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286.4-450 Bonding requirements for applications submitted on or after January 1,
2020 -- Demonstration of financial condition -- Managing principal -Background check -- Incomplete application -- Approval or rejection of
application -- Time limit -- Appeal -- Hearing -- Eligibility if license denied.
(1)
For any new application for a license, submitted on or after January 1, 2020, to
qualify for a license, an applicant shall satisfy and maintain, for the duration of
licensure under this subtitle, the following bonding requirements, which shall cover
all licensed locations:
(a) The applicant shall deposit with the commissioner, in a form directed by the
commissioner, one (1) of the following instruments that satisfy the
requirements of paragraph (b) of this subsection:
1.
An irrevocable letter of credit;
2.
A corporate surety bond;
3.
Evidence that the applicant has established an account payable to the
commissioner in a federally insured financial institution in this state and
has deposited United States currency in an amount that satisfies the
requirements of paragraph (b) of this subsection, with a signed and
notarized acknowledgement from the financial institution; or
4.
A savings certificate of a federally insured financial institution in this
state that is not available for withdrawal except by direct order of the
commissioner, with a signed and notarized acknowledgement from the
financial institution. Interest earned on the certificate shall accrue to the
applicant;
(b) The instruments identified in paragraph (a) of this subsection shall:
1.
Be made payable to the commissioner;
2.
Be in the following amounts:
a.
One hundred thousand dollars ($100,000), if the applicant is
privately held; or
b.
Two hundred fifty thousand dollars ($250,000), if the applicant is
publicly traded;
3.
Provide for claim on the instrument by the commissioner who has a
cause of action under this subtitle. The total liability of the surety,
cumulative or otherwise, shall not exceed the amount specified in the
instrument; and
4.
Be available for the recovery of expenses, fines, and fees levied or
imposed by the commissioner under this subtitle, and for losses or
damages that are determined by the commissioner to have been incurred
by any customer as a result of the applicant's or licensee's failure to
comply with the requirements of this subtitle; and
(c) No claim shall be maintained to enforce any liability on an instrument under
this subsection unless the claim is brought within three (3) years after the act
upon which it is based.
(2)
(3)
(4)
(5)
(6)
(a)
For any application submitted on or after January 1, 2020, including renewal
applications, an applicant or licensee shall demonstrate that its financial
condition is sufficient to effectively conduct the business of a licensee in one
(1) or more licensed Kentucky locations by having and maintaining, for the
duration of licensure under this subtitle:
1.
If the applicant is privately held:
a.
A total net worth of at least fifty thousand dollars ($50,000), when
receivables are one million dollars ($1,000,000) or less; or
b.
A total net worth of at least one hundred thousand dollars
($100,000), when receivables are more than one million dollars
($1,000,000); or
2.
If the applicant is publicly traded, a total net worth in excess of two
hundred fifty thousand dollars ($250,000).
(b) For the purposes of this subsection, receivables shall be determined upon the
initial application, or for renewal applications, based on the most recent
annual report filed under KRS 286.4-590.
(a) Each applicant shall have, at the time of making application and for the
duration of licensure under this subtitle, at least one (1) managing principal.
(b) Prior to a change in managing principal, each licensee shall file a written
request for the change with the department. The written request shall include
sufficient proof that the new managing principal has experience to satisfy the
requirements of this subsection, and the commissioner may deny the requested
change.
(c) Each person named as a managing principal in an application or written
request under this subsection shall provide the commissioner with sufficient
proof that the managing principal has at least two (2) years of lending
experience working in a financial institution. The commissioner shall
determine from the application or written request whether an applicant has
sufficient experience to satisfy this requirement and may withhold approval
based on this determination.
(a) At the time of application, the commissioner shall require each managing
principal and person in control of an applicant or licensee to submit to a
criminal background check.
(b) The cost of each records background check shall be borne by the applicant or
licensee.
The commissioner may deem an application incomplete if the applicant fails to pay
any fee, or submit any documentation or information, required under this subtitle
within sixty (60) days from the date the application was filed. After sixty (60) days,
if the application is incomplete, it shall be considered abandoned.
(a) Once a completed application is filed, and after an investigation, the
commissioner shall issue to the applicant a license to make loans in
accordance with this subtitle, if the commissioner finds that the financial
responsibility, financial condition, experience, character, and general fitness
(7)
of the applicant reasonably demonstrate that the applicant, its managing
principal, and each person in control of the applicant will operate honestly,
fairly, and efficiently in accordance with the purposes of this subtitle.
(b) If the commissioner finds that the applicant does not meet the requirements
under paragraph (a) of this subsection, he or she shall not issue a license and
shall return any license fee paid by the applicant, but shall retain the five
hundred dollars ($500) investigation fee to cover the cost of investigating the
application.
(c) When determining whether an applicant has satisfied the qualifications
required under this subsection, the commissioner shall consider the grounds
set forth in KRS 286.4-490.
(d) The commissioner shall approve or deny every application for license within
sixty (60) days from the receipt of a completed application, unless the time is
extended by a written agreement between the applicant and the commissioner.
(e) If the commissioner denies a license, the applicant may, within twenty (20)
days from the date of denial, file a written petition requesting a hearing to
appeal with the office of the commissioner. Upon the timely filing of a
petition to appeal, an administrative hearing shall be conducted in accordance
with KRS Chapter 13B. If the applicant does not file a petition within the
required time frame, he or she shall be deemed to have waived the right to
appeal.
(f) The official record of the hearing shall be filed in the office of the
commissioner as a public record, open to public inspection.
Any applicant, or person in control of an applicant, that has a license denied by the
commissioner shall not be eligible to apply for a license under this subtitle, or serve
as a person in control of an applicant or licensee, until the expiration of one (1) year
from the date a final order denying the license is entered by the commissioner.
Effective: June 27, 2019
Formerly codified as KRS 288.450.
History: Amended 2019 Ky. Acts ch. 120, sec. 4, effective June 27, 2019. -- Amended
2010 Ky. Acts ch. 24, sec. 660, effective July 15, 2010. -- Amended 2000 Ky. Acts
ch. 157, sec. 2, effective July 14, 2000. -- Amended 1998 Ky. Acts ch. 198, sec. 2,
effective July 15, 1998. -- Amended 1996 Ky. Acts ch. 318, sec. 217, effective July
15, 1996. -- Created 1960 Ky. Acts ch. 204, sec. 5, effective June 16, 1960.
Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts
ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the
Kentucky Financial Services Code, KRS Chapter 286, and KRS references within
this statute have been adjusted to conform with the 2006 renumbering of that code.
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