title: RCW 31.24.020

text:
(1) Five or more persons, a majority of whom are residents of this state and three of which are federally insured depository institutions, who desire to charter a business development company under this chapter, may incorporate as a business development company by filing with the director an application for a business development company charter, which application contains the following:
(a) A cover letter requesting a charter as a business development company under authority of this chapter, and specifying the purpose of the requested charter;
(b) A business plan satisfactory to the director, including a plan of assessment in the event that applicant seeks to assess stockholders, or a class of stockholders, as provided for in RCW 31.24.066;
(c) Proposed articles of incorporation, in form and substance consistent with the requirements of subsection (4) of this section;
(d) Proposed bylaws, in form and substance consistent with the requirements of this chapter;
(e) A filing fee and application review fee as established by the director consistent with RCW 31.24.025; and
(f) All other relevant information as is necessary to satisfy the director that such proposed business development company has a reasonable likelihood of (i) fulfilling the purposes of this chapter and (ii) operating in a safe and sound manner.
(2) In addition to all other requirements of an application, the director shall not grant final approval of an application for organization as a business development company under this chapter, and a business development company shall not commence business, until the applicant certifies to the satisfaction of the director, that a minimum amount of initial capital has been subscribed for, which minimum amount of capital is subject to the determination of the director, who may consider (a) the intended purpose of initial capital and (b) the suitability and sufficiency of the amount of initial capital in relation to the applicant's proposed business plan.
(3) The articles of incorporation must be in writing, signed by all the incorporators and their representatives and acknowledged before an officer authorized to take acknowledgments.
(4) The articles of incorporation shall contain:
(a) The name of the business development company, which must include the word "Development";
(b) A recital that the business development company is organized under this chapter;
(c) The location of the principal office of the business development company, but the company may have offices in other places within the state as may be fixed by the board of directors;
(d) The purposes for which the business development company is founded, which, except for a historic business development company as authorized by RCW 31.24.190, are:
(i) To promote, stimulate, develop, and advance the business prosperity and economic welfare of Washington and its citizens;
(ii) To encourage and assist through financing, investments, or other business transactions, in the location of new business and industry in this state and to rehabilitate and assist existing business and industry;
(iii) To stimulate and assist in the expansion of business activity which will tend to promote the business development and maintain the economic stability of this state, provide maximum opportunities for employment, encourage thrift, and improve the standard of living of citizens of this state;
(iv) To cooperate and act in conjunction with other organizations, public or private, in the promotion and advancement of industrial, commercial, agricultural, and/or recreational developments in this state; and
(v) To provide financing for the promotion, development, and conduct of business activity in this state;
(e) The names and mailing addresses of the members of the first board of directors, who, unless otherwise provided by the articles of incorporation or the bylaws, shall hold office for the first year of existence of the business development company or until their successors are elected and have qualified;
(f) Any provision which the incorporators may choose to insert for the regulation of the business and for the conduct of the affairs of the business development company;
(g) Any provision creating, dividing, limiting, and regulating the powers of the business development company, the directors, stockholders or any class of the stockholders, including a designation of the officers, and provisions governing the issuance of stock certificates to replace lost or destroyed certificates;
(h) The amount of authorized capital stock and the number of shares into which it is divided, the par value of each share, and the amount of capital with which it will commence business;
(i) A statement indicating whether capital stock or any class of capital stock shall be assessable stock as part of a plan of assessment;
(j) The names and mailing addresses of the subscribers of stock and the number of shares subscribed by each;
(k) Any other provision consistent with the laws of this state for the regulation of the affairs of the business development company, and Title 23B RCW; and
(l) The signatures of each of the incorporators, who must be the same persons making application for a business development company charter as identified in subsection (1) of this section.
(5) The director has ninety days from submission of a completed application to approve it and issue a certificate of authority. If the director finds that the application is insufficient, the director may either disapprove the application or respond by specifying in writing what changes and modifications, consistent with this chapter, will be necessary to approve such application.
[ 2006 c 87 s 3; 1974 ex.s. c 16 s 1; 1963 c 162 s 2.]

catchline: Application—Contents—Articles of incorporation—Fees—Initial capital—Approval.


doc_type: statute

jurisdiction: wa

title: RCW 31.24.023

text:
(1) The director shall present the articles of incorporation, after approval by the director, to the secretary of state for filing.
(2) An applicant is not authorized to commence and maintain business as a business development company under this chapter until having received a certificate of authority from the department to conduct business as a business development company.
[ 2006 c 87 s 4.]

license: public-domain-government-work

rule_set: Revised Code of Washington

catchline: Filing articles of incorporation—Receipt of certificate of authority.

code: rcw

unit: section

court: Washington State Legislature


title: RCW 31.24.025

text:
The director may, consistent with the requirements for banks under *Title 30 RCW, collect from an applicant or business development company, as applicable, application fees, application review fees, periodic examination fees, and similar fees and charges, as may be reasonable for the safe and sound regulation and promotion of business development companies under this chapter.
[ 2006 c 87 s 5.]
Notes:
*Reviser's note: Title 30 RCW was recodified and/or repealed pursuant to 2014 c 37, effective January 5, 2015.

catchline: Fees—Director's discretion.


title: RCW 31.24.030

text:
In furtherance of its purposes and in addition to the powers now or hereafter conferred on business corporations by Title 23B RCW and upon limited liability companies by chapter 25.15 RCW, as applicable, a business development company has, subject to the restrictions and limitations in this section, the following powers:
(1) To assess stockholders, or a class of stockholders, of the business development company, if authorized by the articles of incorporation and approved by the department pursuant to a plan of assessment as provided for in RCW 31.24.066;
(2) To make qualified loans to borrowers in relation to business development projects;
(3) To make qualified investments in businesses in relation to business development projects;
(4) To facilitate and arrange qualified participation loans by qualified loan participants to borrowers in relation to business development projects;
(5) To participate in the partial funding of qualified participation loans;
(6) To elect, appoint, and employ officers, agents, and employees;
(7) To make contracts and incur liabilities for any of the purposes of the business development company. However, a business development company shall not incur any secondary liability by way of guaranty or endorsement of the obligations of any person, firm, company, association, or trust, or in any other manner;
(8) To the extent permitted by other applicable law, to borrow money from the federal small business administration and any other similar federal or state agency, for any of the purposes of a business development company;
(9) To borrow money from a financial institution or other financial entity;
(10) To issue bonds, debentures, notes, or other evidence of indebtedness, whether secured or unsecured, and to secure the same by mortgage, pledge, deed of trust, or other lien on its property, franchises, rights, and privileges of every kind and nature or any part or interest therein, without securing stockholder approval;
(11) To purchase, receive, hold, lease, or otherwise acquire, and to sell, convey, transfer, lease, or otherwise dispose of real and personal property, together with such rights and privileges as may be incidental and appurtenant thereto and the use thereof, including, but not restricted to, any real or personal property acquired by the business development company in the satisfaction of debts or enforcement of obligations;
(12) To acquire the good will, business, rights, real and personal property, and other assets, or any part thereof, or interest therein, of any persons, firms, corporations, limited liability companies, partnerships, limited partnerships, associations, or trusts, and to assume, undertake, or pay the obligations, debts, and liabilities of any such person, firm, corporation, limited liability company, partnership, limited partnership, association, or trust;
(13) To acquire improved or unimproved real estate for the purpose of constructing industrial plants or other business establishments thereon or for the purpose of disposing of such real estate to others for the construction of industrial plants or other business establishments; and to acquire, construct or reconstruct, alter, repair, maintain, operate, sell, convey, transfer, lease, or otherwise dispose of industrial plants or business establishments;
(14) To acquire, subscribe for, own, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of the stock, shares, bonds, debentures, notes, or other securities and evidences of interest in, or indebtedness of, any person, firm, limited liability company, partnership, limited partnership, association, or trust, and while the owner or holder thereof to exercise all the rights, powers, and privileges of ownership, including the right to vote thereon;
(15) To mortgage, pledge, or otherwise encumber any property, right or things of value, acquired pursuant to the powers contained in subsections (11), (12), and (14) of this section, as security for the payment of any part of the purchase price thereof;
(16) To cooperate with and avail itself of the facilities and assistance programs of the United States department of commerce, the United States department of the treasury, the United States department of housing and urban development, the department of commerce, and any other similar state or federal governmental agencies; and to cooperate with and assist, and otherwise encourage organizations in the various communities of the state in the promotion, assistance, and development of the business prosperity and economic welfare of such communities or of this state or of any part thereof; and
(17) To do all acts and things necessary or convenient to carry out the powers expressly granted in this chapter.
[ 2023 c 470 s 2012; 2006 c 87 s 6; 1991 c 72 s 49; 1985 c 466 s 42; 1983 c 3 s 51; 1963 c 162 s 3.]
Notes:
Explanatory statement—2023 c 470: See note following RCW 10.99.030.
Effective date—Severability—1985 c 466: See notes following RCW 43.31.125.

catchline: Corporate powers.


title: RCW 31.24.066

text:
(1) As part of a business plan approved by the department, an applicant or business development company may seek to maintain capital for purposes of making qualified investments and qualified loans by periodically assessing its stockholders, or a class of stockholders, according to a plan of assessment and as agreed upon by affected stockholders by subscription or similar agreement.
(2) A plan of assessment may provide for:
(a) Stockholders, or a class of stockholders, making, when called upon, additional paid-in capital in exchange for additional equity; and/or
(b) Stockholders, or a class of stockholders, making, when called upon, loans or other debt financing to the business development company in exchange for an agreement of repayment.
(3) A plan of assessment shall provide for equal treatment by the board of directors of all stockholders, or members of a class of stockholders, subject to assessment.
(4) In the case of the approval of a plan of assessment, or the examination of the administration of an ongoing plan of assessment, in which assessable stock is held by a financial institution that is also regulated by the department, the department may condition its approval of the implementation or continued administration of a plan of assessment as to the affected financial institution on whether the safety and soundness of such financial institution is or may become unimpaired, or on whether an assessment of such financial institution has not or will not result, in a material adverse affect on the classification of such financial institution, or its lending or investment portfolio. The authority of the department pursuant to this subsection shall be in addition to all other authority of the department under this chapter or any other applicable law, and notwithstanding any other law to the contrary.
[ 2006 c 87 s 7.]


title: RCW 31.24.070

text:
(1) The stockholders of the business development company have the following powers:
(a) To determine the number of and elect directors as provided in RCW 31.24.090;
(b) To make, amend, and repeal bylaws;
(c) To amend the articles of incorporation as provided in RCW 31.24.080;
(d) To dissolve the company as provided in RCW 31.24.150;
(e) To do all things necessary or desirable to secure aid, assistance, loans, and other financing from any financial institutions, and from any agency established under federal laws;
(f) To exercise such other powers consistent with this chapter as may be conferred on the stockholders by the bylaws.
(2) As to all matters requiring action by the stockholders of the business development company, the stockholders shall vote, and, except as otherwise provided, such matters shall require the affirmative vote of a majority of the votes to which the stockholders present or represented at the meeting shall be entitled.
(3) Each stockholder shall have one vote, in person or by proxy, for each share of capital stock held.
(4) The capital stock of stockholders of a business development company is nonassessable, unless authorized by the department pursuant to a plan of assessment which has been approved by the director as provided for in RCW 31.24.066.
(5) Except as permitted by a plan of assessment providing for a class of assessable stock pursuant to RCW 31.24.066 or as may otherwise be established by rule, all stock is a single class of voting common stock.
(6) The director may, subject to examination authority, determine that a policy of declaring dividends for stockholders by a particular business development company constitutes an unsafe and unsound practice as to such business development company. If the practice is determined to be unsafe and unsound, the director may instruct such a business development company to cease and desist the declaration and grant of such dividends.
(7) The department may, at the option of the director, adopt rules, consistent with principles of safety and soundness, that, while not prohibiting dividends to stockholders in general, may limit the amount of such dividends and the time and manner of declaring them.
[ 2006 c 87 s 8; 1963 c 162 s 7.]

catchline: Powers of stockholders—Voting rights—Proxy voting—Plan of assessment—Dividends—Rules.


title: RCW 31.24.073

text:
Unless part of an initial or amended business plan approved by the director, or as may otherwise be provided by rule adopted pursuant to RCW 31.24.120(3), the aggregate limit of qualified loans, qualified investment, and partial funding of qualified participation loans by a business development company to a single borrower or business, in relation to a business development project, shall not exceed twenty-five percent of the combined capital, surplus, and undivided profits of the business development company.
[ 2006 c 87 s 9.]

catchline: Aggregate limit on loans and investments—Single borrower or business.


title: RCW 31.24.075

text:
(1) A business development company may not be a party to, nor engage in, an insider transaction, unless such an insider transaction is approved or ratified by its board of directors, exclusive of the vote of any interested director.
(2) Any insider transaction is subject to the examination and enforcement authority of the department under this chapter.
[ 2006 c 87 s 10.]

catchline: Insider transactions.


title: RCW 31.24.080

text:
(1) The articles of incorporation of a business development company may be amended by the affirmative vote of two-thirds of the votes to which the stockholders are entitled, subject to the written approval of the director.
(2) Within thirty days after an amendment of the articles of incorporation has been adopted and approved by the director, the articles of amendment shall be filed in the office of the secretary of state by the director. An amendment shall not take effect until it has been so filed.
[ 2006 c 87 s 11; 1994 c 92 s 235; 1963 c 162 s 8.]

catchline: Amendment of articles of incorporation—Director's approval—Filing.


title: RCW 31.24.090

text:
(1) The business and affairs of a business development company shall be managed and conducted by a board of directors, a president, a secretary, a treasurer, and such other officers and such agents as the company by its bylaws shall authorize. A single authorized individual may jointly hold the offices of secretary and treasurer. The president and the treasurer may not be the same person.
(2) The board of directors shall consist of such number, not less than five nor more than nine, as shall be determined in the first instance by the incorporators and thereafter annually by the stockholders of the business development company. The board of directors:
(a) May exercise all the powers of the business development company, except those conferred upon the stockholders by law or by the bylaws of the business development company; and
(b) Shall choose and appoint all the agents and officers of the business development company and fill all vacancies except vacancies in the office of director which shall be filled as provided in subsections (3) and (4) of this section.
(3) The board of directors shall be elected in the first instance by the incorporators and thereafter at the annual meeting, the day and month of which shall be established by the bylaws, or, if no annual meeting shall be held in the year of incorporation, then within ninety days after the approval of the articles of incorporation at a special meeting as provided in subsection (4) of this section.
(4) At each annual meeting, or at each special meeting held as provided in subsection (3) of this section, the stockholders of a business development company shall elect all of the board of directors. The directors shall hold office until the next annual meeting of the business development company, or special meeting. The authority of the directors commences immediately after the election and continues until their successors are elected and qualified, unless sooner removed in accordance with the provisions of the bylaws. Any vacancy in the office of a director shall be filled by the remaining directors at a regular meeting or special meeting called for that purpose. The director appointed to fill such vacancy shall serve until the next annual meeting, resignation, or removal according to law.
(5) Directors and officers shall not be responsible for losses unless the same shall have been occasioned by the gross negligence or willful misconduct of such directors and officers.
(6) The board of directors shall conduct regular meetings at least every quarter and may hold special meetings as called for pursuant to the bylaws.
(7) Unless otherwise restricted by the articles of incorporation or bylaws, members of the board of directors of a business development company or any committee designated by the board of directors may participate in a meeting of such board or committee by means of a conference telephone or similar communications equipment, in which all persons participating in the meeting can hear each other at the same time. Participation by such means shall constitute presence, in person, at a meeting.
[ 2006 c 87 s 12; 1974 ex.s. c 16 s 3; 1963 c 162 s 9.]

catchline: Board of directors—Officers and agents—Powers—Election—Meetings.


title: RCW 31.24.100

text:
(1) A business development company shall maintain an amount of minimum capital, surplus, and undivided profits that, based upon the determination of the director, shall be deemed safe and sound for each business development company. However, the minimum ratio of paid-in capital to total assets, inclusive of all qualified loans and qualified investments, shall be and remain no less than eight percent.
(2) Subject to subsection (1) of this section, minimum capital, surplus, undivided profits, and net earnings shall be determined by the board of directors, subject to the exercise of prudent business judgment.
[ 2006 c 87 s 13; 1963 c 162 s 10.]

catchline: Minimum capital, surplus, undivided profits, and net earnings.


title: RCW 31.24.110

text:
A business development company shall not receive money on deposit.
[ 2006 c 87 s 14; 1963 c 162 s 11.]

catchline: No receipt of money on deposit.


title: RCW 31.24.120

text:
(1) The director shall exercise the same power and authority over business development companies organized under this chapter as exercised over banks and trust companies under *Title 30 RCW, to the extent *Title 30 RCW does not conflict with this chapter.
(2) A business development company shall be examined at least once every twenty-four months by the director and shall make reports of its condition not less than annually to the director, and more frequently in the discretion of the director. The business development company shall pay the actual cost of the examinations.
(3) To assure the safety and soundness of business development companies and to fulfill the purposes of this chapter, the director may, by examination, rule, and interpretation, establish and enforce safety and soundness and examination standards, for all operations and activities of and related to business development companies.
[ 2006 c 87 s 15; 1994 c 92 s 236; 1963 c 162 s 12.]
Notes:
*Reviser's note: Title 30 RCW was recodified and/or repealed pursuant to 2014 c 37, effective January 5, 2015.

catchline: Examinations by director of financial institutions—Reports—Authority of director.


title: RCW 31.24.130

text:
(1) The first meeting of a business development company shall be called by a notice signed by three or more of the incorporators, stating the time, place, and purpose of the meeting, a copy of which notice shall be mailed, or delivered, to each incorporator at least five days before the day appointed for the meeting. The first meeting may be held without such notice upon agreement in writing to that effect signed by all the incorporators. A copy of the notice or unanimous agreement of the incorporators shall be recorded in the minutes of the first meeting.
(2) At the first meeting, the incorporators shall, consistent with Title 23B RCW:
(a) Choose a temporary recording secretary;
(b) Adopt bylaws;
(c) Elect directors; and
(d) Engage in other business within the powers of the business development company as the incorporators present may see fit.
(3) Upon being sworn in at the first meeting, the temporary recording secretary shall make and attest a record of the proceedings.
(4) At least five of the incorporators shall constitute a quorum for the transaction of business at a first meeting.
[ 2006 c 87 s 16; 1963 c 162 s 13.]

catchline: First meeting—Notice—Duties of incorporators.


title: RCW 31.24.140

text:
Unless otherwise provided in the articles of incorporation, the period of duration of a business development company shall be perpetual, subject, however, to the right of the stockholders to dissolve the business development company as provided in RCW 31.24.150.
[ 2006 c 87 s 17; 1963 c 162 s 14.]

catchline: Duration of business development company.


title: RCW 31.24.150

text:
A business development company, upon the affirmative vote of two-thirds of the votes of the stockholders entitled to vote their shares, shall dissolve the business development company as provided by Title 23B RCW, to the extent that Title 23B RCW is not in conflict with this chapter. Upon dissolution of the business development company, none of the business development company's assets shall be distributed to the stockholders until all sums due the creditors thereof have been paid in full.
[ 2006 c 87 s 18; 1991 c 72 s 50; 1983 c 3 s 52; 1963 c 162 s 15.]


title: RCW 31.24.160

text:
Under no circumstances shall the credit of the state of Washington be pledged to any corporation organized under the provisions of this chapter.
[ 1963 c 162 s 16.]

catchline: Credit of state not pledged.


title: RCW 31.24.170

text:
Any business development company organized under this chapter shall be a state development company, as authorized under Title V of the small business investment act of 1958, Public Law 85-699, 15 U.S.C. Sec. 695, as amended, or any other similar federal legislation.
[ 2006 c 87 s 19; 1963 c 162 s 17.]

catchline: Business development companies designated state development companies.


title: RCW 31.24.190

text:
(1) In addition to the purposes specified in RCW 31.24.020 a historic business development company may be formed for one or more of the following purposes:
(a) To encourage and stimulate the preservation of historic buildings or historic commercial areas or neighborhoods by returning them to economically productive uses which are compatible with or enhance the historic character of such buildings, commercial areas, or neighborhoods;
(b) To stimulate and assist in the development of business or other activities which have an impact upon the preservation of historic buildings, commercial areas, or neighborhoods;
(c) To cooperate and act in conjunction with other organizations, public or private, in the promotion and advancement of historical preservation activities; and
(d) To provide financing through loans, investments of other business transactions for the promotion, development, and conduct of all kinds of business activity that encourages or relates to historic preservation.
(2) A historic business development company shall not engage in the broad economic and business promotion activities permitted by a general business development company.
(3) A general business development company may, in addition to all other activities permitted by this chapter, engage in those activities specifically permitted of a historic business development company organized under subsection (1) of this section.
[ 2006 c 87 s 20; 1973 1st ex.s. c 90 s 2.]

catchline: Formation of historic business development company for purpose of preservation of historic buildings, areas, or neighborhoods.


title: RCW 31.24.200

text:
*Chapter 30.44 RCW applies to the insolvency and liquidation of a business development company organized under this chapter.
[ 2006 c 87 s 21.]
Notes:
*Reviser's note: Chapter 30.44 RCW was recodified as chapter 30A.44 RCW pursuant to 2014 c 37 s 4, effective January 5, 2015.

catchline: Insolvency and liquidation—Chapter 30.44 RCW.


title: RCW 31.24.205

text:
The director has the same power and authority to exercise supervisory direction and conservatorship of, and to issue cease and desist orders upon, a business development company organized under this chapter, as the director has in regard to a bank under *Title 30 RCW.
[ 2006 c 87 s 22.]
Notes:
*Reviser's note: Title 30 RCW was recodified and/or repealed pursuant to 2014 c 37, effective January 5, 2015.

catchline: Supervisory direction and conservatorship.


title: RCW 31.24.210

text:
(1) Subject to written approval of the director, one or more general business development companies may merge into or consolidate with each other consistent with *chapter 30.49 RCW.
(2) Upon ninety days advance application to and written approval of the director, a historic business development company may convert its charter to that of a general business development company. An application for conversion shall contain a cover letter requesting conversion, the proposed articles of amendments and bylaws amendments, a modified business plan, and other relevant information in form and substance similar to the requirements of a de novo application for a general business development company as provided in RCW 31.24.020. In making a determination of whether to approve or deny such a conversion, the director shall consider:
(a) The historic performance and safety and soundness of the historic business development company;
(b) Whether the conversion to a general business development company will have a likelihood of continuing to fulfill the purposes of this chapter;
(c) Whether the applicant will have a likelihood of remaining safe and sound as a general business development company and pursuant to its proposed modified business plan; and
(d) Whether the proposed conversion would serve, or otherwise not detract from, the needs and convenience of the community served by the business development company.
[ 2006 c 87 s 23.]
Notes:
*Reviser's note: Chapter 30.49 RCW was recodified as chapter 30A.49 RCW pursuant to 2014 c 37 s 4, effective January 5, 2015.


title: RCW 31.24.215

text:
(1) Notwithstanding any other provision of this chapter, a development credit corporation created under chapter 31.20 RCW, or any other company incorporated under Title 23B RCW, may convert to a business development company by filing an application with the department and receiving written approval of the director within ninety days of the date the application is received.
(2) In addition to all other requirements of a business development company pursuant to this chapter, the director shall not approve an application for conversion of a development credit corporation unless:
(a) A minimum of three stockholders of such corporation are financial institutions;
(b) The majority of outstanding shares of common stock of such corporation are held by financial institutions;
(c) The articles of incorporation of such a corporation are amended to conform to the requirements of RCW 31.24.020;
(d) The bylaws of such a corporation are amended to conform to the requirements of this chapter;
(e) The business plan of the corporation is consistent with the requirements of this chapter and has been approved by the director; and
(f) The corporation otherwise satisfies the director that all other requirements of a business development company under this chapter have been met. However, such a corporation is not required to have had a minimum of five incorporators at the time it originally was incorporated with the secretary of state, as provided for in RCW 31.24.020(1).
(3) Upon approval by the director of the corporation's application for conversion, the amended articles of incorporation, as approved by the director, shall be filed by the director with the secretary of state in the same manner provided for the filing of initial articles of incorporation under RCW 31.24.023. Such corporation shall not commence operation as a business development company until the director has issued such corporation a certificate of authority to conduct business as a business development company.
[ 2006 c 87 s 24.]

catchline: Conversion of development credit corporation—Application—Approval—Filing of articles—Certificate of authority.


title: RCW 31.24.220

text:
The existing privileges, immunities, and requirements of confidentiality and disclosure with respect to examination records and information obtained by the director in conducting examinations, which are applicable to banks, as set forth in *RCW 30.04.075, apply to examination records and information obtained by the director in conducting examinations of business development companies organized under this chapter.
[ 2006 c 87 s 25.]
Notes:
*Reviser's note: RCW 30.04.075 was recodified as RCW 30A.04.075 pursuant to 2014 c 37 s 4, effective January 5, 2015.


title: RCW 31.24.225

text:
Notwithstanding any other provision of this chapter, a business development company organized under this chapter may be chartered as a limited liability company, or may convert to doing business as a limited liability company, to the same extent and subject to the same terms and conditions as permitted for a bank organized under *Title 30 RCW, including, without limitation, requirements related to director approval, operational matters, corporate governance, and restrictions on complete dissociation. However:
(1) The rights of stockholders, as defined in this chapter, supersede the provisions of *Title 30 RCW to the contrary; and
(2) The limited liability company agreement, or other governing charter document of the limited liability company, must contain the same or substantially similar recitals as required in RCW 31.24.020 with respect to business purpose, organizational authority, board of directors, management, and limitations on liability of directors and officers.
[ 2006 c 87 s 26.]
Notes:
*Reviser's note: Title 30 RCW was recodified and/or repealed pursuant to 2014 c 37, effective January 5, 2015.

catchline: Business as a limited liability company.


title: RCW 31.24.230

text:
(1) An applicant may apply simultaneously for both a business development company charter, under this chapter, and for a license as a nondepository lender of federally guaranteed small business loans, under chapter 31.40 RCW.
(2) An applicant may apply simultaneously for both a business development company charter, under this chapter, and for a license as a nondepository lender of guaranteed agricultural loans, under chapter 31.35 RCW.
(3) Notwithstanding any provisions of this chapter or chapter 31.35 or 31.40 RCW, applications presented to the director as set forth in subsections (1) and (2) of this section shall be considered and evaluated by the director as one application, and an applicant:
(a) If granted a business development company charter based on a joint application as provided in subsections (1) and (2) of this section, shall pay fees and charges only as required by this chapter and be subject to joint and simultaneous application review and periodic examination; and
(b) If denied a business development company charter when having made a joint application as provided in subsections (1) and (2) of this section, shall pay fees and charges only as required by this chapter.
(4) An existing business development company organized under this chapter may apply for either a license, under chapter 31.35 RCW, or a license, under chapter 31.40 RCW, or both; and, if granted, the business development company, as a dual licensee, shall then pay fees and charges only as required by this chapter and be subject to joint and simultaneous application review and periodic examination.
[ 2006 c 87 s 27.]

catchline: Simultaneous applications—Business development company and nondepository lender of certain loans—Procedure—Fees.


title: RCW 31.24.235

text:
The director has broad administrative authority and discretion to adopt rules to carry out the purposes of this chapter.
[ 2006 c 87 s 31.]

catchline: Rule making.


title: RCW 31.24.901

text:
This chapter shall be known and may be cited as the "business development company act."
[ 2006 c 87 s 32.]

catchline: Short title.


title: RCW 31.35.010

text:
The legislature finds and declares that nondepository agricultural lenders can enhance their access to working capital for the purpose of financing agricultural borrowers by using the United States farmers home administration loan guaranty program. The farmers home administration loan guaranty program provides financing to agricultural borrowers needing working capital and longer term financing for the purchase of real estate, agricultural production expenses, debt refinancing, equipment, and the purchase of other fixed assets. Loans can be made to agricultural borrowers by nondepository lenders and guaranteed by the farmers home administration only if the state provides an ongoing opportunity for examination of such entities to confirm good lending practices and solvency.
It is the intent of the legislature to empower the director of financial institutions to examine nondepository agricultural lenders for the purpose of allowing such lenders to qualify for participation in the farmers home administration loan guaranty program.
[ 1994 c 92 s 251; 1990 c 134 s 1.]

catchline: Findings—Intent.


title: RCW 31.35.020

text:
Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
(1) "Agricultural lender" means a Washington corporation incorporated under Title 23B or 24 RCW and qualified as such under this chapter and the jurisdiction of the federal government agency sponsoring the loan guaranty program.
(2) "Director" means the director of financial institutions.
(3) "Loan guaranty program" means the farmers home administration loan guaranty program, or any other government program for which the agricultural lender is eligible and which has as its function the provision, facilitation, or financing of agricultural business operations.
[ 1994 c 92 s 252; 1990 c 134 s 2.]

catchline: Definitions.


title: RCW 31.35.030

text:
(1) The director shall administer this chapter. The director may issue orders and adopt rules that, in the opinion of the director, are necessary to execute, enforce, and effectuate the purposes of this chapter. Rules to enforce the provisions of this chapter shall be adopted under the administrative procedure act, chapter 34.05 RCW.
(2) An application filed with the director under this chapter shall be in such form and contain such information as required by the director by rule and be consistent with the requirements of the loan guaranty program.
(3) After the director is satisfied that the applicant has satisfied all the conditions necessary for approval, the director shall issue a license to the applicant authorizing it to be an agricultural lender under this chapter.
(4) Any change of control of an agricultural lender shall be subject to the approval of the director. Such approval shall be subject to the same criteria as the criteria for approval of the original license. For purposes of this subsection, "change of control" means directly or indirectly, alone or in concert with others, to own, control, or hold the power to vote ten percent or more of the outstanding voting stock of an agricultural lender or the power to elect or control the election of a majority of the board of directors of an agricultural lender.
(5) The director may deny, suspend, or revoke a license if the agricultural lender violates any provision of this chapter or any rules promulgated pursuant to this chapter.
[ 1994 c 92 s 253; 1990 c 134 s 3.]


title: RCW 31.35.040

text:
(1) An agricultural lender may participate in a loan guaranty program. If an agricultural lender participates in a loan guaranty program, the agricultural lender shall comply with the requirements of that program.
(2) An agricultural lender may be incorporated under either the Washington business corporation act, Title 23B RCW, or the Washington nonprofit corporation act, Title 24 RCW. In addition to the powers and privileges provided to an agricultural lender by this chapter, an agricultural lender has all the powers and privileges conferred by its incorporating statute that are not inconsistent with or limited by this chapter.
[ 1990 c 134 s 4.]

catchline: Participation by agricultural lender—Powers and privileges.


title: RCW 31.35.050

text:
(1) The director is authorized to charge a fee for the estimated direct and indirect costs for examination and supervision by the director of an agricultural lender or a subsidiary of an agricultural lender. Excess examiner time shall be billed at a reasonable rate established by rule.
(2) All such fees shall be deposited in the financial services regulation fund and administered consistent with the provisions of RCW 43.320.110.
[ 2001 c 177 s 7; 1994 c 92 s 254; 1990 c 134 s 5.]
Notes:
Effective date—2001 c 177: See note following RCW 43.320.080.

catchline: Costs of supervision—Fees.


title: RCW 31.35.060

text:
(1) An agricultural lender shall keep books, accounts, and other records in such form and manner as required by the director. These records shall be kept at such place and shall be preserved for such length of time as specified by the director by rule.
(2) Not more than ninety days after the close of each calendar year, or within a period specified by the director, an agricultural lender shall file with the director a report containing the following:
(a) Financial statements, including the balance sheet, the statement of income or loss, the statement of changes in capital accounts, and the statement of changes in financial position; and
(b) Other information that the director may require.
(3) Each agricultural lender shall provide for a loan loss reserve sufficient to cover projected loan losses that are not guaranteed by the United States government or any agency thereof.
[ 1994 c 92 s 255; 1990 c 134 s 6.]

catchline: Responsibility of agricultural lender—Recordkeeping—Loan loss reserve.


title: RCW 31.35.070

text:
(1) The director shall visit each agricultural lender at least every twenty-four months for the purpose of assuring that the agricultural lender remains in compliance with and qualified for the loan guaranty program.
(a) The director may accept timely audited financial statements and other timely reports the director determines to be relevant and accurate as part of a full and complete examination of the agricultural lender. The director shall make an independent review of loans guaranteed by the loan guaranty program.
(b) The agricultural lender shall be exempt from examination under this subsection if it terminates its activities under the loan guaranty program and no loans guaranteed by the loan guaranty program remain on the books. This exemption becomes effective upon notification to the director. The director shall confirm termination of activities under the loan guaranty program with the appropriate federal agency.
(c) All examination reports and all information obtained by the director and the director's staff in conducting examinations of an agricultural lender are confidential to the same extent bank examinations are confidential under *RCW 30.04.075.
(d) All examination reports may be shared with other state or federal agencies consistent with **chapter 30.04 RCW.
(2) A director, officer, or employee of an agricultural lender or of a subsidiary of an agricultural lender being examined by the director or a person having custody of any of the books, accounts, or records of the agricultural lender or of the subsidiary shall facilitate the examination so far as it is in his or her power to do so.
(3) If in the opinion of the director it is necessary in the examination of an agricultural lender or of a subsidiary of an agricultural lender, the director may retain any certified public accountant, attorney, appraiser, or other person to assist the director. The agricultural lender being examined shall pay the fees of a person retained by the director under this subsection.
[ 1994 c 92 s 256; 1990 c 134 s 7.]
Notes:
Reviser's note: *(1) RCW 30.04.075 was recodified as RCW 30A.04.075 pursuant to 2014 c 37 s 4, effective January 5, 2015.
**(2) Chapter 30.04 RCW was recodified as chapter 30A.04 RCW pursuant to 2014 c 37 s 4, effective January 5, 2015.

catchline: Examination of agricultural lender.


title: RCW 31.35.080

text:
(1) The director shall adopt rules to enforce the intent and purposes of this chapter. Such rules shall include, but not be limited to, the following:
(a) Disclosure of conflicts of interest;
(b) Prohibition of false statements made to the director on any form required by the director or during any examination; or
(c) Prevention of fraud and undue influence within an agricultural lender.
(2) A violation of any provision of this chapter or any rule of the director adopted under this chapter by an agent, employee, officer, or director of the agricultural lender shall be punishable by a fine, established by the director, not to exceed one hundred dollars for each offense. Each day's continuance of the violation shall be a separate and distinct offense. All fines shall be credited to the financial services regulation fund.
(3) The director may issue and serve upon an agricultural lender a notice of charges if, in the opinion of the director, the agricultural lender is violating or has violated the law, rule, or any condition imposed in writing by the director or any written agreement made by the director.
(a) The notice shall contain a statement of the facts constituting the alleged violation or practice and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist should issue against the agricultural lender. The hearing shall be set not earlier than ten days nor later than thirty days after service of the notice unless a later date is set by the director at the request of the agricultural lender.
Unless the agricultural lender appears at the hearing by a duly authorized representative, it shall be deemed to have consented to the issuance of the cease and desist order. In the event of consent or if, upon the record made at the hearing, the director finds that any violation or practice specified in the notice of charges has been established, the director may issue and serve upon the agricultural lender an order to cease and desist from the violation or practice. The order may require the agricultural lender and its directors, officers, employees, and agents to cease and desist from the violation or practice and may require the agricultural lender to take affirmative action to correct the conditions resulting from the violation or practice.
(b) A cease and desist order shall become effective at the expiration of ten days after the service of the order upon the agricultural lender concerned, except that a cease and desist order issued upon consent shall become effective at the time specified in the order and shall remain effective as provided in the order unless it is stayed, modified, terminated, or set aside by action of the director or a reviewing court.
[ 2001 c 177 s 8; 1994 c 92 s 257; 1990 c 134 s 8.]
Notes:
Effective date—2001 c 177: See note following RCW 43.320.080.


title: RCW 31.35.090

text:
If, in the opinion of the director, an agricultural lender violates or there is reasonable cause to believe that an agricultural lender is about to violate any provision of this chapter or any rule adopted under this chapter, the director may bring an action in the appropriate court to enjoin the violation or to enforce compliance. Upon a proper showing, a restraining order, or preliminary or permanent injunction, shall be granted, and a receiver or a conservator may be appointed for the agricultural lender or the agricultural lender's assets.
[ 1994 c 92 s 258; 1990 c 134 s 9.]

catchline: Enforcement—Court order.


title: RCW 31.35.100

text:
All agricultural lenders shall notify their members at the time of membership and annually thereafter that their investment in the agricultural lender, although regulated by the director, is not insured, guaranteed, or protected by any federal or state agency.
[ 1994 c 92 s 259; 1990 c 134 s 10.]

catchline: Notice—Investments not insured.


title: RCW 31.35.105

text:
RCW 31.24.230 (2) through (4) supersede any contrary provision of this chapter.
[ 2006 c 87 s 28.]

catchline: Application of RCW 31.24.230.


title: RCW 31.35.900

text:
If any provision of this act or its application to any person or circumstance is held invalid or, if in the written opinion of the farmers home administration, is contrary to the intent and purposes of the loan guaranty program, the director shall not enforce such provision, but the remainder of the act or the application of the provision to other persons or circumstances shall not be affected.
[ 1994 c 92 s 260; 1990 c 134 s 11.]

catchline: Severability—Administrative review—1990 c 134.


title: RCW 31.40.010

text:
The legislature finds and declares that small and moderate-size companies can enhance their access to working capital and to capital for acquiring and equipping commercial and industrial facilities by using the United States small business administration national small business loan program known as the 7(a) loan guaranty program. The 7(a) loan guaranty program provides financing to small firms needing working capital and longer term financing for equipment and other fixed assets. Such loans can be made to small businesses by nondepository lenders and guaranteed by the small business administration only if the state provides for the ongoing regulation and examination of such entities.
It is the intent of the legislature that the director of financial institutions [license], regulate, and subject to ongoing examination, nondepository lenders for the purpose of allowing such lenders to participate in the small business administration's 7(a) loan guaranty program.
[ 1994 c 92 s 261; 1989 c 212 s 1.]

catchline: Intent.


title: RCW 31.40.020

text:
Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
(1) "Licensee" means a Washington corporation licensed under the terms of this chapter.
(2) "Director" means the director of financial institutions.
[ 1994 c 92 s 262; 1989 c 212 s 2.]


title: RCW 31.40.030

text:
(1) The director shall administer this chapter. The director may issue orders and adopt rules that, in the opinion of the director, are necessary to execute, enforce, and effectuate the purposes of this chapter. Rules to enforce the provisions of this chapter shall be adopted under the administrative procedure act, chapter 34.05 RCW.
(2) Whenever the director issues an order or a license under this chapter, the director may impose conditions that are necessary, in the opinion of the director, to carry out the purposes of this chapter.
(3) An application filed with the director under this chapter shall be in such a form and contain such information as the director may require.
(4) Any change of control of a licensee shall be subject to the approval of the director. Such approval shall be subject to the same criteria as the criteria for approval of the original license. For purposes of this subsection, "change of control" means directly or indirectly, alone or in concert with others, to own, control, or hold the power to vote ten percent or more of the outstanding voting stock of a licensee or the power to elect or control the election of a majority of the board of directors of the licensee.
[ 1994 c 92 s 263; 1989 c 212 s 3.]

catchline: Director—Powers and duties.


title: RCW 31.40.040

text:
(1) A licensee may participate in the 7(a) loan guaranty program of the small business administration pursuant to section 7(a) of the federal small business investment act of 1958, 15 U.S.C. Sec. 636(a), or any other government program for which the licensee is eligible and which has as its function the provision or facilitation of financing or management assistance to business firms. If a licensee participates in a program referred to in this section, the licensee shall comply with the requirements of that program.
(2) A licensee may be incorporated under either the Washington business corporation act or the Washington nonprofit corporation act. In addition to the powers and privileges provided to a licensee by this chapter, a licensee has all the powers and privileges conferred by its incorporating statute which are not inconsistent with or limited by this chapter.
[ 1989 c 212 s 4.]

catchline: Licensee—Powers and duties.


title: RCW 31.40.050

text:
After a review of information regarding the directors, officers, and controlling persons of the applicant for a license, a review of the applicant's business plan, including at least three years of detailed financial projections and other relevant information, and a review of such additional information as is considered relevant by the director, the director shall approve an application for a license if, and only if, the director determines that:
(1) The applicant is capitalized in an amount that is not less than five hundred thousand dollars and that such sum is adequate for the applicant to transact business as a nondepository 7(a) lender and that in evaluating the capital position of the applicant the director may consider and include the net worth of any corporate shareholder of the applicant corporation if the shareholder guarantees the liabilities of the applicant: PROVIDED, That such corporate shareholder be subject to the reporting requirements of RCW 31.40.080;
(2) Each director, officer, and controlling person of the applicant is of good character and sound financial standing; that the directors and officers of the applicant are competent to perform their functions with respect to the applicant; and that the directors and officers of the applicant are collectively adequate to manage the business of the applicant as a nondepository 7(a) lender;
(3) The business plan of the applicant will be honestly and efficiently conducted in accordance with the intent and purposes of this chapter; and
(4) The proposed activity possesses a reasonable prospect for success.
[ 1994 c 92 s 264; 1989 c 212 s 5.]

catchline: License approval.


title: RCW 31.40.060

text:
(1) Either by itself or in concert with a director, officer, principal shareholder, or affiliate, or with another licensee, a licensee shall not hold control of a business firm to which it has made a loan under section 7(a) of the federal small business investment act of 1958, 15 U.S.C. Sec. 636(a), except that, to the extent necessary to protect the licensee's interest as creditor of the business firm, a licensee that provides financing assistance to a business firm may acquire and hold control of that business firm. Unless the director approves a longer period, a licensee holding control of a business firm under this section shall divest itself of the interest which constitutes holding control as soon as practicable or within five years after acquiring that interest, whichever is sooner.
(2) For the purposes of subsection (1) of this section, "hold control" means alone or in concert with others:
(a) Ownership, directly or indirectly, of record or beneficially, of voting securities greater than:
(i) For a business firm with outstanding voting securities held by fewer than fifty shareholders, forty percent of the outstanding voting securities;
(ii) For a business firm with outstanding voting securities held by fifty or more shareholders, twenty-five percent of the outstanding voting securities;
(b) Being able to elect or control the election of a majority of the board of directors.
[ 1994 c 92 s 265; 1989 c 212 s 6.]

catchline: Prohibited loans—Exception.


title: RCW 31.40.070

text:
(1) The director is authorized to charge a fee for the estimated direct and indirect costs of the following:
(a) An application for a license and the investigation thereof;
(b) An application for approval to acquire control of a licensee and the investigation thereof;
(c) An application for approval for a licensee to merge with another corporation, an application for approval for a licensee to purchase all or substantially all of the business of another person, or an application for approval for a licensee to sell all or substantially all of its business or of the business of any of its offices to another licensee and the investigation thereof;
(d) An annual license;
(e) An examination by the director of a licensee or a subsidiary of a licensee. Excess examiner time shall be billed at a reasonable rate established by rule.
(2) A fee for filing an application with the director shall be paid at the time the application is filed with the director.
(3) All such fees shall be deposited in the financial services regulation fund and administered consistent with the provisions of RCW 43.320.110.
[ 2001 c 177 s 9; 1994 c 92 s 266; 1989 c 212 s 7.]
Notes:
Effective date—2001 c 177: See note following RCW 43.320.080.
Construction—1989 c 212 s 7: "Nothing in section 7 of this act shall be construed to prevent repayment to the general fund of the twenty-five thousand dollar start-up appropriation set forth in section 15 of this act." [ 1989 c 212 s 14.]

catchline: Fees.


title: RCW 31.40.080

text:
(1) A licensee shall keep books, accounts, and other records in such a form and manner as the director may require. These records shall be kept at such a place and shall be preserved for such a length of time as the director may specify.
(2) Not more than ninety days after the close of each calendar year or within a period specified by the director, a licensee shall file with the director a report containing the following:
(a) Financial statements, including the balance sheet, the statement of income or loss, the statement of changes in capital accounts and the statement of changes in financial position; and
(b) Other information that the director may require.
(3) Each licensee shall provide for a loan loss reserve sufficient to cover projected loan losses which are not guaranteed by the United States government or any agency thereof.
[ 1994 c 92 s 267; 1989 c 212 s 8.]

catchline: Records—Reports—Loan loss reserve.


title: RCW 31.40.090

text:
(1) The director shall examine each licensee not less than once every twenty-four months.
(2) The director may with or without notice and at any time during regular business hours examine a licensee or a subsidiary of a licensee.
(3) A director, officer, or employee of a licensee or of a subsidiary of a licensee being examined by the director or a person having custody of any of the books, accounts, or records of the licensee or of the subsidiary shall otherwise facilitate the examination so far as it is in his or her power to do so.
(4) If in the director's opinion it is necessary in the examination of a licensee, or of a subsidiary of a licensee, the director may retain any certified public accountant, attorney, appraiser, or other person to assist the director. The licensee being examined shall pay the fees of a person retained by the director under this subsection.
[ 2006 c 87 s 30; 1994 c 92 s 268; 1989 c 212 s 9.]

catchline: Examination of licensees.


title: RCW 31.40.100

text:
If the director denies an application, the director shall provide the applicant with a written statement explaining the basis for the denial.
[ 1994 c 92 s 269; 1989 c 212 s 10.]

catchline: Application denial.


title: RCW 31.40.110

text:
(1) The director shall adopt rules to enforce the intent and purposes of this chapter. Such rules shall include, but need not be limited to, the following:
(a) Disclosure of conflicts of interest;
(b) Prohibition of false statements made to the director on any form required by the director or during any examination requested by the director; or
(c) Prevention of fraud and undue influence by a licensee.
(2) A violation of any provision of this chapter or any rule of the director adopted under this chapter by an agent, employee, officer, or director of the licensee shall be punishable by a fine, established by the director, not to exceed one hundred dollars for each offense. Each day's continuance of the violation shall be a separate and distinct offense. Each such fine shall be credited to the financial services regulation fund.
[ 2001 c 177 s 10; 1994 c 92 s 270; 1989 c 212 s 11.]
Notes:
Effective date—2001 c 177: See note following RCW 43.320.080.

catchline: Rules—Penalties.


title: RCW 31.40.120

text:
If, in the opinion of the director, a person violates or there is reasonable cause to believe that a person is about to violate any provision of this chapter or any rule adopted under this chapter, the director may bring an action in the appropriate court to enjoin the violation or to enforce compliance. Upon a proper showing, a restraining order, preliminary or permanent injunction, shall be granted, and a receiver or a conservator may be appointed for the defendant or the defendant's assets.
[ 1994 c 92 s 271; 1989 c 212 s 12.]

catchline: Injunction.


title: RCW 31.40.130

text:
The director may deny, suspend, or revoke a license if the applicant or holder violates any provision of this chapter or any rules promulgated pursuant to this chapter.
[ 1994 c 92 s 272; 1989 c 212 s 13.]

catchline: Penalty—License impairment.


title: RCW 31.40.135

text:
RCW 31.24.230 (1), (3), and (4) supersede any contrary provision of this chapter.
[ 2006 c 87 s 29.]


title: RCW 31.40.900

text:
If any provision of this act or its application to any person or circumstance is held invalid or, if in the written opinion of the small business administration, is contrary to the intent and purposes of the 7(a) loan guaranty program, the director shall not enforce such provision but the remainder of the act or the application of the provision to other persons or circumstances shall not be affected.
[ 1994 c 92 s 273; 1989 c 212 s 16.]

catchline: Severability—1989 c 212.


title: RCW 31.45.010

text:
Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
(1) "Applicant" means a person that files an application for a license under this chapter, including the applicant's sole proprietor, owners, directors, officers, partners, members, and controlling persons.
(2) "Borrower" means a natural person who receives a small loan.
(3) "Business day" means any day that the licensee is open for business in at least one physical location.
(4) "Check" means the same as defined in RCW 62A.3-104(f) and, for purposes of conducting the business of making small loans, includes other electronic forms of payment, including stored value cards, internet transfers, and automated clearinghouse transactions.
(5) "Check casher" means an individual, partnership, unincorporated association, or corporation that, for compensation, engages, in whole or in part, in the business of cashing checks, drafts, money orders, or other commercial paper serving the same purpose.
(6) "Check seller" means an individual, partnership, unincorporated association, or corporation that, for compensation, engages, in whole or in part, in the business of or selling checks, drafts, money orders, or other commercial paper serving the same purpose.
(7) "Collateral" means the same as defined in chapter 62A.9A RCW.
(8) "Controlling person" means a person owning or controlling ten percent or more of the total outstanding shares of the applicant or licensee, if the applicant or licensee is a corporation, and a member who owns ten percent or more of a limited liability company or limited liability partnership.
(9) "Default" means the borrower's failure to repay the small loan in compliance with the terms contained in the small loan agreement or note or failure to pay any installment plan payment on an installment plan within ten days after the date upon which the installment was scheduled to be paid.
(10) "Director" means the director of financial institutions.
(11) "Financial institution" means a commercial bank, savings bank, savings and loan association, or credit union.
(12) "Installment plan" is a contract between a licensee and borrower that provides that the loaned amount will be repaid in substantially equal installments scheduled on or after a borrower's pay dates and no less than fourteen days apart.
(13) "Licensee" means a check casher or seller licensed by the director to engage in business in accordance with this chapter. "Licensee" also means a check casher or seller, whether located within or outside of this state, who fails to obtain the license or small loan endorsement required by this chapter.
(14) "Loaned amount" means the outstanding principal balance and any fees authorized under RCW 31.45.073 that have not been paid by the borrower.
(15) "Origination date" means the date upon which the borrower and the licensee initiate a small loan transaction.
(16) "Outstanding principal balance" of a small loan means any of the principal amount that has not been paid by the borrower.
(17) "Paid" means that moment in time when the licensee deposits the borrower's check or accepts cash for the full amount owing on a valid small loan. If the borrower's check is returned by the borrower's bank for any reason, the licensee shall not consider the loan paid.
(18) "Person" means an individual, partnership, association, limited liability company, limited liability partnership, trust, corporation, and any other legal entity.
(19) "Principal" means the loan proceeds advanced for the benefit of the borrower in a small loan, excluding any fee or interest charge.
(20) "Rescission" means annulling the loan contract and, with respect to the small loan contract, returning the borrower and the licensee to their financial condition prior to the origination date of the loan.
(21) "Small loan" means a loan of up to the maximum amount and for a period of time up to the maximum term specified in RCW 31.45.073.
(22) "Termination date" means the date upon which payment for the small loan transaction is due or paid to the licensee, whichever occurs first.
(23) "Total of payments" means the principal amount of the small loan plus all fees or interest charged on the loan.
(24) "Trade secret" means the same as defined in RCW 19.108.010.
[ 2012 c 17 s 7; 2009 c 510 s 2; 2003 c 86 s 1; 1995 c 18 s 1; 1994 c 92 s 274; 1993 c 143 s 1; 1991 c 355 s 1.]
Notes:
Finding—Intent—Liberal construction—2009 c 510: "The legislature finds that some small loan borrowers are unable to pay the entire loaned amount when it is due. Many of these borrowers take out multiple loans to pay off the original borrowed sum.
It is the legislature's intent to reduce or limit the number of borrowers taking out multiple loans by providing for installment plans that give a borrower a better opportunity to pay off their original small loan without having to resort to taking out a subsequent loan or loans.
This act shall be liberally construed to effectuate the legislature's intent to protect borrowers." [ 2009 c 510 s 1.]

catchline: Definitions.


title: RCW 31.45.020

text:
(1) This chapter does not apply to:
(a) Any financial institution or trust company authorized to do business in Washington;
(b) The cashing of checks, drafts, or money orders by any person who cashes checks, drafts, or money orders as a convenience, as a minor part of its customary business, and not for profit;
(c) The issuance or sale of checks, drafts, or money orders by any corporation, partnership, or association that has a net worth of not less than three million dollars as shown by audited financial statements; and
(d) The issuance or sale of checks, drafts, money orders, or other commercial paper serving the same purpose by any agent of a corporation, partnership, or association described in (c) of this subsection.
(2) Upon application to the director, the director may exempt a person from any or all provisions of this chapter upon a finding by the director that although not otherwise exempt under this section, the applicant is not primarily engaged in the business of cashing or selling checks and a total or partial exemption would not be detrimental to the public.
[ 2003 c 86 s 2; 1994 c 92 s 275; 1991 c 355 s 2.]

catchline: Application of chapter.


title: RCW 31.45.022

text:
(1) The requirements under any federal law or laws of another state regarding the privacy or confidentiality of any information or material provided to the department [of financial institutions], and any privilege arising under federal or state law, including the rules of any federal or state court, with respect to that information or material, continues to apply to the information or material after the information or material has been disclosed to the department [of financial institutions]. If consistent with applicable law, the information and material may be shared with all state and federal regulatory officials without the loss of privilege or the loss of confidentiality protections provided by federal law or state law.
(2) When the department [of financial institutions] is a party to a memoranda of understanding or enforcement order issued by the consumer financial protection bureau, the privacy, confidentiality, or privilege accorded to the document by federal law continues to apply even after the memoranda or order has been signed by the director or a designee.
(3) Any requirement under chapter 42.56 RCW relating to the disclosure of confidential supervisory information or any information or material described in subsection (1) or (2) of this section that is inconsistent with subsection (1) or (2) of this section is superseded by the requirements of this section.
[ 2014 c 36 s 8.]

catchline: Privacy or confidentiality of any information or material—Federal or other state's laws.


title: RCW 31.45.030

text:
(1) Except as provided in RCW 31.45.020, no check casher or seller may engage in business without first obtaining a license from the director in accordance with this chapter. A license is required for each location where a licensee engages in the business of cashing or selling checks or drafts.
(2) Each application for a license shall be in writing in a form prescribed by the director and shall contain the following information:
(a) The legal name, residence, and business address of the applicant and, if the applicant is a partnership, association, or corporation, of every member, officer, and director thereof;
(b) The location where the initial registered office of the applicant will be located in this state;
(c) The complete address of any other locations at which the applicant proposes to engage in business as a check casher or seller; and
(d) Such other data, financial statements, and pertinent information as the director may require with respect to the applicant, its directors, trustees, officers, members, or agents.
(3) Any information in the application regarding the personal residential address or telephone number of the applicant, and any trade secret as defined in RCW 19.108.010 including any financial statement that is a trade secret, is exempt from the public records disclosure requirements of chapter 42.56 RCW.
(4) The application shall be filed together with an investigation and supervision fee established by rule by the director. Such fees collected shall be deposited to the credit of the financial services regulation fund in accordance with RCW 43.320.110.
(5)(a) Before granting a license to sell checks, drafts, or money orders under this chapter, the director shall require that the licensee file with the director a surety bond running to the state of Washington, which bond shall be issued by a surety insurer which meets the requirements of chapter 48.28 RCW, and be in a format acceptable to the director. The director shall adopt rules to determine the penal sum of the bond that shall be filed by each licensee. The bond shall be conditioned upon the licensee paying all persons who purchase checks, drafts, or money orders from the licensee the face value of any check, draft, or money order which is dishonored by the drawee bank, savings bank, or savings and loan association due to insufficient funds or by reason of the account having been closed. The bond shall only be liable for the face value of the dishonored check, draft, or money order, and shall not be liable for any interest or consequential damages.
(b) Before granting a small loan endorsement under this chapter, the director shall require that the licensee file with the director a surety bond, in a format acceptable to the director, issued by a surety insurer that meets the requirements of chapter 48.28 RCW. The director shall adopt rules to determine the penal sum of the bond that shall be filed by each licensee. A licensee who wishes to engage in both check selling and making small loans may combine the penal sums of the bonding requirements and file one bond in a form acceptable to the director. The bond shall run to the state of Washington as obligee, and shall run to the benefit of the state and any person or persons who suffer loss by reason of the licensee's violation of this chapter or any rules adopted under this chapter. The bond shall only be liable for damages suffered by borrowers as a result of the licensee's violation of this chapter or rules adopted under this chapter, and shall not be liable for any interest or consequential damages.
(c) The bond shall be continuous and may be canceled by the surety upon the surety giving written notice to the director and licensee of its intent to cancel the bond. The cancellation is effective thirty days after the notice is received by the director. Whether or not the bond is renewed, continued, reinstated, reissued, or otherwise extended, replaced, or modified, including increases or decreases in the penal sum, it shall be considered one continuous obligation, and the surety upon the bond shall not be liable in an aggregate or cumulative amount exceeding the penal sum set forth on the face of the bond. In no event shall the penal sum, or any portion thereof, at two or more points in time be added together in determining the surety's liability. The bond shall not be liable for any liability of the licensee for tortious acts, whether or not such liability is imposed by statute or common law, or is imposed by contract. The bond shall not be a substitute or supplement to any liability or other insurance required by law or by the contract. If the surety desires to make payment without awaiting court action against it, the penal sum of the bond shall be reduced to the extent of any payment made by the surety in good faith under the bond.
(d) Any person who is a purchaser of a check, draft, or money order from the licensee having a claim against the licensee for the dishonor of any check, draft, or money order by the drawee bank, savings bank, or savings and loan association due to insufficient funds or by reason of the account having been closed, or who obtained a small loan from the licensee and was damaged by the licensee's violation of this chapter or rules adopted under this chapter, may bring suit upon such bond or deposit in the superior court of the county in which the check, draft, or money order was purchased, or in the superior court of a county in which the licensee maintains a place of business. Jurisdiction shall be exclusively in the superior court. Any such action must be brought not later than one year after the dishonor of the check, draft, or money order on which the claim is based. In the event valid claims against a bond or deposit exceed the amount of the bond or deposit, each claimant shall only be entitled to a pro rata amount, based on the amount of the claim as it is valid against the bond, or deposit, without regard to the date of filing of any claim or action.
(e) In lieu of the surety bond required by this section, the applicant for a check seller license may file with the director a deposit consisting of cash or other security acceptable to the director in an amount equal to the penal sum of the required bond. In lieu of the surety bond required by this section, the applicant for a small loan endorsement may file with the director a deposit consisting of cash or other security acceptable to the director in an amount equal to the penal sum of the required bond, or may demonstrate to the director net worth in excess of three times the amount of the penal sum of the required bond.
The director may adopt rules necessary for the proper administration of the security or to establish reporting requirements to ensure that the net worth requirements continue to be met. A deposit given instead of the bond required by this section is not an asset of the licensee for the purpose of complying with the liquid asset provisions of this chapter. A deposit given instead of the bond required by this section is a fund held in trust for the benefit of eligible claimants under this section and is not an asset of the estate of any licensee that seeks protection voluntarily or involuntarily under the bankruptcy laws of the United States.
(f) Such security may be sold by the director at public auction if it becomes necessary to satisfy the requirements of this chapter. Notice of the sale shall be served upon the licensee who placed the security personally or by mail. If notice is served by mail, service shall be addressed to the licensee at its address as it appears in the records of the director. Bearer bonds of the United States or the state of Washington without a prevailing market price must be sold at public auction. Such bonds having a prevailing market price may be sold at private sale not lower than the prevailing market price. Upon any sale, any surplus above amounts due shall be returned to the licensee, and the licensee shall deposit with the director additional security sufficient to meet the amount required by the director. A deposit given instead of the bond required by this section shall not be deemed an asset of the licensee for the purpose of complying with the liquid asset provisions of this chapter.
[ 2005 c 274 s 255; 2003 c 86 s 3; 2001 c 177 s 11; 1995 c 18 s 4; 1994 c 92 s 276; 1993 c 176 s 1; 1991 c 355 s 3.]
Notes:
Effective date—2001 c 177: See note following RCW 43.320.080.
Effective date—1993 c 176: "This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately [April 30, 1993]." [ 1993 c 176 s 2.]
Examination reports and information from financial institutions exempt: RCW 42.56.400.

catchline: License required—Small loan endorsement—Application—Fee—Bond—Deposit in lieu of bond—Director's duties.


title: RCW 31.45.040

text:
(1) The director shall conduct an investigation of every applicant to determine the financial responsibility, experience, character, and general fitness of the applicant. The director shall issue the applicant a license to engage in the business of cashing or selling checks, or both, or a small loan endorsement, if the director determines to his or her satisfaction that:
(a) The applicant has satisfied the requirements of RCW 31.45.030;
(b) The applicant is financially responsible and appears to be able to conduct the business of cashing or selling checks or making small loans in an honest, fair, and efficient manner with the confidence and trust of the community; and
(c) The applicant has the required bonds, or has provided an acceptable alternative form of financial security.
(2) The director may refuse to issue a license or small loan endorsement if he or she finds that the applicant, or any person who is a director, officer, partner, agent, sole proprietor, owner, or controlling person of the applicant, has been convicted of a felony in any jurisdiction within seven years of filing the present application or is associating or consorting with any person who has been convicted of a felony in any jurisdiction within seven years of filing the present application. The term "substantial stockholder" as used in this subsection, means a person owning or controlling ten percent or more of the total outstanding shares of the applicant corporation.
(3) A license or small loan endorsement may not be issued to an applicant:
(a) Whose license to conduct business under this chapter, or any similar statute in any other jurisdiction, has been suspended or revoked within five years of the filing of the present application;
(b) Who has been banned from the industry by an administrative order issued by the director or the director's designee, for the period specified in the administrative order; or
(c) When any person who is a sole proprietor, owner, director, officer, partner, agent, or controlling person of the applicant has been banned from the industry in an administrative order issued by the director, for the period specified in the administrative order.
(4) A license or small loan endorsement issued under this chapter shall be conspicuously posted in the place of business of the licensee. The license is not transferable or assignable.
(5) A license or small loan endorsement issued in accordance with this chapter remains in force and effect until surrendered, suspended, or revoked, or until the license expires as a result of nonpayment of the annual assessment fee.
[ 2003 c 86 s 4; 1996 c 13 s 1; 1995 c 18 s 5; 1994 c 92 s 277; 1991 c 355 s 4.]

catchline: Application for license or small loan endorsement—Financial responsibility—Director's investigation.


title: RCW 31.45.043

text:
Applicants may be required to make application through a multistate licensing system as prescribed by the director. Existing licensees may be required to transition onto a multistate licensing system as prescribed by the director.
[ 2012 c 17 s 8.]

catchline: Multistate licensing system—Director's discretion.


title: RCW 31.45.045

text:
Each licensee on a nationwide licensing system shall submit reports of condition which must be in the form and must contain the information as the director may require.
[ 2014 c 36 s 9.]

catchline: Reports—Nationwide licensing system.


title: RCW 31.45.050

text:
(1) Each applicant and licensee shall pay to the director an investigation or examination fee as established in rule and an annual assessment fee for the coming year in an amount determined by rule as necessary to cover the operation of the program. The annual assessment fee is due upon the annual assessment fee due date as established in rule. Nonpayment of the annual assessment fee may result in expiration of the license as provided in subsection (2) of this section. In establishing the fees, the director shall differentiate between check cashing and check selling and making small loans, and consider at least the volume of business, level of risk, and potential harm to the public related to each activity. The fees collected shall be deposited to the credit of the financial services regulation fund in accordance with RCW 43.320.110.
(2) If a licensee does not pay its annual assessment fee by the annual assessment fee due date as specified in rule, the director or the director's designee shall send the licensee a notice of suspension and assess the licensee a late fee not to exceed twenty-five percent of the annual assessment fee as established in rule by the director. The licensee's payment of both the annual assessment fee and the late fee must arrive in the department's offices by 5:00 p.m. on the tenth day after the annual assessment fee due date, unless the department is not open for business on that date, in which case the licensee's payment of both the annual assessment fee and the late fee must arrive in the department's offices by 5:00 p.m. on the next occurring day that the department is open for business. If the payment of both the annual assessment fee and the late fee does not arrive prior to such time and date, then the expiration of the licensee's license is effective at 5:00 p.m. on the thirtieth day after the assessment fee due date. The director or the director's designee may reinstate the license if, within twenty days after the effective date of expiration, the licensee:
(a) Pays both the annual assessment fee and the late fee; and
(b) Attests under penalty of perjury that it did not engage in conduct requiring a license under this chapter during the period its license was expired, as confirmed by an investigation by the director or the director's designee.
(3) If a licensee intends to do business at a new location, to close an existing place of business, or to relocate an existing place of business, the licensee shall provide written notification of that intention to the director no less than thirty days before the proposed establishing, closing, or moving of a place of business.
[ 2003 c 86 s 5; 2001 c 177 s 12; 1996 c 13 s 2; 1995 c 18 s 6; 1994 c 92 s 278; 1991 c 355 s 5.]
Notes:
Effective date—2001 c 177: See note following RCW 43.320.080.

catchline: Investigation or examination fee and annual assessment fee required—Amounts determined by rule—Failure to pay—Notice requirements of licensee.


title: RCW 31.45.060

text:
(1) A schedule of the fees and the charges for the cashing and selling of checks, drafts, money orders, or other commercial paper serving the same purpose shall be conspicuously and continuously posted in every location licensed under this chapter. The licensee shall provide to its customer a receipt for each transaction. The receipt must include the name of the licensee, the type and amount of the transaction, and the fee or fees charged for the transaction.
(2) Each licensee shall keep and maintain such business books, accounts, and records as the director may require to fulfill the purposes of this chapter. Every licensee shall preserve such books, accounts, and records as required in rule by the director for at least two years from the completion of the transaction. Records may be maintained on an electronic, magnetic, optical, or other storage media. However, the licensee must maintain the necessary technology to permit access to the records by the department for the period required under this chapter.
(3) A check, draft, or money order sold by a licensee shall be drawn on an account of a licensee maintained in a federally insured financial institution authorized to do business in the state of Washington.
[ 2003 c 86 s 6; 1994 c 92 s 279; 1991 c 355 s 6.]

catchline: Licensee—Schedule of fee and charges—Recordkeeping.


title: RCW 31.45.070

text:
(1) No licensee may engage in a loan business; the negotiation of loans; or the discounting of notes, bills of exchange, checks, or other evidences of debt in the same premises where a check cashing or selling business is conducted, unless the licensee:
(a) Is conducting the activities of pawnbroker as defined in RCW 19.60.010;
(b) Is a properly licensed consumer loan company under chapter 31.04 RCW;
(c) Is conducting other lending activity permitted in the state of Washington; or
(d) Has a small loan endorsement issued under this chapter.
(2) Except as otherwise permitted in this chapter, no licensee may at any time cash or advance any moneys on a postdated check or draft. However, a licensee may cash a check payable on the first banking day following the date of cashing if:
(a) The check is drawn by the United States, the state of Washington, or any political subdivision of the state, or by any department or agency of the state or its subdivisions; or
(b) The check is a payroll check drawn by an employer to the order of its employee in payment for services performed by the employee.
(3) Except as otherwise permitted in this chapter, no licensee may agree to hold a check or draft for later deposit. A licensee must deposit all checks and drafts cashed by the licensee as soon as practicable.
(4) No licensee may issue or cause to be issued any check, draft, or money order, or other commercial paper serving the same purpose, that is drawn upon the trust account of a licensee without concurrently receiving the full principal amount, in cash, or by check, draft, or money order from a third party believed to be valid.
(5) Each licensee shall comply with all applicable state and federal statutes relating to the activities governed by this chapter.
[ 2012 c 17 s 9; 2003 c 86 s 7; 1995 c 18 s 7; 1994 c 92 s 280; 1991 c 355 s 7.]


title: RCW 31.45.073

text:
(1) No licensee may engage in the business of making small loans without first obtaining a small loan endorsement to its license from the director in accordance with this chapter. An endorsement will be required for each location where a licensee engages in the business of making small loans, but a small loan endorsement may authorize a licensee to make small loans at a location different than the licensed locations where it cashes or sells checks. A licensee may have more than one endorsement.
(2) A licensee must set the due date of a small loan on or after the date of the borrower's next pay date. If a borrower's next pay date is within seven days of taking out the loan, a licensee must set the due date of a small loan on or after the borrower's second pay date after the date the small loan is made. The termination date of a small loan may not exceed the origination date of that same small loan by more than forty-five days, including weekends and holidays, unless the term of the loan is extended by agreement of both the borrower and the licensee and no additional fee or interest is charged. The maximum principal amount of any small loan, or the outstanding principal balances of all small loans made by all licensees to a single borrower at any one time, may not exceed seven hundred dollars or thirty percent of the gross monthly income of the borrower, whichever is lower. A licensee is prohibited from making a small loan to a borrower who is in default on another small loan until after that loan is paid in full or two years have passed from the origination date of the small loan, whichever occurs first.
(3) A licensee is prohibited from making a small loan to a borrower in an installment plan with any licensee until after the plan is paid in full or two years have passed from the origination date of the installment plan, whichever occurs first.
(4) A borrower is prohibited from receiving more than eight small loans from all licensees in any twelve-month period. A licensee is prohibited from making a small loan to a borrower if making that small loan would result in a borrower receiving more than eight small loans from all licensees in any twelve-month period.
(5) A licensee that has obtained the required small loan endorsement may charge interest or fees for small loans not to exceed in the aggregate fifteen percent of the first five hundred dollars of principal. If the principal exceeds five hundred dollars, a licensee may charge interest or fees not to exceed in the aggregate ten percent of that portion of the principal in excess of five hundred dollars. If a licensee makes more than one loan to a single borrower, and the aggregated principal of all loans made to that borrower exceeds five hundred dollars at any one time, the licensee may charge interest or fees not to exceed in the aggregate ten percent on that portion of the aggregated principal of all loans at any one time that is in excess of five hundred dollars. The director may determine by rule which fees, if any, are not subject to the interest or fee limitations described in this section. It is a violation of this chapter for any licensee to knowingly loan to a single borrower at any one time, in a single loan or in the aggregate, more than the maximum principal amount described in this section.
(6) In connection with making a small loan, a licensee may advance moneys on the security of a postdated check. The licensee may not accept any other property, title to property, or other evidence of ownership of property as collateral for a small loan. The licensee may accept only one postdated check per loan as security for the loan. A licensee may permit a borrower to redeem a postdated check with a payment of cash or the equivalent of cash. The licensee may disburse the proceeds of a small loan in cash, in the form of a check, or in the form of the electronic equivalent of cash or a check.
(7) No person may at any time cash or advance any moneys on a postdated check or draft in excess of the amount of goods or services purchased without first obtaining a small loan endorsement to a check casher or check seller license.
[ 2009 c 510 s 3; 2003 c 86 s 8; 1995 c 18 s 2.]
Notes:
Finding—Intent—Liberal construction—2009 c 510: See note following RCW 31.45.010.

catchline: Making small loans—Endorsement required—Due date—Termination date—Maximum amount—Installment plans—Interest—Fees—Postdated check or draft as security.


title: RCW 31.45.077

text:
(1) Each application for a small loan endorsement to a check casher or check seller license must be in writing and in a form prescribed by the director and shall contain the following information:
(a) The legal name, residence, and business address of the applicant, and if the applicant is a partnership, corporation, or association, the name and address of every member, partner, officer, and director thereof;
(b) The street and mailing address of each location where the licensee will engage in the business of making small loans;
(c) A surety bond, or other security allowed under RCW 31.45.030, in the amount required; and
(d) Any other pertinent information, including financial statements, as the director may require with respect to the licensee and its directors, officers, trustees, members, or employees.
(2) Any information in the application regarding the licensee's personal residential address or telephone number, and any trade secrets of the licensee as defined under RCW 19.108.010 including any financial statement that is a trade secret, is exempt from the public records disclosure requirements of chapter 42.56 RCW.
(3) The application shall be filed together with an investigation and review fee established by rule by the director. Fees collected shall be deposited to the credit of the financial services regulation fund in accordance with RCW 43.320.110.
[ 2005 c 274 s 256; 2003 c 86 s 9; 2001 c 177 s 13; 1995 c 18 s 3.]
Notes:
Effective date—2001 c 177: See note following RCW 43.320.080.

catchline: Small loan endorsement—Application—Form—Information—Exemption from disclosure—Fees.


title: RCW 31.45.079

text:
A person may not engage in the business of making small loans as an agent for a licensee or exempt entity without first obtaining a small loan endorsement to a check casher or check seller license under this chapter. An agent of a licensee or exempt entity engaged in the business of making small loans is subject to this chapter. To the extent that federal law preempts the applicability of any part of this chapter, all other parts of this chapter remain in effect.
[ 2003 c 86 s 10.]

catchline: Making small loans—Agent for a licensee or exempt entity—Federal preemption.


title: RCW 31.45.080

text:
(1) All funds received by a licensee or its agents from the sale of checks, drafts, money orders, or other commercial paper serving the same purpose constitute trust funds owned by and belonging to the person from whom they were received or to the person who has paid the checks, drafts, money orders, or other commercial paper serving the same purpose.
(2) All such trust funds shall be deposited in a bank, savings bank, or savings and loan association located in Washington state in an account or accounts in the name of the licensee designated "trust account," or by some other appropriate name indicating that the funds are not the funds of the licensee or of its officers, employees, or agents. Such funds are not subject to attachment, levy of execution, or sequestration by order of a court except by a payee, assignee, or holder in due course of a check, draft, or money order sold by a licensee or its agent. Funds in the trust account, together with funds and checks on hand and in the hands of agents held for the account of the licensee at all times shall be at least equal to the aggregate liability of the licensee on account of checks, drafts, money orders, or other commercial paper serving the same purpose that are sold.
(3) The director shall adopt rules requiring the licensee to periodically withdraw from the trust account the portion of trust funds earned by the licensee from the sale of checks, drafts, money orders, or other commercial paper serving the same purpose. If a licensee has accepted, in payment for a check, draft, money order, or commercial paper serving the same purpose issued by the licensee, a check or draft that is subsequently dishonored, the director shall prohibit the withdrawal of earned funds in an amount necessary to cover the dishonored check or draft.
(4) If a licensee or its agent commingles trust funds with its own funds, all assets belonging to the licensee or its agent are impressed with a trust in favor of the persons specified in subsection (1) of this section in an amount equal to the aggregate funds that should have been segregated. Such trust continues until an amount equal to the necessary aggregate funds have been deposited in accordance with subsection (2) of this section.
(5) Upon request of the director, a licensee shall furnish to the director an authorization for examination of financial records of any trust fund account established for compliance with this section.
(6) The director may adopt any rules necessary for the maintenance of trust accounts, including rules establishing procedures for distribution of trust account funds if a license is suspended, terminated, or not renewed.
[ 1994 c 92 s 281; 1991 c 355 s 8.]

catchline: Trust funds—Deposit requirements—Rules.