12160-12170

INSURANCE CODE
SECTION 12160-12170




12160.  (a) A person shall not render or agree to render motor club
service in this state without first obtaining from the commissioner a
certificate of authority to act as a motor club.
   (b) The issuance, sale, or offer for sale in this state of
securities of its own issue by any motor club shall be subject to the
provisions of Article 8 (commencing with Section 820) of Chapter 1
of Part 2 of Division 1 of this code the same as if motor clubs were
included in Section 826 thereof, and any such club shall not be
subject to the Corporate Securities Law in the Corporations Code.




12161.  Application for a certificate of authority shall be made on
a form prescribed by the commissioner, accompanied by a filing fee of
two thousand sixty-five dollars ($2,065). Such certificate shall not
be granted until the applicant conforms to the requirements of this
part and the laws of this state prerequisite to its issue. After such
issue the holder shall continue to comply with the requirements of
this part and the laws of this state.



12162.  The commissioner shall not issue a certificate of authority
to any motor club until:
   (a) It files with him the following:
   1. A formal application for the certificate in such form and
detail as the commissioner requires, executed under oath by its
president or other principal officer.
   2. A certified copy of its charter or articles of incorporation
and its bylaws, if any.
   3. A copy of its latest financial statement, or report of
independent audit as the commissioner may require; or, in the event
neither is available, its most recent operating statement and balance
sheet. Any such financial statement, audit, operating and balance
sheet shall be verified by the person compiling or making the same
and by an executive officer of the applicant.
   4. If it is a foreign corporation, a certificate from its
domiciliary state regulatory authority executed not more than 30 days
before the filing of its application that it is duly authorized to
do a motor club business in that state.
   5. An explanation of its plan of doing business, and copies of the
following: its application for membership; the proposed membership
certificate or identification card; any proposed addendum thereto;
any individual insurance policy and any group master policy and
individual certificates thereunder to be offered; any service
contract to be issued.
   6. Such other information as the commissioner may find necessary
in order to determine applicant's qualifications.
   (b) It first deposits security with the commissioner in one of the
following forms:
   1. Securities of the kinds prescribed by this code for capital
fund investments by stock insurers and approved by the commissioner,
in the amount of one hundred thousand dollars ($100,000) based on par
value or market value, whichever is less. The making, maintenance
and withdrawal of such deposits and the substitution of securities
therein shall be governed by Article 11 (commencing with Section 939)
of Chapter 1 of Part 2 of Division 1; or
   2. A surety bond on a form prescribed by the Attorney General of
this state, executed by an admitted surety insurer in the penal sum
of one hundred thousand dollars ($100,000).
   (c) It pays to the commissioner an annual license fee of one
hundred seventy-seven dollars ($177).
   (d) Its name is approved by the commissioner under the provisions
of Section 881, the provisions of which section are hereby made
applicable to motor clubs.
   (e) It proves by affidavits of its officers, directors, managers,
and individual owners of more than 10 percent on a form prescribed by
the commissioner that it is not disqualified under the provisions of
Section 704.5 of this code.
   (f) It satisfies the commissioner it is qualified as respects each
of the subjects enumerated in subdivisions (b), (c), (e), (f), (h),
(i), and (j) of Section 717, when those subjects are read in the
sense of protection to its members instead of policyholders.
   (g) It is a separate legal entity capable of being examined by the
commissioner as provided in this part.



12162.5.  All motor clubs applying for a certificate of authority to
act as a motor club in this state shall demonstrate to the
satisfaction of the commissioner that such club has a net worth of
not less than two hundred fifty thousand dollars ($250,000). For the
purposes of Sections 12162.5 and 12162.6, net worth is defined as the
excess of total assets over total liabilities. Such net worth shall
be maintained at all times as a condition for the continuance of its
certificate of authority to act as a motor club in this state.



12162.6.  (a) A motor club holding a certificate of authority to act
as a motor club granted prior to January 1, 1992, may continue to
retain the certificate until July 1, 1996, without complying with the
increased minimum net worth requirement of Section 12162.5.
   (b) A motor club shall be deemed to be insolvent and subject to
Section 12164 proceedings whenever its net worth is less than two
hundred fifty thousand dollars ($250,000) and it fails to comply with
one of these two conditions:
   (1) An audit by an independent certified public accountant with an
audit report prepared by the certified public accountant and filed
with the commissioner no later than June 30 of the year following the
year covered by the audit.
   (2) A demonstration to the satisfaction of the commissioner, on a
quarterly basis, of an amount of liquid assets sufficient to satisfy
its current liabilities to members.



12162.7.  For purposes of this article, "liquid assets" means cash,
cash equivalents, and marketable securities readily convertible into
cash. Liquid assets also include bonds, stocks, certificates of
deposit, negotiable short-term instruments, service members' dues
receivable not over 90 days, receivables due from affiliates not over
90 days, acquisition costs deferred not over 90 days, federal income
tax recoverables, and interest and dividends due and accrued.



12162.8.  If any portion of the audit report required by paragraph
(1) of subdivision (b) of Section 12162.6 includes a qualified
opinion as to the financial condition of the motor club or its
ability to exist as a going concern, the motor club shall be
considered materially deficient under Section 717, and subject to
Section 12164. Similarly, if a motor club qualifying under paragraph
(2) of subdivision (b) of Section 12162.6 fails to demonstrate to the
commissioner an amount of liquid assets sufficient to satisfy its
current liabilities to members, it shall be considered materially
deficient under Section 717 and subject to Section 12164.




12163.  (a) The security required by subdivision (b) of Section
12162 shall thereafter be continuously maintained by a motor club in
one of the forms prescribed. Failure of a motor club so to maintain
the same shall be cause for revoking its certificate of authority.
   (b) Such security shall be for the protection, use, and benefit of
all persons whose applications for membership in a motor club have
been accepted by such club or its representative and of this state as
respects fees, fines, penalties, and taxes. Such security shall be
subject to the following conditions, and, if a bond, shall be
expressly so conditioned:
   1. The club shall faithfully furnish and render to all persons
whose applications for membership have been accepted any and all of
the motor club benefits and services sold or offered for sale by it.
   2. The club will faithfully conform to all provisions of law of
the state pertaining to the sale and rendering of "motor club service"
as defined and provided in Part 5 (commencing with Section 12140) of
Division 2 of this code.
   3. The club will promptly pay all fees, fines, penalties, and
taxes which may be levied against it under authority of law.
   4. If the club ceases to do business in this state as a motor
club, it shall comply with the appropriate withdrawal procedure.
   (c) Any person defrauded or injured by any wrongful act,
misrepresentation, or failure on the part of the club with respect to
the selling or rendering of any of its benefits or services may
bring suit on the bond, if the security be a bond, in his own name.
The commissioner may bring suit on such bond. If the security be a
deposit of securities, any such a person or the commissioner may levy
upon the same in execution of a judgment.




12164.  (a) The commissioner may revoke or suspend the certificate
of authority of a motor club whenever, after a hearing in accordance
with the procedure provided in Section 701, he finds that any of the
following circumstances exist:
   1. The club has violated any provision of this part.
   2. It or its officers refuse to submit to an examination, as
provided for in Section 12169.
   3. It is transacting business fraudulently.
   4. It is no longer able to qualify for issuance to it of a
certificate of authority as a motor club.
   (b) The commissioner may give notice of such revocation or
suspension to the public in such manner as he deems proper.
   (c) All of the provisions of Article 14 (commencing with Section
1010) of Chapter 1 of Part 2 of Division 1 of this code not
inconsistent with this part shall apply to motor clubs.
   For the purpose of this part, "insolvency" means that a club's
assets are less than its liabilities.



12165.  Subject to the annual fee provisions herein, every
certificate of authority issued or held under this part shall be for
an indefinite term and, unless sooner revoked by the commissioner,
shall terminate upon occurrence of any of the following:
   (a) Upon the holder's ceasing to exist as a separate entity.
   (b) Upon the winding up, or dissolution, or expiration, or
forfeiture of the holder's corporate existence.
   (c) Upon completion of the withdrawal procedure prescribed by
Article 15 (commencing with Section 1070) of Chapter 1 of Part 2 of
Division 1 of this code and surrender by the holder of its
certificate of authority and cancellation of the same by the
commissioner. All provisions of such article not inconsistent with
this part shall apply.
   (d) Upon the entry of a final court order in a proceeding under
said Article 14 (commencing with Section 1010), Chapter 1 of Part 2
of Division 1 of this code.



12166.  Notwithstanding the preceding provisions for a certificate
of authority of indefinite term, each holder of a certificate of
authority under this chapter shall owe and pay in advance to the
commissioner an annual fee of one hundred fifty dollars ($150) on
account of such certificate of authority until its final termination
or revocation. Such fee shall be for annual periods commencing on
July 1st of each year and ending on June 30th of each year and shall
be due on each March 1st and shall be delinquent on and after each
April 1st.


12167.  Qualification of a motor club for a certificate of authority
under this part does not require prior qualification with the
Secretary of State under the Corporations Code for an intrastate
business, but the issuance to it of a certificate of authority under
this part does not relieve such foreign applicant of any duty to
qualify with the Secretary of State pursuant to the Corporations Code
before transacting intrastate business in this state.



12168.  Annually on or before March 1st of each year, copies of any
instruments making any changes in articles of incorporation, bylaws,
and membership certificate or identification card or service contract
required by this part to be filed with the application for admission
shall be filed with the commissioner. In the case of articles of
incorporation, an amendment or certificate of amendment shall be
certified by the official custodian of the original as a true copy of
the same on file in his office. Amended bylaws or other papers shall
be certified by the corporation secretary over the corporate seal to
be true copies of the same currently adopted. The commissioner shall
require the payment of twenty dollars ($20) in advance for each such
annual filing of amended documents or papers pursuant to this
article.



12169.  (a) Whenever the commissioner has reasonable cause to
believe that a motor club is insolvent or is transacting its business
in a fraudulent manner, he may demand from the club a statement
under oath setting forth its assets and liabilities. He may, for the
purpose of verifying the correctness of such statement, examine the
books and affairs of the club.
   (b) If such statement is not furnished within 20 days from the
time of such demand by the commissioner, or if, upon the examination
of such records, the statement furnished or any record examined is
found to contain any willful misstatement of fact, the expense of the
examination shall be paid by the motor club.
   (c) Whenever any foreign motor club applies for admission, the
commissioner may make, or cause to be made by the motor club
regulatory authority of its domiciliary state, an examination of the
applicant's motor club business and affairs. Whenever such an
examination is made, all of the provisions of Article 4 (commencing
with Section 730) Chapter 1 of Part 2 of Division 1 of this code not
inconsistent with this part shall be applicable.




12170.  Motor clubs certificated on the effective date of this
chapter shall not be required to be recertificated, but thereafter
shall be subject to the provisions of this chapter and shall be
issued continuous certificates of authority subject to the conditions
provided in this chapter.