Chap. 17.—An ACT to amend Chapter 529, Acts of 1928, approved March 28, 1928,
as amended, which amended and re-enacted, in its entirety, Chapter 408, Acts
of 1918, approved March 23, 1918, pertaining to the offer, sale, et cetera, of
securities, by adding a new section, numbered 5-a, defining certain terms, re-
quiring any company proposing to sell, selling, or having sold certain kinds of
securities, in Virginia, to make and maintain a deposit as security for the per-
formance of the obligations assumed, or otherwise to provide security, as
determined by the State Corporation Commission; providing for the appoint-
ment of a receiver for any such company under certain circumstances ; requiring
certain steps to be taken, or certain conditions to exist, before application for a
receiver for any such company by any person other than the State Corporation
Commission as provided; providing for the custody, control, et cetera, of the
deposit when made; and declaring an emergency. [S B 4]

Approved October 5, 1942

1. Be it enacted by the General Assembly of Virginia, That chapter
five hundred and twenty-nine, Acts of nineteen hundred and twenty-eight,
approved March twenty-eighth, nineteen hundred and twenty-eight, as
amended, which amended and re-enacted, in its entirety, chapter four
hundred and eight, Acts of nineteen hundred and eighteen, approved
March twenty-three, nineteen hundred and eighteen, be amended by add-
ing a new section, numbered five-a, as follows:

Section 5-a.—(a) Definitions—When used in this section, unless
the context clearly requires otherwise, (1) “Company” means any per-
son, firm, company, association, or corporation; (2) “Face amount cer-
tificate” means any certificate, investment contract, or other security
which represents an obligation on the part of its issuer to pay a stated
or determinable sum or sums at a fixed or determinable date or dates
more than twenty-four months after the date of issuance in consideration
of the payment of periodic installments of a stated or determinable amount
(which security shall be known as a face amount certificate of the “in-
stallment type’), or any security which represents a similar obligation
on the part of a face amount certificate company the consideration for
which is the payment of a single lump sum (which security shall be known
as a “fully-paid face amount security”) ; (3) “Commission” means the
State Corporation Commission of Virginia; (4) “Qualified investments”
means investments of a kind which life insurance companies are per-
mitted to invest in or hold under the provisions of the New York insur-
ance laws and such investments as the Commission shall by rule, regula-
tion or order authorize as qualified investments; (5) “Central Fund”
means a deposit of qualified investments for the protection of investors
not protected by a special deposit required to be maintained in any State.

(b) Deposit requirements.—In addition to such other provisions or
requirements of this chapter as may be initially applicable to face amount
certificate companies, or as may be required of such companies by the
Commission, under, and in pursuance of, the provisions of this chapter
the Commission may, in the public interest, or for the protection of inves-
tors, after ten days notice and an opportunity to be heard, require, by
rule, regulation or order, any company which proposes to issue, or whict
has issued and has outstanding, face amount certificates in this State
except such companies as are required pursuant to some law of the
United States to deposit and, in pursuance of such requirement, have de:
posited securities for the protection of certificate holders in accordance
with the requirements of that law, to deposit and maintain, upon such
terms and conditions as the Commission prescribes and as are appro-
priate for the protection of investors, with the Treasurer of Virginia,
qualified investments in an aggregate amount and value equal to the ‘lia-
bility, from time to time, of the company tocertificate holders in this
State, and the Commission has authority, upon entry of an order in-
stituting a proceeding which has for its purpose the determination of the
matter of necessity for a deposit, or at any time during the pendency of
such proceeding, to take such steps, by temporary injunction or other-
wise, as are deemed necessary in the public interest and for the protection
of the interests of investors; provided, that should such company main-
tain deposits in a central fund for the protection of its investors, where-
ever they may be located, in a manner satisfactory to the Commission,
such deposit. may be in lieu of any deposit which may be directed to be
made in this State for the protection of Virginia investors as hereinbefore
provided ; the acceptance of a central fund in lieu of deposit as herein-
before provided for shall not operate to preclude the exercise of powers
conferred upon the Commission by this section at any time it may deem
it necessary or appropriate for the protection of investors.

(c) Effect of failure or refusal; Receiverships—Should any such
company, having heretofore issued and sold face amount certificates in
this State, such certificates, in whole or in part, being still outstanding,
fail or refuse to deposit and maintain qualified investments in this State
in accordance with the requirements of the Commission made in pur-
suance of the authority conferred by this Section, or if the Commission is
of the opinion that any such company doing business in this State is in
an insolvent condition the Commission may file a bill in equity in the
Circuit Court of the city of Richmond for the administering of the assets
of the company as an insolvent and/or for the purpose of taking posses-
sion of its property in this State and of distribution of its assets among
those entitled thereto according to their respective rights, and, in addi-
tion to other requisite parties, the Treasurer of Virginia shall be made a
party to the suit in the event a deposit has been made under the provisions
of this section and the funds shall be distributed by order of the court.

(d) Prerequisite to filing of suit by claimants.—No court of equity
in this State shall entertain a bill to place any face amount certificate com-
pany chartered, or lawfully doing business, under the laws of this State
and being, or having been, supervised by the Commission under this
chapter, upon application of any person, other than the Commission, in
the hands of a receiver, unless the applicant for such receivership is a
judgment creditor of’ such company and the judgment has remained for
a period of thirty days unpaid, not suspended or superseded, until such
applicant shall have presented a copy of his bill to the Commission for
the purpose of investigation of the matters and things involved in the
bill, and shall have given reasonable notice ta the company involved that
a copy of the proposed bill has been lodged with the Commission. After
the Commission has completed its investigation it shall make a recom-
mendation to the court in which the bill is proposed to be filed that the
receiver prayed for be, or be not, appointed.
(e) Prerequisites to withdrawal of investments.—Qualified in-
vestments deposited in accordance with the requirements of the Com-
mission as provided in this section may be withdrawn by the company
at its option whenever other qualified investments are deposited in an
equivalent amount and value with the Treasurer of Virginia in substitu-
tion therefor, or to the extent of any excess value over the aggregate
amount of its liability on all of its face amount certificates outstanding
in Virginia, whether heretofore or hereafter issued or sold. The Treasurer
of Virginia shall permit the withdrawal of any such investments, as in
this subdivision, (e), provided, only upon the presentation by the com-
pany of proper authorization from the Commission for such withdrawal.

f) Power and Duties of Treasurer.—The Treasurer of Virginia
shall receipt to the company and to the Commission for the qualified in-
vestments deposited with him. Upon the face value of such deposit the
Treasurer shall make an annual assessment of one-twentieth of one per-
centum to be by him collected from such company to defray the expense
of his office in the safekeeping and handling of such deposits, to be paid
by him into the general fund of the State treasury. Until the court other-
wise orders in a proceeding pursuant to a bill in equity as herein provided,
the Company shall be entitled to collect, receive and retain the income
from and/or payments made on any investments deposited with the
Treasurer, provided that the value of the investments on deposit shall
not at any time be less than the value required to be deposited. Interest
coupons, if any, shall be surrendered by the Treasurer to the Company,
so long as it shall be entitled to receive such interest, not more than
twenty (20) nor less than ten (10) days prior to their respective
maturities.

The State shall be responsible for the safekeeping of all such de-
posits with the Treasurer of Virginia and if said deposits or any part
thereof shall be lost, destroyed or misappropriated, the State shall make
good such loss to the company making the deposit.

2. An emergency exists and this act is in force from its passage.