31A-5-304 - Promoter stock.
31A-5-304. Promoter stock.
(1) While the organization permit is effective, the incorporators, directors, and principalofficers of a stock corporation shall in the aggregate subscribe and pay, at the public offeringprice, at least $150,000 in cash or in property of equivalent value approved by the commissionerunder Subsection 31A-5-207(1)(a) or (2)(a), for shares offered by the corporation under theorganization permit.
(2) (a) Certificates representing promotional securities and any stock received on thoseshares as the result of a stock dividend, stock split, or exercise of preemptive or conversionrights, shall be placed in escrow with a depository satisfactory to the commissioner under anagreement providing that the shares may not be transferred without the approval of thecommissioner.
(b) If the corporation issues any life insurance policies, any shares subject to this sectionshall be released from escrow five years after issuance of the certificate of authority. In othercases, the shares shall be released from escrow three years after issuance of the certificate ofauthority.
(3) The commissioner's approval of the transfer of promoter stock under Subsection(2)(a):
(a) shall be granted upon request, if the corporation has made an addition to earnedsurplus in each of the two immediately preceding years of at least 15% of the capital and surplusraised by the sale of shares under the organization permit; and
(b) may be granted upon a showing of hardship by the shareholder or his estate orlegatee, if the release from escrow of the shares or a portion of the shares would not, in thecommissioner's opinion, endanger the interests of insureds or the public.
(4) For three years after the issuance of the certificate of authority, an option to purchasestock may be issued only under a plan approved by the commissioner.
(5) This section does not apply to promotional securities issued prior to July 1, 1986.
Enacted by Chapter 242, 1985 General Session