Section 27-27-10

Solicitation permit - Bond or deposit in lieu thereof; waiver of same.

(a) Except as to proposed domestic insurers which are subject to the requirements of Section 27-27-16, the commissioner shall not issue a solicitation permit until the applicant therefor has filed with him a corporate surety bond in the penalty of $15,000.00 in favor of the State of Alabama and for the use and benefit of the state and of proposed Alabama investors in and creditors of the proposed organization.

(b) The bond shall be conditioned upon the payment of costs incurred by the state in event of any legal proceedings for liquidation or dissolution of the proposed organization before completion of organization or in event a certificate of authority is not granted and upon a full accounting for funds received until the proposed insurer has been granted its certificate of authority or until the proposed corporation, syndicate, organization or financing has been completed as defined in the solicitation permit.

(c) In lieu of filing such bond, the applicant may deposit with the State Treasurer through the commissioner $15,000.00 in cash, or its equivalent, or in United States government bonds at par value, to be held in trust under the same conditions as required for the bond.

(d) The commissioner may, in his discretion, waive the requirement for a bond or deposit in lieu thereof if the solicitation permit provides that:

(1) The proposed securities are to be distributed solely and finally to those few persons who are the active promoters intimate to the formation of the insurer or other corporation, syndicate, or organization; or

(2) The securities are to be issued in connection with subsequent financing as provided in Section 27-27-14.

(e) Any bond filed or deposited, or remaining portion thereof, held under this section shall be released and discharged upon settlement or termination of all liabilities against it.

(Acts 1971, No. 407, p. 707, §506.)