transactions under the license in a manner injurious to the permit
holder or to subscribers or prospects or the public.
7. This section does not apply to securities broker-dealers
registered as such under the Securities Exchange Act of 1934, or with
respect to securities the sale of which is underwritten, other than on a
best efforts basis, by such a broker-dealer.
8. With respect to solicitation of subscriptions to or purchase of
securities covered by a solicitation permit issued by the Commissioner,
the license required by this section is in lieu of a license or permit
otherwise required of the solicitor under any other law of this state.
(Added to NRS by 1971, 1792; A 1997, 2204; 1999, 520 , 544 ; 2003, 2871 , effective on the date of the repeal of
the federal law requiring each state to establish procedures for
withholding, suspending and restricting the professional, occupational
and recreational licenses for child support arrearages and for
noncompliance with certain processes relating to paternity or child
support proceedings)
[Expires by limitation on the date of the repeal of the
federal law requiring each state to establish procedures for withholding,
suspending and restricting the professional, occupational and
recreational licenses for child support arrearages and for noncompliance
with certain processes relating to paternity or child support
proceedings.]
1. A natural person who applies for the issuance of a permit or
license pursuant to this chapter shall submit to the Commissioner the
statement prescribed by the Division of Welfare and Supportive Services
of the Department of Health and Human Services pursuant to NRS 425.520
. The statement must be completed and
signed by the applicant.
2. The Commissioner shall include the statement required pursuant
to subsection 1 in:
(a) The application or any other forms that must be submitted for
the issuance or renewal of the permit or license; or
(b) A separate form prescribed by the Commissioner.
3. A permit or license may not be issued by the Commissioner
pursuant to this chapter if the applicant is a natural person who:
(a) Fails to submit the statement required pursuant to subsection
1; or
(b) Indicates on the statement submitted pursuant to subsection 1
that he is subject to a court order for the support of a child and is not
in compliance with the order or a plan approved by the district attorney
or other public agency enforcing the order for the repayment of the
amount owed pursuant to the order.
4. If an applicant indicates on the statement submitted pursuant
to subsection 1 that he is subject to a court order for the support of a
child and is not in compliance with the order or a plan approved by the
district attorney or other public agency enforcing the order for the
repayment of the amount owed pursuant to the order, the Commissioner
shall advise the applicant to contact the district attorney or other
public agency enforcing the order to determine the actions that the
applicant may take to satisfy the arrearage.
(Added to NRS by 1997, 2202)
[Expires by limitation on the date of the repeal of
the federal law requiring each state to establish procedures for
withholding, suspending and restricting the professional, occupational
and recreational licenses for child support arrearages and for
noncompliance with certain processes relating to paternity or child
support proceedings.]
1. If the Commissioner receives a copy of a court order issued
pursuant to NRS 425.540 that provides
for the suspension of all professional, occupational and recreational
licenses, certificates and permits issued to a person who is the holder
of a permit or license issued pursuant to this chapter, the Commissioner
shall deem the permit or license issued to that person to be suspended at
the end of the 30th day after the date on which the court order was
issued unless the Commissioner receives a letter issued to the holder of
the permit or license by the district attorney or other public agency
pursuant to NRS 425.550 stating that
the holder of the permit or license has complied with the subpoena or
warrant or has satisfied the arrearage pursuant to NRS 425.560 .
2. The Commissioner shall reinstate a permit or license issued
pursuant to this chapter that has been suspended by a district court
pursuant to NRS 425.540 if the
Commissioner receives a letter issued by the district attorney or other
public agency pursuant to NRS 425.550
to the person whose permit or license was suspended stating that the
person whose permit or license was suspended has complied with the
subpoena or warrant or has satisfied the arrearage pursuant to NRS
425.560 .
(Added to NRS by 1997, 2203)
1. When newly organized, a domestic mutual insurer may be
authorized to transact any one of the kinds of insurance listed in the
schedule contained in subsection 2.
2. When applying for an original certificate of authority, the
insurer must be otherwise qualified therefor under this Code, and must
have received and accepted bona fide applications as to substantial
insurable subjects for insurance of a substantial character of the kind
of insurance proposed to be transacted, must have collected in cash the
full premium therefor at a rate not less than that usually charged by
other insurers for comparable coverages, must have surplus funds on hand
and deposited as of the date such insurance coverages are to become
effective, or, in lieu of such applications, premiums, and surplus, may
deposit and thereafter maintain surplus, all in accordance with that part
of the following schedule which applies to the one kind of insurance the
insurer proposes to transact:
(A) (B) (C) (D)
(E) (F) (G) (H)
Max. Deposit Deposit
Min. Min.No. Min.
Min. Amt. Min. of
No.of Subjects Prem.
Amt. Ins.Ea. Surplus Surplus
Kind of Apps. Cov- Col-
Ins.Ea. Subj. Funds In Lieu
Ins. Accepted ered lected
Subj. (v) (vi) (vi)
Life (i)........................ 500 500 Annual
$2,000 $5,000 $100,000 $200,000
Health (ii).................. 500 500 Quarterly
$25 $50 $100,000 $200,000
(Weekly Indemnity)
Property (iii)............. 100 250 Annual
$3,000 $7,000 $100,000 $200,000
Casualty (iv).............. 50 500 Annual $5,000
$25,000 $200,000 $300,000
Expendable surplus: In addition to surplus deposited and thereafter
to be maintained as shown in column (G) or (H) in the above schedule, the
insurer when first authorized must have on hand additional surplus funds
in an amount not less than 150 percent of the applicable deposited
surplus required of it under the above schedule. Of such additional
surplus the insurer may expend two- thirds thereof thereafter in conduct
of its business, and shall maintain unimpaired the remaining one-third
together with such deposited surplus.
3. The following provisions are respectively applicable to the
schedule in subsection 2 and provisions as indicated by like Roman
numerals appearing in such schedule:
(i) No group insurance or term policies for terms of less than 10
years shall be included.
(ii) No group, blanket or family plans of insurance shall be
included. In lieu of weekly indemnity a like premium value in medical,
surgical and hospital benefits may be provided. Any accidental death or
dismemberment benefit provided shall not exceed $5,000.
(iii) Only insurance of the owner’s interest in real property may be
included.
(iv) Insurance of legal liability for bodily injury and property
damage, to which the maximum and minimum insured amounts apply, must be
included.
(v) The maximums provided for in column (F) are net of applicable
reinsurance.
(vi) The deposit of surplus in the amount specified in columns (G)
and (H) must thereafter be maintained unimpaired. The deposit is subject
to the provisions of NRS 682B.010 to
682B.120 , inclusive (administration
of deposits).
As to the financial requirements for the authority of such insurer to
transact additional kinds of insurance, see NRS 693A.190 .
(Added to NRS by 1971, 1793)
1. Before soliciting applications for insurance as required under
NRS 692B.200 , the incorporators of
the proposed insurer shall procure a solicitation permit as required by
NRS 692B.040 , and shall file with the
Commissioner a corporate surety bond in the penal sum of $50,000 in favor
of the State of Nevada and conditioned as follows:
(a) Upon due accounting for and deposit, as required under NRS
692B.230 , of funds received as
premiums upon applications for insurance; and
(b) If the corporation fails to complete its organization and
secure a certificate of authority issued by the Commissioner within the
period allowed therefor by the solicitation permit, all premiums
collected from applicant members will be promptly returned to them, and
all other indebtedness of the corporation, other than any compensation to
directors, officers or solicitors of insurance applications, and costs
incurred by the State of Nevada in any legal proceedings for the
liquidation or dissolution of the corporation will be paid.
2. In lieu of such a bond, the incorporators may deposit with the
Commissioner cash in the amount of $50,000, or securities of the United
States Government or of the State of Nevada of a market value of at least
$50,000, and the Commissioner shall hold such deposit in trust for the
same purposes as apply to a bond under subsection 1.
3. If the corporation or an affiliate corporation proposes also to
offer securities for initial financing of the proposed insurer, in
addition to the securing of qualifying applications for insurance, the
bond or deposit required by this section may be combined with that
required under NRS 692B.150 , with
appropriate extension of the conditions of such bond or deposit to comply
with the requirements of both sections, so that only one such bond or
deposit of $50,000 shall be necessary for all such purposes.
4. The Commissioner shall release and discharge the bond or
deposit or remaining portion thereof held under this section upon
settlement of all liabilities, if any, against it.
(Added to NRS by 1971, 1794)
1. Upon issuance of the required solicitation permit, the proposed
insurer may commence solicitation of requisite applications for insurance
policies and may receive deposits of premiums thereon.
2. All such applications shall be in writing signed by the
applicant, covering subjects of insurance resident, located or to be
performed in this state.
3. All such applications shall provide that:
(a) Issuance of the policy is contingent upon the insurer
qualifying for and receiving a certificate of authority;
(b) No insurance is in effect unless and until the certificate of
authority has been issued;
(c) The prepaid premium or deposit, and membership or policy fee,
if any, shall be refunded in full to the applicant if organization is not
completed and the certificate of authority is not issued and received by
the insurer before expiration or other termination of the solicitation
permit; and
(d) All qualifying premiums shall be paid in cash.
4. Solicitations for such qualifying applications for insurance
shall be by licensed agents of the corporation; and the Commissioner
shall upon the corporation’s request therefor and fulfillment of the
requirements applicable under chapter 683A
of NRS (agents, brokers and solicitors), license as agents of the
corporation individuals qualified therefor under, and subject to, such
sections.
(Added to NRS by 1971, 1795)
1. All sums collected by a domestic mutual corporation as premiums
or fees on qualifying applications for insurance therein must be
deposited in escrow with a bank, credit union or trust company located in
this state under a written agreement filed with and approved by the
Commissioner. The terms of such an agreement must be consistent with
those of the solicitation permit and of the applicable provisions of this
section and NRS 692B.250 .
2. Upon issuance to the corporation of a certificate of authority
as an insurer for the kind of insurance for which such applications were
solicited, all money so held in escrow becomes the money of the insurer.
Until the certificate of authority is issued, the money remains the
property of the applicants for insurance as respectively entitled thereto.
(Added to NRS by 1971, 1795; A 1999, 1553 )
1. The Commissioner shall withdraw all funds held in escrow under
NRS 692B.170 , and refund to
securities subscribers or purchasers all sums paid in thereon under the
solicitation permit, less that part allowed and used for organization,
sales and promotion expenses, if:
(a) The permit holder has failed to complete its organization or
financing, within the terms of the permit, or, if to be an insurer, it
has failed to secure its certificate of authority, all before expiration
of the permit; or
(b) The permit is revoked.
2. As to funds paid in on subscriptions by founders, promoters and
incorporators and held on deposit in lieu of the bond under subsection 3
of NRS 692B.150 , only such portion of
such funds shall be refundable under this section as may remain after
discharge of all liabilities against the deposit under NRS 692B.150
and the charging of such funds with a
proportionate share of organization, sales and promotion expenses.
3. If a proposed domestic mutual insurer fails to complete its
organization and to secure its original certificate of authority within
the period allowed therefor by the solicitation permit, the corporation
shall transact no further business, and the Commissioner shall return or
cause to be returned to the persons entitled thereto all advance deposits
or payments of premiums or fees held in escrow under NRS 692B.230 .
(Added to NRS by 1971, 1795)
1. At any time prior to the issuance of a certificate of authority
to a proposed domestic stock or mutual insurer, the incorporators may
voluntarily surrender the articles of incorporation and the corporation
may be voluntarily dissolved by written agreement filed with the
Commissioner. The agreement shall be signed and verified by a majority of
the incorporators, and shall be signed (without verification) by at least
two-thirds of all persons who theretofore have become subscribers to or
purchasers of securities of the corporation and (in the case of a
proposed mutual insurer) by at least two-thirds of all persons who
theretofore have applied for policies in the proposed insurer.
2. The Commissioner shall approve the surrender of such articles
of incorporation and dissolution if upon investigation he finds that:
(a) No insurance business has been transacted by the corporation
except (in the case of a proposed mutual insurer) for solicitation of
qualifying applications for insurance;
(b) Arrangements satisfactory to him have been made for the return
to subscribers, purchasers and applicants of all funds paid by them upon
subscription or purchase of securities, or upon applications for
insurance, under the solicitation permit theretofore held by the
corporation, less (as to securities subscriptions and purchases) the part
thereof actually and lawfully used for expenses; and
(c) All obligations of the corporation have been paid or discharged.
3. The articles of incorporation so surrendered, together with the
executed copy of the agreement, bearing thereon the endorsed approval of
the Commissioner, shall be filed with the Secretary of State and
thereupon the corporate existence of the corporation shall cease.
4. The provisions of NRS 696B.210 and 696B.220 (grounds for rehabilitation, liquidation of
domestic insurer) do not apply to the voluntary dissolution of a proposed
domestic insurer pursuant to this section.
(Added to NRS by 1971, 1796)
1. No person referred to in NRS 692B.040 (solicitation permit required), after
receiving a certificate of authority, if an insurer, or after completing
its original organization and financing, if other than an insurer, shall
in this state solicit or receive funds in exchange for or grant options
with respect to its securities until it has applied to the Commissioner
for, and has been granted, a solicitation permit. This section is subject
to the same exemptions as are provided by NRS 692B.060 (exemptions).
2. The Commissioner shall issue such a permit unless he finds that:
(a) The funds proposed to be secured are inadequate or excessive in
amount for the purposes intended;
(b) The proposed securities or the manner of their distribution
would be unfair or inequitable to existing or proposed security holders
or policyholders of the issuer; or
(c) Other reasonable objections exist as to the proposed financing.
3. Any such permit granted by the Commissioner shall be for such
duration, and shall contain such terms and be issued upon such
conditions, as the Commissioner may reasonably require for the protection
of existing or proposed investors. In the Commissioner’s discretion
escrow of funds, or a bond or deposit in lieu thereof, need not be
required, and other terms and conditions of the permit may be
substantially the same as or materially different from requirements made
under this chapter as to solicitation permits for initial financing; but
no such permit shall allow sales or promotion expense, for the sale of
the securities in excess of the amount reasonably required therefor, and
in no event to exceed 15 percent of the proceeds of such sales if and as
such funds are actually received.
4. Every person who violates the provisions of subsection 1 is
subject to the same penalties prescribed by NRS 692B.040 (solicitation permit required; penalty).
(Added to NRS by 1971, 1797)
