Or. Admin. Code § 410-141-5190 - CAPITALIZATION: Surplus Notes
(1) With
the prior approval of the Authority, a CCO may issue one or more surplus notes
in order to secure funding needed to comply with minimum capital and surplus
requirements and/or minimum risk-based capital requirements under these rules,
or otherwise to provide additional funding required for the CCO's
operations.
(2) Approval by the
Authority of the issuance and sale of a surplus note by a CCO, including the
form and terms of the surplus note and the purchaser of the surplus note, is
required and shall be at the sole discretion of the Authority.
(3) The issuance and sale of a surplus note,
and the form and terms of the surplus note, shall comply with the standards for
the issuance of surplus notes set forth in the Accounting Practices and
Procedures Manual published by the NAIC, as well as the following requirements:
(a) A surplus note shall be sold only in
return for cash or marketable securities having readily determinable values and
liquidity satisfactory to the Authority.
(b) Commissions, promotion expenses or
finders' fees may not be paid in connection with a surplus note sale except for
commissions, expenses and fees customarily incurred within the context of
public or private placement offerings underwritten by an investment banking or
similar entity.
(c) Payment of
principal or interest on a surplus note may not be made without the prior
written approval of the Authority. The issuer shall provide the Authority with
written notice at least twenty (20) business days prior to the intended date of
the payment of principal or interest on a surplus note or such shorter period
as the Authority may permit.
(d)
Payment of principal or interest on a surplus note shall be subordinated to
payment of all other liabilities of the issuer.
(e) Payment of interest on a surplus note may
be made only from the unassigned funds of the issuer.
(f) Surplus notes shall not be assignable or
negotiable without the prior written approval of the Authority.
Notes
Statutory/Other Authority: ORS 413.042, 414.572, 414.591 & 414.605
Statutes/Other Implemented: ORS 414.570-414.686 & 415.001-415.430
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