2005 Nevada Revised Statutes - Chapter 692B — Formation and Capitalization of Domestic Stock and Mutual Insurers; Financing of Insurers and Holding Companies

CHAPTER 692B - FORMATION ANDCAPITALIZATION OF DOMESTIC STOCK AND MUTUAL INSURERS; FINANCING OF INSURERS ANDHOLDING COMPANIES

NRS 692B.010 Scope.

NRS 692B.020 Incorporation.

NRS 692B.030 Amendmentof articles of incorporation; approval of Commissioner; applicability toexisting insurers.

NRS 692B.040 Solicitationpermit required; penalty.

NRS 692B.050 Insuranceholding corporation defined; Massachusetts trusts.

NRS 692B.060 Exemptions.

NRS 692B.070 Applicationfor solicitation permit. [Effective until the date of the repeal of the federallaw requiring each state to establish procedures for withholding, suspendingand restricting the professional, occupational and recreational licenses forchild support arrearages and for noncompliance with certain processes relatingto paternity or child support proceedings.]

NRS 692B.070 Applicationfor solicitation permit. [Effective on the date of the repeal of the federallaw requiring each state to establish procedures for withholding, suspendingand restricting the professional, occupational and recreational licenses forchild support arrearages and for noncompliance with certain processes relatingto paternity or child support proceedings.]

NRS 692B.080 Applicationfor permit to solicit qualifying mutual applications.

NRS 692B.090 Investigation.

NRS 692B.100 Grantingor denial of permit.

NRS 692B.110 Termsof permit; compliance.

NRS 692B.120 Permitas inducement.

NRS 692B.130 Prospectusrequired; contents of prospectus; other literature; filing of certain salesliterature and visual sales material with Commissioner.

NRS 692B.140 Modificationor revocation of permit.

NRS 692B.150 Bond;deposit in lieu of bond; waiver or release.

NRS 692B.160 Rightsunder permit.

NRS 692B.170 Depositof money in escrow.

NRS 692B.180 Subscriptioncontracts.

NRS 692B.190 Licenseto sell securities. [Effective until the date of the repeal of the federal lawrequiring each state to establish procedures for withholding, suspending andrestricting the professional, occupational and recreational licenses for childsupport arrearages and for noncompliance with certain processes relating topaternity or child support proceedings.]

NRS 692B.190 Licenseto sell securities. [Effective on the date of the repeal of the federal lawrequiring each state to establish procedures for withholding, suspending andrestricting the professional, occupational and recreational licenses for childsupport arrearages and for noncompliance with certain processes relating topaternity or child support proceedings.]

NRS 692B.193 Paymentof child support: Statement by applicant for permit or license; grounds fordenial of permit or license; duty of Commissioner. [Expires by limitation onthe date of the repeal of the federal law requiring each state to establishprocedures for withholding, suspending and restricting the professional,occupational and recreational licenses for child support arrearages and fornoncompliance with certain processes relating to paternity or child supportproceedings.]

NRS 692B.197 Suspensionof permit or license for failure to pay child support or comply with certainsubpoenas or warrants; reinstatement of permit or license. [Expires bylimitation on the date of the repeal of the federal law requiring each state toestablish procedures for withholding, suspending and restricting theprofessional, occupational and recreational licenses for child supportarrearages and for noncompliance with certain processes relating to paternityor child support proceedings.]

NRS 692B.200 Mutualinsurers: Initial qualifications.

NRS 692B.210 Mutualinsurers: Permit; bond or deposit.

NRS 692B.220 Mutualinsurers: Qualifying applications for insurance.

NRS 692B.230 Mutualinsurers: Deposit of premiums in escrow.

NRS 692B.240 Failureto complete or qualify.

NRS 692B.250 Voluntarydissolution.

NRS 692B.260 Subsequentfinancing: Solicitation permit required; penalty.

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NRS 692B.010 Scope. This chapter applies to the formation, after January 1,1972, of domestic stock and mutual insurers, to the capitalization of domesticstock insurers, and to the financing of domestic insurers of all types and ofinsurance holding corporations thereof.

(Added to NRS by 1971, 1782)

NRS 692B.020 Incorporation.

1. The general corporation laws of this state governthe incorporation of domestic stock and mutual insurers formed after January 1,1972, where not in conflict with the express provisions of this Code. In caseof such conflict the express provisions of this Code govern.

2. A domestic insurer must be incorporated by not lessthan three natural persons. The articles of incorporation must set forth thename and residence address of each of the true incorporators, and dummyincorporators must not be used.

3. The articles of incorporation must also set forth:

(a) The names and addresses of each proposed directoror officer who is not an incorporator;

(b) The kind or kinds of insurance proposed to betransacted, 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 authorizedcapital, the number of shares into which divided, and the par value of eachshare, which par value must not be less than $1. Shares without nominal or parvalue must not be authorized. All authorized shares must be of one class, withone vote per outstanding share and equal rights between outstanding shares asto dividends and distributions, and in all other respects; and

(d) If to be a mutual insurer, the contingent liabilityof policyholders for payment of losses and expenses of the insurer, whichliability must not be less than one or more than six times the policyholderspremium at the annual rate for a term of 1 year, as specified in the articlesof incorporation. Such contingent liability may be rendered inoperativepursuant to the provisions of NRS 693A.250.

4. The articles of incorporation of a proposed stockinsurer must require that all shares be issued at a price not less than parvalue, and must not provide for stock options.

(Added to NRS by 1971, 1782; A 1991, 2204)

NRS 692B.030 Amendmentof articles of incorporation; approval of Commissioner; applicability toexisting insurers.

1. An amendment of articles of incorporation of adomestic insurer shall not be filed or accepted for filing with the Secretaryof State unless first submitted to and approved by the Commissioner.

2. The insurer shall deliver executed quadruplicateoriginals of the proposed articles of amendment to the Commissioner. If theCommissioner finds the same to be in accordance with law, he shall endorse hisapproval on each set of the articles of amendment and return the same to theinsurer. The insurer shall then file the original set with the Secretary ofState, one set with the Commissioner, and otherwise as required by law. If theCommissioner does not so find, he shall not approve the proposed articles ofamendment, but shall return all sets to the insurer together with his writtenstatement of the reasons for nonapproval.

3. After January 1, 1972, no existing domestic stockor mutual insurer shall amend its articles of incorporation in any way whichwould conflict with the requirements of this Code as to a newly formed similardomestic insurer; but an existing domestic stock insurer with preferred stockalready as part of its authorized capital shall have the right to increase ordecrease the amount of the same or modify the rights and priorities thereof asotherwise permitted by law.

(Added to NRS by 1971, 1783)

NRS 692B.040 Solicitationpermit required; penalty.

1. A person forming or proposing to form a domesticinsurer, or insurance holding corporation thereof, or corporation to beattorney-in-fact for a domestic reciprocal insurer, or proposing to securefunds for the formation or financing of a domestic insurer, or production ofinsurance business therefor, or for an insurance holding corporation holding orproposing to hold securities of a domestic insurer, or for an attorney-in-factcorporation of a domestic reciprocal insurer, or for the formation or financingof a syndicate, association, firm, partnership or organization for any suchpurposes, shall not in this state advertise or offer for sale any securities orpolicies, 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 theCommissioner.

2. A person who violates the provisions of thissection 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)

NRS 692B.050 Insuranceholding corporation defined; Massachusetts trusts.

1. As used in this Code, an insurance holdingcorporation is a corporation, whether or not incorporated under the laws ofthis state, owning or holding, or proposing to own or hold, a controlling stockinterest in a domestic stock insurer. Shares owned directly or indirectly bythe corporation or by its subsidiary or affiliate corporation, firm ororganization, or by its officers, directors or principal stockholders, shall bedeemed to be owned or held by the corporation for the purposes of this section.

2. For the purposes of this chapter that type oforganization known as a Massachusetts trust shall be deemed to be acorporation.

(Added to NRS by 1971, 1784)

NRS 692B.060 Exemptions. NRS 692B.040 doesnot apply to:

1. Sales of securities not involving a publicoffering, and under a plan filed with and not disapproved by the Commissioner;that is, sales on which no commission or other compensation is payableresulting from offers privately made to not over 20 persons (other than banks,savings associations, investment companies registered as such under theInvestment Company Act of 1940, registered securities dealers, investmenthouses and other financial institutions) within a 12-month period, and whereall persons (including such banks, associations, companies, dealers, houses andinstitutions) so acquiring such securities do so for investment purposes onlyand not with a view to further distribution. The Commissioner shall disapproveany such plan within 10 days after filing, or within such reasonable additionalperiod as the Commissioner may request within such 10 days, if found by him tobe:

(a) Unfair to any existing or proposed other holders ofsecurities of the insurer; or

(b) Unlawful.

2. Sales of securities by an insurance holdingcorporation for purposes which do not include the financing, directly orindirectly, of a domestic insurer.

3. Stock of the insurer or insurance holdingcorporation 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 plantherefor adopted by the board of directors, approved by a majority of the stockof the issuer corporation having voting rights, and filed with and approved bythe Commissioner. The Commissioner shall approve such a plan unless found byhim to be inequitable to other personnel of the insurer or other personsfinancially interested in the insurer.

4. Securities issued or proposed to be issued pursuantto any merger, consolidation, bulk reinsurance, conversion, mutualization orcorporate affiliation approved by the Commissioner pursuant to chapter 693A of NRS.

5. Securities issued in exchange for outstandingsecurities of the issuer, or partly in exchange for such outstanding securitiesand partly for cash, in connection with a recapitalization of the issuer or theexercise of conversion or exchange rights under such outstanding securities.

6. Securities issued and distributed to existingholders of securities of the insurer as a dividend paid in securities.

7. Fractional share interests in stock of the issueroffered and sold for the purpose of rounding out to whole shares in connectionwith any stock dividend or other distribution of shares to existing securityholders of the issuer.

(Added to NRS by 1971, 1784)

NRS 692B.070 Applicationfor solicitation permit. [Effective until the date of the repeal of the federallaw requiring each state to establish procedures for withholding, suspendingand restricting the professional, occupational and recreational licenses forchild support arrearages and for noncompliance with certain processes relatingto paternity or child support proceedings.]

1. A written application for any permit required underNRS 692B.040 must be filed with theCommissioner. 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 tobe formed or financed;

(b) On forms furnished by the Commissioner, for eachperson associated or to be associated as incorporator, director, promoter,manager or in other similar capacity in the enterprise, or in the formation ofthe proposed insurer, corporation, syndicate, association, firm ororganization, or in the proposed financing:

(1) His name, residential address andqualifications;

(2) His business background and experience forthe preceding 10 years; and

(3) A complete set of his fingerprints which theCommissioner may forward to the Central Repository for Nevada Records ofCriminal History for submission to the Federal Bureau of Investigation for itsreport;

(c) A full disclosure of the terms of all pertinentunderstandings and agreements existing or proposed among any persons orentities so associated or to be associated, and a copy of each such agreement;

(d) Executed quadruplicate originals of the articles ofincorporation of a proposed domestic stock or mutual insurer;

(e) The original and one copy of the proposed bylaws ofa proposed domestic stock or mutual insurer;

(f) The plan according to which solicitations are to bemade and a reasonably detailed estimate of all organization and sales expensesto be incurred in the proposed organization and offering;

(g) A copy of any security, receipt or certificateproposed to be offered, and a copy of any proposed subscription agreement orapplication 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 agreementrequired;

(j) A copy of:

(1) The articles of incorporation of anycorporation, other than a proposed domestic insurer, proposing to offer itssecurities, certified by the public officer having custody of the originalthereof;

(2) Any syndicate, association, firm,organization or other similar agreement, by whatever name called, if funds forany of the purposes referred to in subsection 1 of NRS 692B.040 are to be secured throughthe 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 reciprocalinsurer, the power of attorney and of other agreements existing or proposedaffecting subscribers, investors, the attorney-in-fact or the insurer;

(k) If the applicant is a natural person, the statementrequired pursuant to NRS 692B.193; and

(l) Such additional pertinent information as theCommissioner may reasonably require.

2. The application must be accompanied by a deposit ofthe fees required under NRS 680B.010for the filing of the application and for issuance of the permit, if granted.

3. If the applicant is a natural person, theapplication must include the social security number of the applicant.

4. In lieu of a special filing thereof of informationrequired by subsection 1, the Commissioner may accept a copy of any pertinentfiling made with the Securities and Exchange Commission relative to the sameoffering.

(Added to NRS by 1971, 1785; A 1997, 2203; 1999, 520, 543; 2003, 2870)

NRS 692B.070 Application for solicitation permit.[Effective on the date of the repeal of the federal law requiring each state toestablish procedures for withholding, suspending and restricting theprofessional, occupational and recreational licenses for child supportarrearages and for noncompliance with certain processes relating to paternityor child support proceedings.]

1. A written application for any permit requiredunder NRS 692B.040 must be filed withthe 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 tobe formed or financed;

(b) On forms furnished by the Commissioner, for eachperson associated or to be associated as incorporator, director, promoter,manager or in other similar capacity in the enterprise, or in the formation ofthe proposed insurer, corporation, syndicate, association, firm ororganization, or in the proposed financing:

(1) His name, residential address andqualifications;

(2) His business background and experience forthe preceding 10 years; and

(3) A complete set of his fingerprints which theCommissioner may forward to the Central Repository for Nevada Records of CriminalHistory for submission to the Federal Bureau of Investigation for its report;

(c) A full disclosure of the terms of all pertinentunderstandings and agreements existing or proposed among any persons orentities so associated or to be associated, and a copy of each such agreement;

(d) Executed quadruplicate originals of the articles ofincorporation of a proposed domestic stock or mutual insurer;

(e) The original and one copy of the proposed bylaws ofa proposed domestic stock or mutual insurer;

(f) The plan according to which solicitations are to bemade and a reasonably detailed estimate of all organization and sales expensesto be incurred in the proposed organization and offering;

(g) A copy of any security, receipt or certificateproposed to be offered, and a copy of any proposed subscription agreement orapplication 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 agreementrequired;

(j) A copy of:

(1) The articles of incorporation of anycorporation, other than a proposed domestic insurer, proposing to offer itssecurities, certified by the public officer having custody of the originalthereof;

(2) Any syndicate, association, firm,organization or other similar agreement, by whatever name called, if funds forany of the purposes referred to in subsection 1 of NRS 692B.040 are to be secured throughthe 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 reciprocalinsurer, the power of attorney and of other agreements existing or proposedaffecting subscribers, investors, the attorney-in-fact or the insurer; and

(k) Such additional pertinent information as theCommissioner may reasonably require.

2. The application must be accompanied by a deposit ofthe fees required under NRS 680B.010for the filing of the application and for issuance of the permit, if granted.

3. In lieu of a special filing thereof of informationrequired by subsection 1, the Commissioner may accept a copy of any pertinentfiling made with the Securities and Exchange Commission relative to the sameoffering.

(Added to NRS by 1971, 1785; A 1997, 2203; 1999, 520, 543; 2003, 2870, effectiveon the date of the repeal of the federal law requiring each state to establishprocedures for withholding, suspending and restricting the professional,occupational and recreational licenses for child support arrearages and fornoncompliance with certain processes relating to paternity or child supportproceedings)

NRS 692B.080 Applicationfor permit to solicit qualifying mutual applications. Writtenapplication for any permit required under NRS692B.040 in connection with the formation of a domestic mutual insurer bythe securing of qualifying applications for insurance as provided in NRS 692B.200 shall be filed with theCommissioner. The application shall contain such information and be accompaniedby such of the documents and the fees required under NRS 692B.070 as may be applicable, and inaddition shall be accompanied by:

1. A copy of each policy for which applications areproposed to be solicited;

2. A copy of the proposed insurance application form,consistent with the requirements of NRS692B.220 (qualifying applications for insurance); and

3. A schedule of the premiums or premium ratesproposed to be charged in connection with such insurance applications.

(Added to NRS by 1971, 1786)

NRS 692B.090 Investigation.

1. Upon completion of the application for a permitunder NRS 692B.070 and 692B.080, the Commissioner shall promptlycause an investigation to be made of:

(a) The identity, character, reputation, experience,financial standing and motives of the persons proposing to organize, promote orfinance the insurer or organization;

(b) The character, financial responsibility, insurancemanagement experience and business qualifications of the officers, directorsand managers of the insurer or organization existing or proposed; and

(c) Such other aspects of the insurer, organization orproposed financing as the Commissioner deems advisable.

2. The Commissioner may, in his discretion, waiveinvestigation with respect to the further financing of a domestic insureralready duly authorized to transact insurance in this state.

(Added to NRS by 1971, 1786)

NRS 692B.100 Grantingor denial of permit.

1. The Commissioner shall expeditiously examine anapplication for a solicitation permit and complete the investigation as calledfor. Subject to subsection 2, if the Commissioner finds on such examination andinvestigation that:

(a) The application is complete;

(b) The documents therewith filed are proper in form;and

(c) The proposed financing is reasonable and adequatein amount for the purposes intended and the applicant is otherwise entitled tothe permit,

he shallgive notice to the applicant that he will issue the permit upon the filing ofany bond required by NRS 692B.150 or 692B.210, or deposit in lieu thereof, andthe filing of an executed copy of any escrow agreement required in connectiontherewith. If quadruplicate executed originals of articles of incorporation ofa proposed domestic stock or mutual insurer have been filed with him asrequired under paragraph (d) of subsection 1 of NRS 692B.070, he shall inscribe hisapproval on each copy thereof and return them to the applicant for filing withthe Secretary of State and otherwise as required by law.

2. If the Commissioner does not so find, or findsthat:

(a) The proposed sale of securities would be or tend tobe unfair or inequitable as to present or proposed security holders orinvestors;

(b) Any of the individuals associated or to beassociated in the insurer, corporation, syndicate, association, firm,organization or financing are not of good reputation as to business affairs orfinancial responsibility;

(c) The proposed insurer would not be able to qualifyfor a certificate of authority in this state by virtue of the provisions ofsubsection 2 of NRS 680A.090 (ownership,management);

(d) If an insurance holding corporation, its plan ofcapitalization or security options, or financing are such as would beprohibited under this Code as to a newly formed domestic stock insurer; or

(e) There is material variance, adverse to theapplicant, as between the information furnished by the applicant in connectionwith the application and that determined by the Commissioner on investigation,

he shallgive notice to the applicant that a permit will not be granted, stating theparticulars of the grounds for such denial, and refund to the applicant allsums deposited in connection with the application other than the fee for thefiling of the application.

(Added to NRS by 1971, 1787)

NRS 692B.110 Termsof permit; compliance.

1. Upon filing any bond (or making the deposit in lieuof bond) required under NRS 692B.150or 692B.210, and upon filing with theCommissioner an executed copy of any required escrow agreement, theCommissioner shall issue a permit to the applicant if the applicant is entitledthereto under NRS 692B.100.

2. Every such permit shall contain provisions, asapplicable, as follows:

(a) It shall state the securities which are to beoffered, the number and selling price; or identify the insurance policy orpolicies for which applications are to be solicited in the case of theformation of a new domestic mutual insurer.

(b) It shall require that all premiums and the purchaseprice of securities shall be payable only in lawful money of the United Statesof America, or, in the case of sale of securities, in such other securities asmay be specified by class or description in the permit.

(c) It shall require that all securities to be offeredor 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 ininstallments, to a reasonable additional charge to cover expenses and loss ofinterest earnings attributable to such installment subscriptions.

(d) It shall limit the portion of funds received onaccount of the sale of securities under the permit which may be used fororganization, securities sales and promotion expenses to such amount as theCommissioner 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 areactually received.

(e) If the Commissioner believes the same desirable forthe protection of the public or for any other reasonable purpose, the permitmay:

(1) Require the founders, promoters,incorporators or other persons directly involved in the proposed offering, tosubscribe and pay for immediately and in cash, at the proposed public offeringprice, a reasonable proportion of the same securities as proposed to be offeredunder the permit.

(2) Prohibit, limit or control the granting ofoptions, to such founders, promoters, incorporators or other persons, to buythe 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 othertermination of the permit, of his interest in any security, right or interestof 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 thegranting of any option or lien as to any such security, right or interest. TheCommissioner may, in his discretion, require that any security, right orinterest the resale or transfer of which is prohibited in this subparagraph,shall be deposited and held in escrow for the prescribed period. Thissubparagraph does not prohibit the sale or transfer of any such security, rightor interest by the personal representative of a deceased founder, promoter orincorporator, or of any other deceased person associated under the permit.

(4) Contain other reasonable provisions.

(f) If the permit is issued in connection with thesolicitation of qualifying applications for insurance policies of a proposedmutual insurer, it shall limit the portion of funds received therefor which maybe used for organization and sales expense to a reasonable commission relatedto the kind of insurance policy involved, and provide that no such commissionsshall be deemed earned or be paid until the insurer has received itscertificate of authority and the policies so applied for have been actuallyissued, delivered to and accepted by the respective insureds.

(g) The permit shall expire at the expiration of aperiod stated therein, which period shall be not more than 2 years after itsdate of issue, unless earlier terminated by the Commissioner, but subject tothe right of the Commissioner, for good cause shown, to grant an extension foran additional reasonable period.

(h) The permit shall contain such other reasonableconditions relative to accounting, reports, deposits and other mattersconsistent with this chapter as the Commissioner deems advisable for the protectionof existing or prospective investors or policyholders.

3. The holder of the permit, and its directors,officers, employees, agents, founders, promoters, incorporators andrepresentatives shall comply with the terms of the permit.

(Added to NRS by 1971, 1787)

NRS 692B.120 Permitas inducement.

1. The granting of a solicitation permit is permissiveonly and shall not constitute an endorsement by the Commissioner of any personor thing related to any such insurer, corporation, syndicate, association,firm, organization or financing, or constitute evidence of the completeness oraccuracy of information presented in any prospectus or other sales literature.The existence of the permit shall not be advertised or used as an inducement inany solicitation.

2. The Commissioner shall place the substance of thissection in conspicuous type at the top of each such permit issued.

(Added to NRS by 1971, 1789)

NRS 692B.130 Prospectusrequired; contents of prospectus; other literature; filing of certain salesliterature and visual sales material with Commissioner.

1. An offering of securities, or of insurance policies(in case of qualifying applications for insurance in the formation of adomestic mutual insurer), shall be made only by a written prospectus as filedwith the Commissioner and delivered to the prospective investor orpolicyholder.

2. The prospectus shall disclose all facts relative tothe issuer and the offered security or policy which are reasonably materialthereto, and shall not omit a material fact necessary to make the statementsmade, in the light of the circumstances under which made, not misleading. TheCommissioner may make reasonable rules and regulations concerning the form andcontents of prospectuses, not inconsistent with the provisions of this Code.

3. The Commissioner may accept, as a compliance withthis section, a prospectus or offering circular covering securities to beoffered in this state under an existing registration thereof with theSecurities and Exchange Commission or under an existing exemption from suchregistration pursuant to Regulation A of the general rules and regulations ofthe Securities and Exchange Commission under the Securities Act of 1933, asamended.

4. As to securities covered by a solicitation permit,no sales literature or visual sales material other than the prospectus oroffering circular shall be used in solicitations unless a copy thereof has beenfiled with the Commissioner in advance of such use and not disapproved by himin writing mailed or delivered to the filing party within 10 days after thedate of such filing. The Commissioner shall disapprove any such literature ormaterial found by him to be untrue or misleading. This subsection does notmodify or affect any applicable requirement or prohibition under or pursuant tothe Securities Act of 1933, as amended.

(Added to NRS by 1971, 1789)

NRS 692B.140 Modificationor revocation of permit. The Commissioner mayfor cause modify a solicitation permit theretofore issued; and may after a hearingthereon revoke the permit for a violation of law or the terms of the permit, ofany proper order of the Commissioner, or for material misrepresentation in theoffering or sale of securities or policies under the permit.

(Added to NRS by 1971, 1790)

NRS 692B.150 Bond;deposit in lieu of bond; waiver or release.

1. Except as otherwise provided in this section, theCommissioner shall not issue a solicitation permit until the applicant hasfiled with the Commissioner a bond in favor of the State of Nevada, in thepenal sum of $50,000 and issued by a surety insurer authorized to transact suchinsurance in this state.

2. The bond shall be conditioned upon:

(a) The payment of costs incurred by the State ofNevada in the event of any proceeding for liquidation or dissolution of theproposed organization before completion or organization, or, if to be aninsurer, a certificate of authority is not granted;

(b) Compliance with terms of the permit and withapplicable laws of this state; and

(c) A full accounting for all funds received intransactions under the permit until the proposed insurer has been granted itscertificate of authority or until the corporation, syndicate, association, firmor organization or financing has been completed within the terms of the permit.

3. In lieu of filing such a bond the applicant maydeposit with the Commissioner cash in the amount of $50,000 or securities ofthe United States Government or of the State of Nevada in market value of atleast $50,000, and the Commissioner shall hold such deposit in trust for thesame purposes as apply to a bond under subsection 2. The amount so depositedmay, in the Commissioners discretion, be credited toward payment ofsubscriptions to securities by founders, promoters and incorporators ifrequired under subparagraph (1) of paragraph (e) of subsection 2 of NRS 692B.110, (terms of permit) butsubject to such diminution of such credit as may result from actual applicationof the deposit to the purposes for which made.

4. The Commissioner may, in his discretion, waive therequirement for a bond or deposit in lieu thereof if the securities are to beissued in connection with subsequent financing as provided for in NRS 692B.260.

5. The Commissioner shall release and discharge thebond or deposit or remaining portion thereof held under this section uponsettlement of all liabilities, if any, against it.

6. This section does not apply to solicitation of initialqualifying applications for insurance in a proposed domestic mutual insurerpursuant to NRS 692B.200 except asprovided in NRS 692B.210.

(Added to NRS by 1971, 1790)

NRS 692B.160 Rightsunder permit. Upon issuance to it by the Commissionerof its solicitation permit, a newly formed proposed domestic stock or mutualinsurer shall file with the Commissioner a copy of its articles ofincorporation as filed with the Secretary of State and proceed to the offer andsale of its securities and insurance policies as provided for in the permit.

(Added to NRS by 1971, 1791)

NRS 692B.170 Depositof money in escrow.

1. The holder of the solicitation permit shallpromptly 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, creditunion or trust company located in this state and under an agreement consistentwith this chapter filed with and approved by the Commissioner.

2. No part of the money may be withdrawn from thedeposit, except:

(a) For payment of organization, sales and promotionexpenses as earned and as authorized by the permit, and money for suchpurposes, up to the applicable expense limit on money as received, may bewithheld from the deposit;

(b) For the purpose of making any deposit with theCommissioner required for the issuance of a certificate of authority to aninsurer, or if the organization is not, or is not to be, an insurer, uponcompletion of payments on securities subscriptions made under the permit anddeposit 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 incertificates of deposit or savings accounts. Interest accruing thereon becomespart of the money released as provided in paragraph (b) of subsection 2, ormust be applied toward the cost of making refunds under paragraph (c) ofsubsection 2, or to supplement the bond or deposit in lieu thereof if the bondor deposit is called on pursuant to NRS692B.150.

4. When the Commissioner has issued a certificate ofauthority to a proposed insurer he shall release to the insurer any moneyremaining in escrow for its account.

5. The Commissioner may in his discretion waivecompliance with this section as to money to be received under a subsequentfinancing permit pursuant to NRS 692B.260,or in other circumstances where he deems such an escrow to be unnecessary forthe protection of investors or the public.

(Added to NRS by 1971, 1791; A 1999, 1553)

NRS 692B.180 Subscriptioncontracts.

1. No form of subscription contract to sell securitiesunder a solicitation permit shall be used unless the form has been filed withthe 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 orafter such 10-day period, to be:

(a) Prolix or unduly complicated as to terms;

(b) In any material part, printed in such a manner asto be difficult to read;

(c) Unfair to the subscriber in its terms; or

(d) Contrary to law or the terms of the solicitationpermit.

2. No such disapproval shall be retroactively effective.

3. Every such contract providing for payment of thesubscription price in installments shall:

(a) Require payment in full prior to expiration of thepermit; and

(b) Provide for the forfeiture, at the option of thecorporation, of all payments theretofore made if the subscriber fails to cureall delinquencies of payments thereunder within 45 days after written notice ofsuch delinquencies and of such forfeiture requirement has been mailed by thepermit holder to the subscriber at his address last of record with the permitholder.

(Added to NRS by 1971, 1791)

NRS 692B.190 Licenseto sell securities. [Effective until the date of the repeal of the federal lawrequiring each state to establish procedures for withholding, suspending andrestricting the professional, occupational and recreational licenses for childsupport arrearages and for noncompliance with certain processes relating topaternity or child support proceedings.]

1. No person may in this State solicit subscription toor purchase of any security covered by a solicitation permit issued under thischapter, unless then licensed therefor by the Commissioner.

2. Such a license may be issued only to naturalpersons, 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 orreputation; or

(d) For any other cause, reasonably unsuited forfulfillment of the responsibilities of such a licensee.

3. The applicant for such a license must file hiswritten application therefor with the Commissioner, on forms and containinginquiries as designated and required by the Commissioner. The application mustinclude or be accompanied by:

(a) The social security number of the applicant;

(b) An endorsement by the holder of the permit underwhich the securities are proposed to be sold;

(c) A complete set of the fingerprints of the applicanton 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 theCentral Repository for Nevada Records of Criminal History for submission to theFederal Bureau of Investigation for its report; and

(b) Shall promptly cause an investigation to be made ofthe identity and qualifications of the applicant.

5. The license, if issued, must be for the period ofthe permit, and must automatically be extended if the permit is extended.

6. The Commissioner shall revoke the license if at anytime after issuance he has found that the license was obtained throughmisrepresentation or concealment of facts, or that the licensee is no longerqualified therefor, or that the licensee has misrepresented the securitiesoffered, or has otherwise conducted himself in or with respect to transactionsunder the license in a manner injurious to the permit holder or to subscribersor prospects or the public.

7. This section does not apply to securitiesbroker-dealers registered as such under the Securities Exchange Act of 1934, orwith respect to securities the sale of which is underwritten, other than on abest efforts basis, by such a broker-dealer.

8. With respect to solicitation of subscriptions to orpurchase of securities covered by a solicitation permit issued by theCommissioner, the license required by this section is in lieu of a license orpermit 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)

NRS 692B.190 License to sell securities.[Effective on the date of the repeal of the federal law requiring each state toestablish procedures for withholding, suspending and restricting theprofessional, occupational and recreational licenses for child supportarrearages and for noncompliance with certain processes relating to paternityor child support proceedings.]

1. No person may in this state solicit subscription toor purchase of any security covered by a solicitation permit issued under thischapter, unless then licensed therefor by the Commissioner.

2. Such a license may be issued only to naturalpersons, 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 orreputation; or

(d) For any other cause, reasonably unsuited forfulfillment of the responsibilities of such a licensee.

3. The applicant for such a license must file hiswritten application therefor with the Commissioner, on forms and containinginquiries as designated and required by the Commissioner. The application mustinclude or be accompanied by:

(a) An endorsement by the holder of the permit underwhich the securities are proposed to be sold;

(b) A complete set of the fingerprints of the applicanton 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 theCentral Repository for Nevada Records of Criminal History for submission to theFederal Bureau of Investigation for its report; and

(b) Shall promptly cause an investigation to be made ofthe identity and qualifications of the applicant.

5. The license, if issued, must be for the period ofthe permit, and must automatically be extended if the permit is extended.

6. The Commissioner shall revoke the license if at anytime after issuance he has found that the license was obtained throughmisrepresentation or concealment of facts, or that the licensee is no longerqualified therefor, or that the licensee has misrepresented the securitiesoffered, or has otherwise conducted himself in or with respect to transactionsunder the license in a manner injurious to the permit holder or to subscribersor prospects or the public.

7. This section does not apply to securitiesbroker-dealers registered as such under the Securities Exchange Act of 1934, orwith respect to securities the sale of which is underwritten, other than on abest efforts basis, by such a broker-dealer.

8. With respect to solicitation of subscriptions to orpurchase of securities covered by a solicitation permit issued by theCommissioner, the license required by this section is in lieu of a license orpermit 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, effectiveon the date of the repeal of the federal law requiring each state to establishprocedures for withholding, suspending and restricting the professional,occupational and recreational licenses for child support arrearages and fornoncompliance with certain processes relating to paternity or child supportproceedings)

NRS 692B.193 Paymentof child support: Statement by applicant for permit or license; grounds fordenial of permit or license; duty of Commissioner. [Expires by limitation onthe date of the repeal of the federal law requiring each state to establishprocedures for withholding, suspending and restricting the professional,occupational and recreational licenses for child support arrearages and fornoncompliance with certain processes relating to paternity or child supportproceedings.]

1. A natural person who applies for the issuance of apermit or license pursuant to this chapter shall submit to the Commissioner thestatement prescribed by the Division of Welfare and Supportive Services of theDepartment of Health and Human Services pursuant to NRS 425.520. The statement must becompleted and signed by the applicant.

2. The Commissioner shall include the statementrequired pursuant to subsection 1 in:

(a) The application or any other forms that must besubmitted 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 theCommissioner pursuant to this chapter if the applicant is a natural person who:

(a) Fails to submit the statement required pursuant tosubsection 1; or

(b) Indicates on the statement submitted pursuant tosubsection 1 that he is subject to a court order for the support of a child andis not in compliance with the order or a plan approved by the district attorneyor other public agency enforcing the order for the repayment of the amount owedpursuant to the order.

4. If an applicant indicates on the statementsubmitted pursuant to subsection 1 that he is subject to a court order for thesupport of a child and is not in compliance with the order or a plan approvedby the district attorney or other public agency enforcing the order for therepayment of the amount owed pursuant to the order, the Commissioner shalladvise the applicant to contact the district attorney or other public agencyenforcing the order to determine the actions that the applicant may take tosatisfy the arrearage.

(Added to NRS by 1997, 2202)

NRS 692B.197 Suspensionof permit or license for failure to pay child support or comply with certainsubpoenas or warrants; reinstatement of permit or license. [Expires bylimitation on the date of the repeal of the federal law requiring each state toestablish procedures for withholding, suspending and restricting theprofessional, occupational and recreational licenses for child supportarrearages and for noncompliance with certain processes relating to paternityor child support proceedings.]

1. If the Commissioner receives a copy of a courtorder issued pursuant to NRS 425.540that provides for the suspension of all professional, occupational and recreationallicenses, certificates and permits issued to a person who is the holder of a permitor license issued pursuant to this chapter, the Commissioner shall deem thepermit or license issued to that person to be suspended at the end of the 30thday after the date on which the court order was issued unless the Commissionerreceives a letter issued to the holder of the permit or license by the districtattorney or other public agency pursuant to NRS425.550 stating that the holder of the permit or license has complied withthe subpoena or warrant or has satisfied the arrearage pursuant to NRS 425.560.

2. The Commissioner shall reinstate a permit orlicense issued pursuant to this chapter that has been suspended by a districtcourt pursuant to NRS 425.540 if theCommissioner receives a letter issued by the district attorney or other publicagency pursuant to NRS 425.550 to theperson whose permit or license was suspended stating that the person whosepermit or license was suspended has complied with the subpoena or warrant orhas satisfied the arrearage pursuant to NRS425.560.

(Added to NRS by 1997, 2203)

NRS 692B.200 Mutualinsurers: Initial qualifications.

1. When newly organized, a domestic mutual insurer maybe authorized to transact any one of the kinds of insurance listed in theschedule contained in subsection 2.

2. When applying for an original certificate ofauthority, the insurer must be otherwise qualified therefor under this Code,and must have received and accepted bona fide applications as to substantialinsurable subjects for insurance of a substantial character of the kind ofinsurance proposed to be transacted, must have collected in cash the fullpremium therefor at a rate not less than that usually charged by other insurersfor comparable coverages, must have surplus funds on hand and deposited as ofthe date such insurance coverages are to become effective, or, in lieu of suchapplications, premiums, and surplus, may deposit and thereafter maintainsurplus, all in accordance with that part of the following schedule whichapplies 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 InLieu

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 depositedand thereafter to be maintained as shown in column (G) or (H) in the aboveschedule, the insurer when first authorized must have on hand additionalsurplus funds in an amount not less than 150 percent of the applicabledeposited surplus required of it under the above schedule. Of such additionalsurplus the insurer may expend two- thirds thereof thereafter in conduct of itsbusiness, and shall maintain unimpaired the remaining one-third together withsuch deposited surplus.

3. The following provisions are respectivelyapplicable to the schedule in subsection 2 and provisions as indicated by likeRoman numerals appearing in such schedule:

(i) No groupinsurance or term policies for terms of less than 10 years shall be included.

(ii) Nogroup, blanket or family plans of insurance shall be included. In lieu ofweekly indemnity a like premium value in medical, surgical and hospitalbenefits may be provided. Any accidental death or dismemberment benefitprovided shall not exceed $5,000.

(iii) Onlyinsurance of the owners interest in real property may be included.

(iv) Insuranceof legal liability for bodily injury and property damage, to which the maximumand minimum insured amounts apply, must be included.

(v) Themaximums provided for in column (F) are net of applicable reinsurance.

(vi) Thedeposit of surplus in the amount specified in columns (G) and (H) mustthereafter be maintained unimpaired. The deposit is subject to the provisionsof NRS 682B.010 to 682B.120, inclusive (administration ofdeposits).

As to the financial requirements for the authority of suchinsurer to transact additional kinds of insurance, see NRS 693A.190.

(Added to NRS by 1971, 1793)

NRS 692B.210 Mutualinsurers: Permit; bond or deposit.

1. Before soliciting applications for insurance asrequired under NRS 692B.200, theincorporators of the proposed insurer shall procure a solicitation permit asrequired by NRS 692B.040, and shallfile with the Commissioner a corporate surety bond in the penal sum of $50,000in favor of the State of Nevada and conditioned as follows:

(a) Upon due accounting for and deposit, as requiredunder NRS 692B.230, of funds receivedas premiums upon applications for insurance; and

(b) If the corporation fails to complete itsorganization and secure a certificate of authority issued by the Commissionerwithin the period allowed therefor by the solicitation permit, all premiumscollected from applicant members will be promptly returned to them, and allother indebtedness of the corporation, other than any compensation todirectors, officers or solicitors of insurance applications, and costs incurredby the State of Nevada in any legal proceedings for the liquidation ordissolution of the corporation will be paid.

2. In lieu of such a bond, the incorporators maydeposit with the Commissioner cash in the amount of $50,000, or securities ofthe United States Government or of the State of Nevada of a market value of atleast $50,000, and the Commissioner shall hold such deposit in trust for thesame purposes as apply to a bond under subsection 1.

3. If the corporation or an affiliate corporationproposes also to offer securities for initial financing of the proposedinsurer, in addition to the securing of qualifying applications for insurance,the bond or deposit required by this section may be combined with that requiredunder NRS 692B.150, with appropriateextension of the conditions of such bond or deposit to comply with therequirements of both sections, so that only one such bond or deposit of $50,000shall be necessary for all such purposes.

4. The Commissioner shall release and discharge thebond or deposit or remaining portion thereof held under this section uponsettlement of all liabilities, if any, against it.

(Added to NRS by 1971, 1794)

NRS 692B.220 Mutualinsurers: Qualifying applications for insurance.

1. Upon issuance of the required solicitation permit,the proposed insurer may commence solicitation of requisite applications forinsurance policies and may receive deposits of premiums thereon.

2. All such applications shall be in writing signed bythe applicant, covering subjects of insurance resident, located or to beperformed in this state.

3. All such applications shall provide that:

(a) Issuance of the policy is contingent upon theinsurer qualifying for and receiving a certificate of authority;

(b) No insurance is in effect unless and until thecertificate of authority has been issued;

(c) The prepaid premium or deposit, and membership orpolicy fee, if any, shall be refunded in full to the applicant if organizationis not completed and the certificate of authority is not issued and received bythe 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 forinsurance shall be by licensed agents of the corporation; and the Commissionershall upon the corporations request therefor and fulfillment of therequirements applicable under chapter 683Aof NRS (agents, brokers and solicitors), license as agents of the corporationindividuals qualified therefor under, and subject to, such sections.

(Added to NRS by 1971, 1795)

NRS 692B.230 Mutualinsurers: Deposit of premiums in escrow.

1. All sums collected by a domestic mutual corporationas premiums or fees on qualifying applications for insurance therein must bedeposited in escrow with a bank, credit union or trust company located in thisstate under a written agreement filed with and approved by the Commissioner.The terms of such an agreement must be consistent with those of thesolicitation permit and of the applicable provisions of this section and NRS 692B.250.

2. Upon issuance to the corporation of a certificateof authority as an insurer for the kind of insurance for which suchapplications were solicited, all money so held in escrow becomes the money ofthe insurer. Until the certificate of authority is issued, the money remainsthe property of the applicants for insurance as respectively entitled thereto.

(Added to NRS by 1971, 1795; A 1999, 1553)

NRS 692B.240 Failureto complete or qualify.

1. The Commissioner shall withdraw all funds held in escrowunder NRS 692B.170, and refund tosecurities subscribers or purchasers all sums paid in thereon under thesolicitation permit, less that part allowed and used for organization, salesand promotion expenses, if:

(a) The permit holder has failed to complete itsorganization or financing, within the terms of the permit, or, if to be aninsurer, it has failed to secure its certificate of authority, all beforeexpiration 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 undersubsection 3 of NRS 692B.150, onlysuch portion of such funds shall be refundable under this section as may remainafter discharge of all liabilities against the deposit under NRS 692B.150 and the charging of such fundswith a proportionate share of organization, sales and promotion expenses.

3. If a proposed domestic mutual insurer fails tocomplete its organization and to secure its original certificate of authoritywithin the period allowed therefor by the solicitation permit, the corporationshall transact no further business, and the Commissioner shall return or causeto be returned to the persons entitled thereto all advance deposits or paymentsof premiums or fees held in escrow under NRS692B.230.

(Added to NRS by 1971, 1795)

NRS 692B.250 Voluntarydissolution.

1. At any time prior to the issuance of a certificateof authority to a proposed domestic stock or mutual insurer, the incorporatorsmay voluntarily surrender the articles of incorporation and the corporation maybe voluntarily dissolved by written agreement filed with the Commissioner. Theagreement shall be signed and verified by a majority of the incorporators, andshall be signed (without verification) by at least two-thirds of all personswho theretofore have become subscribers to or purchasers of securities of thecorporation and (in the case of a proposed mutual insurer) by at leasttwo-thirds of all persons who theretofore have applied for policies in theproposed insurer.

2. The Commissioner shall approve the surrender ofsuch articles of incorporation and dissolution if upon investigation he findsthat:

(a) No insurance business has been transacted by thecorporation except (in the case of a proposed mutual insurer) for solicitationof qualifying applications for insurance;

(b) Arrangements satisfactory to him have been made forthe return to subscribers, purchasers and applicants of all funds paid by themupon subscription or purchase of securities, or upon applications forinsurance, under the solicitation permit theretofore held by the corporation,less (as to securities subscriptions and purchases) the part thereof actuallyand lawfully used for expenses; and

(c) All obligations of the corporation have been paidor discharged.

3. The articles of incorporation so surrendered,together with the executed copy of the agreement, bearing thereon the endorsedapproval of the Commissioner, shall be filed with the Secretary of State andthereupon 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 aproposed domestic insurer pursuant to this section.

(Added to NRS by 1971, 1796)

NRS 692B.260 Subsequentfinancing: Solicitation permit required; penalty.

1. No person referred to in NRS 692B.040 (solicitation permitrequired), after receiving a certificate of authority, if an insurer, or aftercompleting its original organization and financing, if other than an insurer,shall in this state solicit or receive funds in exchange for or grant optionswith respect to its securities until it has applied to the Commissioner for,and has been granted, a solicitation permit. This section is subject to thesame exemptions as are provided by NRS692B.060 (exemptions).

2. The Commissioner shall issue such a permit unlesshe finds that:

(a) The funds proposed to be secured are inadequate orexcessive in amount for the purposes intended;

(b) The proposed securities or the manner of theirdistribution would be unfair or inequitable to existing or proposed securityholders or policyholders of the issuer; or

(c) Other reasonable objections exist as to theproposed financing.

3. Any such permit granted by the Commissioner shallbe for such duration, and shall contain such terms and be issued upon suchconditions, as the Commissioner may reasonably require for the protection ofexisting or proposed investors. In the Commissioners discretion escrow offunds, or a bond or deposit in lieu thereof, need not be required, and otherterms and conditions of the permit may be substantially the same as ormaterially different from requirements made under this chapter as tosolicitation permits for initial financing; but no such permit shall allowsales or promotion expense, for the sale of the securities in excess of theamount reasonably required therefor, and in no event to exceed 15 percent ofthe proceeds of such sales if and as such funds are actually received.

4. Every person who violates the provisions ofsubsection 1 is subject to the same penalties prescribed by NRS 692B.040 (solicitation permitrequired; penalty).

(Added to NRS by 1971, 1797)

 

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