31A-5-210 - Incorporators' liability and organization expenses. - Utah Statutes

31A-5-210. Incorporators' liability and organization expenses.
(1) The incorporators are jointly and severally liable for all organizational andpromotional expenses and obligations incurred prior to the issuance of the certificate of authority. Upon issuance of the certificate, the insurer may pay those outstanding expenses and obligationslawfully incurred.
(2) (a) (i) After issuance of the certificate of authority, incorporators of a stockcorporation who have advanced money or incurred obligations for the reasonable and authorizedexpenses of organization, including underwriting of securities, may be reimbursed in cash fromthe proceeds of shares subscribed to under the organization permit, or in shares at the publicoffering price, on itemized receipts audited by the commissioner.
(ii) Promotional securities in connection with the financing of a stock corporation whichis in the promotional, exploratory, or developmental stage may be issued in an amount and for aconsideration which is not unreasonable. In this regard, the commissioner may adopt rulessetting forth standards with respect to promotional securities allowed to be issued and theconsiderations to be received for them. The reimbursement for expenses under Subsection(2)(a)(i) has priority over the issuance of promotional securities under Subsection (2)(a)(ii).
(iii) In no event may securities issued under Subsection (2)(a)(i) or promotionalsecurities issued under Subsection (2)(a)(ii) be issued in a manner which would, in the aggregate,cause the dilution in the net tangible asset value of the insurer's securities proposed to be issuedto the public to exceed 25%.
(b) After issuance of the certificate of authority, incorporators of a mutual who haveadvanced money or incurred obligations for the reasonable and authorized expenses oforganization may be reimbursed in cash from the proceeds of subscriptions for mutual bonds andcontribution notes, on itemized receipts audited by the commissioner. The total reimbursementmay not exceed 15% of the amount received for the bonds and notes.
(3) This section does not apply to stock or mutual insurance corporations already inexistence on July 1, 1986.

Enacted by Chapter 242, 1985 General Session