CHAPTER 356

An Act to amend and reenact §§ 38.1-128 and 38.1-124 of the Code of Vir-
ginia, relating to the regulation of the sale of stock in new insurance

companies.
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Be it enacted by the General Assembly of Virginia: .

1. That §§ 38.1-123 and 38.1-124 of the Code of Virginia be amended
and reenacted as follows: .

§ 38.1-123. No stock salesman, broker or other person representing
any insurance company, wherever incorporated, in process of organization
and not licensed to transact business in this State, shall solicit subscrip-
tions to or sell the stock of such company in this State unless and until
such company has furnished the commission full particulars as to the
financial condition and record of the company, and the methods and pro-
posed cost of promotion. Before any such person shall solicit subscrip-
tions to or sell the stock of such company, he shall secure a license therefor
from the commission, which, prior to the issuance of such license, shall
investigate the financial condition and record of the company and the
record of the applicant, and may, for good cause shown, refuse to issue the
license. The fee for each license shall be ten dollars, which shall be collected
by the commission and paid into the general fund of the State treasury.
The cost of promotion, including commissions to stock salesmen and all
expenses of organization of whatever character, shall not exceed five per
centum of the subscription or selling price of each share of stock, and the
commission 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 salesmen or other organization expenses under any sub-
scription 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 sub-
scription to or sale of stock in any such company in series is prohibited *.

The foregoing provisions shall not apply after a company is organized
and actively engaged in the insurance business *.

§ 38.1-124. The fiscal agent or other person engaged in soliciting
subscriptions to or selling the stock of any * insurance company, wherever
incorporated, in process of organization and not licensed to transact bust-
ness in this State, shall file with the commission a surety bond in the amount
of ten per centum of the proposed maximum capital of such company *
conditioned upon the faithful performance of the undertaking in accord-
ance with the provisions of § 38.1-123 by both such agent or other person
and his or its salesmen.