28 Tex. Admin. Code § 13.565 - Letter of Credit
(a) Requirements.
Instead of a deposit, an approved PEO may maintain a letter of credit. A letter
of credit must comply with the following requirements:
(1) the letter of credit cannot be supported
or collateralized by a guaranty;
(2) the letter of credit and all amendments
to the letter of credit must be filed with TDI; and
(A) be clean, irrevocable, unconditional, and
issued by a qualified financial institution;
(B) contain an issue date;
(C) stipulate that the beneficiary is the
commissioner, that the commissioner need only draw a draft under the letter of
credit and present it to obtain funds, and that no other document need be
presented;
(D) show only one amount
on the letter of credit;
(E) state
that the letter of credit is not subject to any conditions or qualifications
outside of the letter of credit and must not contain reference to any other
agreements, documents, or entities;
(F) contain a statement to the effect that
the obligation of the qualified financial institution under the letter of
credit is in no way contingent on reimbursement; and
(G) state that the letter of credit is
subject to and governed by either the laws of this state or the laws of the
state in which the issuing qualified financial institution is domiciled, and
that all drafts drawn on the letter of credit will be presentable at any office
in the United States of the issuing qualified financial institution.
(b) Conditions not
permitted. The letter of credit must not:
(1)
have a schedule of periodic payments;
(2) name any beneficiary other than the
commissioner; and
(3) in aggregate
of all letters of credit issued to the approved PEO by one qualified financial
institution, exceed 10 percent of the financial institution's total equity
capital, as shown in the qualified financial institution's most recent report
of condition as filed with the appropriate federal or state financial
institution regulatory agency.
(c) Term of letter of credit. The term of the
letter of credit must be for at least one year and must contain an evergreen
clause that prevents the expiration of the letter of credit without written
notice from the issuer. The evergreen clause must provide for a period of no
less than 30 days' written notice to the commissioner prior to the expiration
date or nonrenewal.
Notes
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