Section 27-27-7 Solicitation Permit - Issuance; Contents; Compliance with Terms.

(a) Upon the filing of any bond required by Sections 27-27-10 or 27-27-16, after notice by the commissioner provided for in subsection (a) of Section 27-27-6, or upon his decision to grant a solicitation permit if such a bond is not so required, the commissioner shall issue to the applicant or to the newly formed corporation, if the application is on behalf of a newly formed incorporated domestic insurer, a solicitation permit. Every solicitation permit issued by the commissioner shall contain provisions in substance as follows: (1) State the securities or other rights or interests for which subscriptions are to be solicited, the number, classes, par value, and selling price thereof, or identify the insurance contract, or contracts, for which applications and advance premiums or deposits of premium are to be solicited in the case of mutual or reciprocal insurers; (2) Require that any particular class of securities, rights, and interests proposed to be sold or offered under the permit shall be so sold and offered at the same price to all parties and that, if more than one class of securities, rights, or interests are to be offered, each subscriber shall have the right to acquire some of each such class in accordance with such reasonable combination of classes into subscription units as may be approved by the commissioner; (3) Require that all such subscriptions and premiums shall be payable only in lawful money of the United States of America except where stock or other securities are to be issued in exchange for securities or rights thereto under a plan approved by the commissioner of merger, consolidation, recapitalization, or refinancing of an insurer or other corporation; (4) Limit the portion of funds received on account of stock or syndicate, association, partnership, firm, or organization subscriptions which may be used for promotion, securities sales, and organization expenses to such amount as the commissioner deems to be reasonably adequate under the proposed plan of solicitation, but in no event to exceed 15 percent of such funds as and when the funds are actually received; (5) If to be a mutual or reciprocal insurer, limit the portion of funds received on account of applications for insurance which may be used for promotion, sales, or organization expenses to a reasonable commission upon such funds, giving consideration to the kind of insurance and policy involved and to the costs incurred by insurers generally in the production of similar business and provide that no such commission shall be deemed to be earned or paid until the insurer has received its certificate of authority and the policies applied for, upon which the commission is to be based, have been actually issued and delivered; (6) Prohibit the granting of any options to subscribe to, buy, or acquire, in any way, any securities, rights, or interests other than options made a part of convertible securities constituting the proposed offering, in whole or in part, and made available on a uniform basis to all subscribers to any such securities, rights, or interests; (7) Prohibit, by any promoter or other person associated or to be associated in the proposed insurer, corporation, syndicate, firm, partnership, or organization or in solicitations under the permit, the resale or transfer of his interest in any security, right, or interest of the kind proposed to be offered under the solicitation permit or any other interest or right which he may have in, or as to, the same entity prior to the completion of sale of all securities, rights, and interests proposed to be offered or sold under the solicitation permit. In connection with this subdivision, the commissioner may, in his discretion, require that any security, right, or interest the resale or transfer of which is prohibited in this subdivision shall be deposited and held in escrow pending the completion of the sales or offering under the solicitation permit; (8) State in boldface type that the permittee must comply with Chapter 6 of Title 8 of this code, if such chapter is applicable, and with other applicable laws of the State of Alabama; (9) That the permit shall expire not more than two years from its date of issue, unless earlier terminated by the commissioner; if, however, in connection with a proposed offering of securities by a domestic insurer or corporation a registration thereof, or filing with respect thereto, is required by law to be made with any federal agency, the effective period of the permit may, in the commissioner’s discretion, commence upon the effective date of such registration or filing if subsequent to the date of issuance of the permit; and (10) Contain such other reasonable conditions relative to accounting, reports, deposits, or other matters consistent with the provisions of this chapter as the commissioner deems advisable for the protection of existing or prospective investors. (b) The holder of the solicitation permit and its directors, officers, employees, agents, and representatives shall comply with the terms of the permit.