CHAP. 413.—An ACT to repeal section 10 of chapter 2 and to amend and
re-enact section 53 of chapter 2 and section 12 of chapter 5 of an act
entitled an act concerning the bureau of insurance, approved March
9, 1906, as subsequently amended. (H. B. 84.)

Approved March 21, 1916.

Be it enacted by the general assembly of Virginia, That
section ten, of chapter two, of an act entitled an act concern-
ing the bureau of insurance, approved March ninth, nineteen
hundred and six, as subsequently amended, be and the same is
hereby repealed; and that section fifty-three of chapter two and
section twelve of chapter five of said act be amended and re-
enacted so as to read as follows:

CHAPTER II.

Section 53. No stock salesman, broker or other person ren-
resenting any insurance company, wherever incorporated, in
process of organization and not licensed to transact business in
this State, shall be permitted to solicit subscriptions to or sell
the stock of such company in this State unless and until such
company has furnished the bureau of insurance with full par-
ticulars as to the methods and proposed cost of promotion. Be-
fore any such person shall solicit subscriptions to or sell the
stock of such company, he shall be required to secure a license
from the commissioner of insurance, who, prior to the issuance
of such license, shall investigate the record of the applicant
and may, for good cause shown, refuse to issue same. The fee
for each such license shall ke ten dollars and shall be collected
by the commissioner of insurance and paid into the treasury
of the Commonwealth. The cost of promotion, including com-
missions to the stock salesman and al]l exvenses of organization
of whatever character, shall not exceed five per centum of the
subscription or selling price of each share of stock and the
commissioner of insurance shall require this provision to be
plainly set forth in the stock subscription agreement or contract
for the sale of stock. No part of the commissions to the sales-
men or other organization expense under any subscription for
stock shall be payable until such share or shares of stock have
been fully paid for in cash or securities of equivalent value.
The subscription to or sale of stock in any such company in
series 1s prohibited, except that after a company is organized
and actively engaged in the insurance business, the commis-
sioner of insurance is empowered to authorize it to sell a new
issue of stock at an advanced price on conditions not otherwise
inconsistent with the provisions of this section. The fiscal
agent, person or corporation, engaged in promoting the organi-
zation of any such insurance company shall be required to give
to the commissioner of insurance a surety bond in the amount
of ten per centum of the proposed maximum capital of such
company for a faithful performance of the undertaking in ac-
cordance with the provisions of this section by both himself and
his salesmen, but the provisions of this section shall not apply
to any company in process of organization at the time of the
passage of this act.

Any violation of the provisions of this section shall render
the offender, whether promoter or salesman, subject to a fine of
not exceeding one hundred dollars for each offense.

CHAPTER V.

Sec. 12. Organization.—Fraternal benefit societies, as de-
fined by this chapter, may be incorporated under the provisions
of chapter four of the act entitled “An act concerning corpora-
tions,” which became a law May twenty-first, nineteen hundred
and three, except that such fraternal benefit societies shall be
subject to all the restrictions and shall have all the powers in
this chapter provided. The articles of incorporation and duly
certified copies of the constitution and laws, rules and regula-
tions, and copies of all proposed forms of benefit certificates,
applications therefor and circulars to be issued by such so-
ciety, and a bond in the sum of two thousand five hundred dol-
lars, with sureties approved by the commissioner of insurance,
conditioned upon the return of the advanced payments, as pro-
vided in this section, to applicants, if the organization is not
completed within one year, shall be filed with the commissioner
of insurance, who may require such further information as
he deems necessary, and if the purposes of the society conform
to the requirements of this chapter, and all provisions of law
have been complied with, the commissioner of insurance shall
so certify and retain and record (or file) the articles of incor-
poration, and fyrnish the incorporators a preliminary certifi-
eate authorizing said society to solicit members as hereinafter
provided.
Upon receipt of said certificate from the commissioner of
insurance, said society may solicit members for the purpose
of completing its organization and shall collect from each ap-
plicant the amount of not less than one regular monthly pay-
ment, in accordance with its table of rates as provided by its
constitution and laws, and shall issue to each such applicant
a receipt for the amount so collected. But no such society shall
incur any liability other than for such advanced payments,
nor issue any benefit certificate nor pay or allow, or -offer or
promise to pay or allow, to any person any death or disability
benefit until actual bona fide application for death benefit cer-
tificates have been secured upon at least two hundred and fifty
lives for at least one hundred thousand dollars of insurance,
and all such applicants for death benefits shall have been regu-
larly examined by legally qualified practicing physicians, and
certificates of such examinations have been duly filed and ap-
proved by the chief medical examiner of such society, nor until
there shall be established six subordinate lodges or branches
into which said two hundred and fifty applicants have been
initiated, nor until there has been submitted to the commis-
sioner of insurance, under oath of the president and secretary,
or corresponding officers of such society, a list of such appli-
cants, giving their names, addresses, date examined, date ap-
proved, date initiated, name and number of the subordinate
branch of which each applicant is a member, amount of bene-
fits to be granted, rate of stated periodical contributions which
shall be sufficient to provide for meeting the mortuary obliga-
tion contracted, when valued for death benefits upon the basis
of the National Fraternal Congress table of mortality, as
adopted by the National Fraternal Congress, August twenty-
third, eighteen hundred and ninety-nine, or any higher standard
at the option of the society, and for disability benefits by tables
based upon reliable exverience, and for combined death and
permanent total disability benefits by tables based upon re
liable experience, with an interest assumption not higher than
four per centum per annum, nor until it shall be shown to the
commissioner of insurance by the sworn statement of the treas-
urer, or corresponding officer of such society, that at least two
hundred and fifty applicants have each paid in cash at least
one regular monthly payment as herein provided, which pay-
ments in the aggregate shall amount to at least twelve hundred
and fifty dollars, all of which shall be credited to the mortuary
or disability fund on account of such applicants, and no part
of which may be used for expenses.

Said advanced payments shall, during the period of organi-
zation, be held in trust, and, if. the organization is not com-
pleted within one year, as hereinafter provided, returned to said
applicants.

The commissioner of insurance may make such examination
and require such further information as he deems advisable,
and upon presentation of satisfactory evidence that the society
has complied with all the provisions of law, he shall issue to
such society a certificate to that effect. Such certificate shall
be prima facie evidence of the existence of such society at the
date of such certificate. The commissioner of insurance shall
cause a record of such certificate to be made and a certified copy
of such record may be given in evidence with like effect as the
original certificate.

No preliminary certificate granted under the provisions of
this section shall be valid after one year from its date, or after
such further period, not exceeding one year, as may be author-
ized by the commissioner of insurance, upon cause shown, unless
the two hundred and fifty applicants herein required have been
secured and the organization has been completed as herein
provided, and the articles of incorporation and all proceedings
hereunder shall become null and void in one year from the date
of said preliminary certificate, or at the expiration of said ex-
tended period, unless such society shall have completed its
organization and commenced business as herein provided.

The supreme legislative or governing body shall elect all the
officers, trustees, directors or other persons who are to have and
exercise the general control and management of the affairs and
funds of the society, and the first election of such officers shall
be held not later than one year from the date of the issuance
of the permanent certificate.

Every such society shall have the power to make a consti-
tution and by-laws for the government of the society, the ad-
mission of its members, the management of its affairs and the
fixing and readjusting of the rates of contribution of its mem-
bers from time to time; and it shall have. the power to change,
alter, add to or amend such constitution and by-laws and shall
have such other powers as are necessary and incidental to carry-
ing into effect the objects and purposes of the society.