3rd Engrossment - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to commerce; providing enforcement authority 1.3 to the commissioner; providing technical changes; 1.4 regulating certain disclosures; specifying the license 1.5 term and fees of a managing general agent; regulating 1.6 motor vehicle service contracts; regulating 1.7 underwriting practices; regulating insurance brokerage 1.8 business; regulating workers' compensation 1.9 self-insurance; regulating securities broker-dealers 1.10 and investment advisers; authorizing the commissioner 1.11 to withdraw certain inactive registration 1.12 applications; regulating real estate and insurance 1.13 agent continuing education; regulating the contractor 1.14 recovery fund; making collection agencies responsible 1.15 for the acts of collectors; providing standards of 1.16 conduct for notarial acts; regulating unclaimed 1.17 property; amending Minnesota Statutes 1998, sections 1.18 45.027, subdivision 7a; 60A.052, subdivision 1; 1.19 60A.129, subdivision 5; 60H.03, by adding a 1.20 subdivision; 60K.03, subdivision 4; 60K.14, 1.21 subdivision 1; 61A.092, subdivision 6; 62A.136; 1.22 62C.11, subdivision 1; 62C.142, subdivision 2a; 1.23 62E.04, subdivision 4; 62H.10, subdivision 4; 62S.02, 1.24 subdivision 1; 64B.30, subdivision 1; 65B.29, 1.25 subdivisions 2 and 3; 72A.20, subdivision 17; 72A.499, 1.26 subdivision 1; 79A.04, subdivisions 1, 2, 7, and 9; 1.27 79A.11, subdivision 2, and by adding a subdivision; 1.28 79A.22, subdivisions 3 and 11; 80A.04, subdivisions 2 1.29 and 3; 80A.07, subdivision 1; 80A.10, subdivision 2; 1.30 80C.05, subdivision 4; 80C.07; 82.22, subdivision 13; 1.31 82A.04, subdivision 4, and by adding a subdivision; 1.32 82B.14; 83.23, by adding a subdivision; 308A.711, 1.33 subdivision 1; 326.975, subdivision 1; and 345.515; 1.34 Minnesota Statutes 1999 Supplement, sections 60A.052, 1.35 subdivision 2; 60K.19, subdivision 8; 62J.535, 1.36 subdivision 2; 72A.20, subdivision 23; 79A.22, 1.37 subdivision 2; 79A.23, subdivisions 1, 2, and 3; 1.38 79A.24, subdivision 2; and 80A.15, subdivision 2; Laws 1.39 1999, chapter 177, section 89; proposing coding for 1.40 new law in Minnesota Statutes, chapters 60K; 332; and 1.41 359; repealing Minnesota Statutes 1998, sections 1.42 62A.285, subdivision 4; 62A.651; and 65B.13. 1.43 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.44 Section 1. Minnesota Statutes 1998, section 45.027, 2.1 subdivision 7a, is amended to read: 2.2 Subd. 7a. [AUTHORIZED DISCLOSURES OF INFORMATION AND 2.3 DATA.] (a) The commissioner may release and disclose any active 2.4 or inactive investigative information and data on licensees to 2.5 any national securities exchange or national securities 2.6 association registered under the Securities Exchange Act of 1934 2.7 when necessary for the requesting agency in initiating, 2.8 furthering, or completing an investigation. 2.9 (b) The commissioner may release any active or inactive 2.10 investigative data relating to the conduct of the business of 2.11 insurance to the Office of the Comptroller of the Currency or 2.12 the Office of Thrift Supervision in order to facilitate the 2.13 initiation, furtherance, or completion of the investigation. 2.14 Sec. 2. Minnesota Statutes 1998, section 60A.052, 2.15 subdivision 1, is amended to read: 2.16 Subdivision 1. [GROUNDS.] The commissioner may by order 2.17 take any or all of the following actions: (a) deny, suspend, or 2.18 revoke a certificate of authority; (b) censure the insurance 2.19 company;
or(c) impose a civil penalty as provided for in 2.20 section 45.027, subdivision 6; or (d) under a written agreement 2.21 with the insurance company based upon the company's financial 2.22 condition, impose conditions or restrictions on the insurance 2.23 company's authority to transact business in Minnesota. In order 2.24 to take this action the commissioner must find that the order is 2.25 in the public interest, and the insurance company: 2.26 (1) has a board of directors or principal management that 2.27 is incompetent, untrustworthy, or so lacking in insurance 2.28 company managerial experience as to make its operation hazardous 2.29 to policyholders, its stockholders, or to the insurance buying 2.30 public; 2.31 (2) is controlled directly or indirectly through ownership, 2.32 management, reinsurance transactions, or other business 2.33 relations by any person or persons whose business operations are 2.34 or have been marked by manipulation of any assets, reinsurance, 2.35 or accounts as to create a hazard to the company's 2.36 policyholders, stockholders, or the insurance buying public; 3.1 (3) is in an unsound or unsafe condition; 3.2 (4) has the actual liabilities that exceed the actual funds 3.3 of the company; 3.4 (5) has filed an application for a license which is 3.5 incomplete in any material respect or contains any statement 3.6 which, in light of the circumstances under which it was made, 3.7 contained any misrepresentation or was false, misleading, or 3.8 fraudulent; 3.9 (6) has pled guilty, with or without explicitly admitting 3.10 guilt, pled nolo contendere, or been convicted of a felony, 3.11 gross misdemeanor, or misdemeanor involving moral turpitude, or 3.12 similar conduct; 3.13 (7) is permanently or temporarily enjoined by any court of 3.14 competent jurisdiction from engaging in or continuing any 3.15 conduct or practice involving any aspect of the insurance 3.16 business; 3.17 (8) has violated or failed to comply with any order of the 3.18 insurance regulator of any other state or jurisdiction; 3.19 (9) has had a certificate of authority denied, suspended, 3.20 or revoked, has been censured or reprimanded, has been the 3.21 subject of any other discipline imposed by, or has paid or has 3.22 been required to pay a monetary penalty or fine to, another 3.23 state; 3.24 (10) agents, officers, or directors refuse to submit to 3.25 examination or perform any related legal obligation; or 3.26 (11) has violated or failed to comply with, any of the 3.27 provisions of the insurance laws including chapter 45 or 3.28 chapters 60A to 72A or any rule or order under those chapters. 3.29 Sec. 3. Minnesota Statutes 1999 Supplement, section 3.30 60A.052, subdivision 2, is amended to read: 3.31 Subd. 2. [SUSPENSION OR REVOCATION OF AUTHORITY OR 3.32 CENSURE.] If the commissioner determines that one of the 3.33 conditions listed in subdivision 1 exists, the commissioner may 3.34 issue an order requiring the insurance company to show cause why 3.35 any or all of the following should not occur: (1) revocation or 3.36 suspension of any or all certificates of authority granted to 4.1 the foreign or domestic insurance company or its agent; (2) 4.2 censuring of the insurance company; (3) cancellation of all or 4.3 some of the company's insurance contracts then in force in this 4.4 state; or(4) the imposition of a civil penalty; or (5) under a 4.5 written agreement with the insurance company based upon the 4.6 company's financial condition, imposition of conditions or 4.7 restrictions on the insurance company's authority to transact 4.8 business in Minnesota. The order shall be calculated to give 4.9 reasonable notice of the time and place for hearing thereon, and 4.10 shall state the reasons for the entry of the order. All 4.11 hearings shall be conducted in accordance with chapter 14. The 4.12 insurer may waive its right to the hearing. If the insurer is 4.13 under the supervision or control of the insurance department of 4.14 the insurer's state of domicile, that insurance department, 4.15 acting on behalf of the insurer, may waive the insurer's right 4.16 to the hearing. After the hearing, the commissioner shall enter 4.17 an order disposing of the matter as the facts require. If the 4.18 insurance company fails to appear at a hearing after having been 4.19 duly notified of it, the company shall be considered in default, 4.20 and the proceeding may be determined against the company upon 4.21 consideration of the order to show cause, the allegations of 4.22 which may be considered to be true. 4.23 Sec. 4. Minnesota Statutes 1998, section 60A.129, 4.24 subdivision 5, is amended to read: 4.25 Subd. 5. [CONSOLIDATED FILING.] (a) The commissioner may 4.26 allow an insurer to file a consolidated loss reserve 4.27 certification required by subdivision 2, in lieu of separate 4.28 loss certifications and may allow an insurer to file 4.29 consolidated or combined audited financial statements required 4.30 by subdivision 3, paragraph (a), in lieu of separate annual 4.31 audited financial statements, where it can be demonstrated that 4.32 an insurer is part of a group of insurance companies that has a 4.33 pooling or 100 percent reinsurance agreement which substantially 4.34 affects the solvency and integrity of the reserves of the 4.35 insurer and the insurer cedes all of its direct and assumed 4.36 business to the pool. An affiliated insurance company not 5.1 meeting these requirements may be included in the consolidated 5.2 or combined audited financial statements, if the company's total 5.3 admitted assets are less than five percent of the consolidated 5.4 group's total admitted assets. If these circumstances exist, 5.5 then the company may file a written application to file a 5.6 consolidated loss reserve certification and/or consolidated or 5.7 combined audited financial statements. This application shall 5.8 be for a specified period. 5.9 (b) A consolidated annual audit filing shall include a 5.10 columnar consolidated or combining worksheet. Amounts shown on 5.11 the audited consolidated or combined financial statement shall 5.12 be shown on the worksheet. Amounts for each insurer shall be 5.13 stated separately. Noninsurance operations may be shown on the 5.14 worksheet on a combined or individual basis. Explanations of 5.15 consolidating or eliminating entries shall be shown on the 5.16 worksheet. A reconciliation of any differences between the 5.17 amounts shown in the individual insurer columns of the worksheet 5.18 and comparable amounts shown on the annual statement of the 5.19 insurers shall be included on the worksheet. 5.20 Sec. 5. Minnesota Statutes 1998, section 60H.03, is 5.21 amended by adding a subdivision to read: 5.22 Subd. 4. [TERM AND FEES.] The term of a managing general 5.23 agent license issued under this section and the license fees 5.24 imposed are the same as those applicable to a licensed insurance 5.25 agent under chapter 60K. 5.26 Sec. 6. Minnesota Statutes 1998, section 60K.03, 5.27 subdivision 4, is amended to read: 5.28 Subd. 4. [TERM.] All licenses issued pursuant to this 5.29 section remain in force until voluntarily terminated by the 5.30 licensee, not renewed as prescribed in section 60K.06, or until 5.31 suspended or revoked by the commissioner. A voluntary 5.32 termination occurs when the license is surrendered to the 5.33 commissioner with the request that it be terminated or when the 5.34 licensee dies, or when the licensee is dissolved or its 5.35 existence is terminated. In the case of a nonresident license, 5.36 a voluntary termination also occurs upon the happening of the 6.1 event described in subdivision 3, paragraph (c). 6.2 Every licensed agent shall notify the commissioner within 6.3 30ten days of a change of name, address, or information 6.4 contained in the application. 6.5 Sec. 7. [60K.081] [BROKERAGE BUSINESS.] 6.6 Every insurance agent licensed to transact business in this 6.7 state may procure the insurance of risks, or parts of risks, in 6.8 the class or classes of insurance for which the agent is 6.9 licensed, from an insurer authorized to transact business in 6.10 this state, when the agent is not an appointed agent of the 6.11 insurer, but the insurance must be consummated only through an 6.12 appointed agent of the insurer. 6.13 Sec. 8. Minnesota Statutes 1998, section 60K.14, 6.14 subdivision 1, is amended to read: 6.15 Subdivision 1. [PERSONAL SOLICITATION OF INSURANCE SALES.] 6.16 (a) [DEFINITIONS.] For the purposes of this section, the 6.17 following terms have the meanings given them: 6.18 (1) "agent" means a person, copartnership, or corporation 6.19 required to be licensed pursuant to section 60K.02; and 6.20 (2) "personal solicitation" means any contact by an agent, 6.21 or any person acting on behalf of an agent, made for the purpose 6.22 of selling or attempting to sell insurance, when either the 6.23 agent or a person acting for the agent contacts the buyer by 6.24 telephone or in person, except: (i) an attempted sale in which 6.25 the buyer personally knows the identity of the agent, the name 6.26 of the general agency, if any, which the agent represents, and 6.27 the fact that the agent is an insurance agent; (ii) an attempted 6.28 sale in which the prospective purchaser of insurance initiated 6.29 the contact; or (iii) a personal contact which takes place at 6.30 the agent's place of business. 6.31 (b) [DISCLOSURE REQUIREMENT.] Before a personal 6.32 solicitation, the agent or person acting for an agent shall, at 6.33 the time of initial personal contact with the potential buyer, 6.34 clearly and expressly disclose in writing: 6.35 (1) the name and state insurance agent license numberof 6.36 the person making the contact; 7.1 (2) the name of the agent, general agency, or insurer that 7.2 person represents; and 7.3 (3) the fact that the agent, agency, or insurer is in the 7.4 business of selling insurance. 7.5 If the initial personal contact is made by telephone, the 7.6 disclosures required by this subdivision need not be made in 7.7 writing. 7.8 (c) [FALSE REPRESENTATION OF GOVERNMENT AFFILIATION.] No 7.9 agent or person acting for an agent shall make any communication 7.10 to a potential buyer that indicates or gives the impression that 7.11 the agent is acting on behalf of a government agency. 7.12 Sec. 9. Minnesota Statutes 1999 Supplement, section 7.13 60K.19, subdivision 8, is amended to read: 7.14 Subd. 8. [MINIMUM EDUCATION REQUIREMENT.] Each person 7.15 subject to this section shall complete a minimum of 30 credit 7.16 hours of courses accredited by the commissioner during each 7.17 24-month licensing period , two hours of which must be devoted to7.18 state law, regulations, and rules applicable to the line or7.19 lines of insurance for which the agent is licensed. Any person 7.20 whose initial licensing period extends more than six months 7.21 shall complete 15 hours of courses accredited by the 7.22 commissioner during the initial license period. Any person 7.23 teaching or lecturing at an accredited course qualifies for 7.24 1-1/2 times the number of credit hours that would be granted to 7.25 a person completing the accredited course. No more than 15 7.26 credit hours per licensing period may be credited to a person 7.27 for courses sponsored by, offered by, or affiliated with an 7.28 insurance company or its agents. Courses sponsored by, offered 7.29 by, or affiliated with an insurance company or agent may 7.30 restrict its students to agents of the company or agency. 7.31 Sec. 10. Minnesota Statutes 1998, section 61A.092, 7.32 subdivision 6, is amended to read: 7.33 Subd. 6. [APPLICATION.] This section applies to a policy, 7.34 certificate of insurance, or similar evidence of coverage issued 7.35 to a Minnesota resident or issued to provide coverage to a 7.36 Minnesota resident. This section does not apply to: (1) a 8.1 certificate of insurance or similar evidence of coverage that 8.2 meets the conditions of section 61A.093, subdivision 2; or (2) a 8.3 group life insurance policy that contains a provision permitting 8.4 the certificate holder, upon termination or layoff from 8.5 employment, to retain the coverage provided under the group 8.6 policy by paying premiums directly to the insurer, provided that 8.7 the employer shall give the employee notice of the employee's 8.8 and each related certificate holder's right to continue the 8.9 insurance by paying premiums directly to the insurer. A related 8.10 certificate holder is an insured spouse or dependent child of 8.11 the employee. Upon termination of this group policy, each 8.12 covered employee, spouse, and dependent child is entitled to 8.13 have issued to them a life conversion policy as prescribed in 8.14 section 61A.09, subdivision 1, paragraph (h). 8.15 Sec. 11. Minnesota Statutes 1998, section 62A.136, is 8.16 amended to read: 8.17 62A.136 [DENTAL AND VISION PLAN COVERAGE.] 8.18 The following provisions do not apply to health plans 8.19 providing dental or vision coverage only: sections 62A.041; 8.20 62A.0411; 62A.047; 62A.149; 62A.151; 62A.152; 62A.154; 62A.155; 8.21 62A.17, subdivision 6; 62A.21, subdivision 2b; 62A.26; 8.22 62A.28; and62A.285; 62A.30; 62A.304; 62A.3093; and 62E.16. 8.23 Sec. 12. Minnesota Statutes 1998, section 62C.11, 8.24 subdivision 1, is amended to read: 8.25 Subdivision 1. A service plan corporation shall annually 8.26 on or before the last day of March, file with the commissioner a 8.27 financial statement, in such form as the commissioner shall 8.28 prescribe, verified by not less than two of its principal 8.29 officers, showing the financial condition of the corporation as 8.30 of December 31 of the preceding year. The statement shall8.31 include an audit report certified by an independent certified8.32 public accountant and reconciled and adjusted to conform to the8.33 financial statement.8.34 Sec. 13. Minnesota Statutes 1998, section 62C.142, 8.35 subdivision 2a, is amended to read: 8.36 Subd. 2a. [CONTINUATION PRIVILEGE.] Every subscriber 9.1 contract, other than a contract whose continuance is contingent 9.2 upon continued employment or membership, shall contain a 9.3 provision which permits continuation of coverage under the 9.4 contract for the subscriber's former spouse and children upon 9.5 entry of a valid decree of dissolution of marriage , if the9.6 decree requires the subscriber to provide continued coverage for9.7 those persons. The coverage may be continued until the earlier 9.8 of the following dates: 9.9 (a) the date of remarriage of either the subscriber orthe 9.10 subscriber's former spouse becomes covered under any other group 9.11 health plan; or 9.12 (b) the date coverage would otherwise terminate under the 9.13 subscriber contract. 9.14 The contract must require the group contract holder to, 9.15 upon request, provide the insured with written verification from 9.16 the insurer of the cost of this coverage promptly at the time of 9.17 eligibility for this coverage and at any time during the 9.18 continuation period. In no event shall the amount of premium 9.19 charged exceed 102 percent of the cost to the plan for such 9.20 period of coverage for other similarly situated spouses and 9.21 dependent children with respect to whom the marital relationship 9.22 has not dissolved, without regard to whether such cost is paid 9.23 by the employer or employee. 9.24 Sec. 14. Minnesota Statutes 1998, section 62E.04, 9.25 subdivision 4, is amended to read: 9.26 Subd. 4. [MAJOR MEDICAL COVERAGE.] Each insurer and 9.27 fraternal shall affirmatively offer coverage of major medical 9.28 expenses to every applicant who applies to the insurer or 9.29 fraternal for a new unqualified policy, which has a lifetime 9.30 benefit limit of less than $1,000,000, at the time of 9.31 application and annually to every holder of such an unqualified 9.32 policy of accident and health insurance renewed by the insurer 9.33 or fraternal. The coverage shall provide that when a covered 9.34 individual incurs out-of-pocket expenses of $5,000 or more 9.35 within a calendar year for services covered in section 62E.06, 9.36 subdivision 1, benefits shall be payable, subject to any 10.1 copayment authorized by the commissioner, up to a maximum 10.2 lifetime limit of $500,000. The offer of coverage of major 10.3 medical expenses may consist of the offer of a rider on an 10.4 existing unqualified policy or a new policy which is a qualified 10.5 plan. 10.6 Sec. 15. Minnesota Statutes 1998, section 62H.10, 10.7 subdivision 4, is amended to read: 10.8 Subd. 4. [BROKER.] "Broker" means an agent engaged in 10.9 brokerage business pursuant to section 60K.0860K.081. 10.10 Sec. 16. Minnesota Statutes 1999 Supplement, section 10.11 62J.535, subdivision 2, is amended to read: 10.12 Subd. 2. [COMPLIANCE.] (a) Concurrent with the effective10.13 datesdate of required compliance established under United 10.14 States Code, title 42, sections 1320d to 1320d-8, as amended 10.15 from time to time, for uniform electronic billing standards, all 10.16 health care providers must conform to the uniform billing 10.17 standards developed under subdivision 1. 10.18 (b) Notwithstanding paragraph (a), the requirements for the 10.19 uniform remittance advice report shall be effective 12 months 10.20 after the date of the required compliance of the standards for 10.21 the electronic remittance advice transaction are effective under 10.22 United States Code, title 42, sections 1320d to 1320d-8, as 10.23 amended from time to time. 10.24 Sec. 17. Minnesota Statutes 1998, section 62S.02, 10.25 subdivision 1, is amended to read: 10.26 Subdivision 1. [REQUIREMENTS.] A qualified long-term care 10.27 insurance policy may not be offered, issued, delivered, or 10.28 renewed in this state unless the policy satisfies the 10.29 requirements of this chapter and the filing provisions of 10.30 section 62A.02. A qualified long-term care insurance policy 10.31 must cover qualified long-term care services. 10.32 Sec. 18. Minnesota Statutes 1998, section 64B.30, 10.33 subdivision 1, is amended to read: 10.34 Subdivision 1. [VISITATION AND EXAMINATION.] The 10.35 commissioner, or any person the commissioner may appoint, shall 10.36 have the power of visitation and examination into the affairs of 11.1 any domestic society. The commissioner shall conduct an 11.2 examination at least once in every three yearsas often as is 11.3 required in section 60A.031, subdivision 1. The commissioner 11.4 may: 11.5 (1) employ assistance for the purposes of examination and 11.6 the commissioner, or any person the commissioner may appoint, 11.7 shall have free access to any books, papers, and documents that 11.8 relate to the business of the association; and 11.9 (2) summon and qualify as witnesses, under oath, and 11.10 examine its officers, agents, and employees, or other persons, 11.11 in relation to the affairs, transactions, and condition of the 11.12 association. 11.13 Sec. 19. Minnesota Statutes 1998, section 65B.29, 11.14 subdivision 2, is amended to read: 11.15 Subd. 2. [INSURANCE REQUIRED.] No motor vehicle service 11.16 contract may be issued, sold, or offered for sale in this state 11.17 unless the provider of the service contract is insured under a 11.18 motor vehicle service contract reimbursement insurance policy 11.19 issued by an insurer authorized to do business in this 11.20 state. Insurers issuing such a policy are required to have 11.21 capital and surplus equal to at least $5,000,000 at the end of 11.22 the preceding year. Capital and surplus must be calculated 11.23 using the accounting standards required by section 60A.13. 11.24 Sec. 20. Minnesota Statutes 1998, section 65B.29, 11.25 subdivision 3, is amended to read: 11.26 Subd. 3. [FILING REQUIREMENTS.] No motor vehicle service 11.27 contract may be issued, sold, or offered for sale in this state 11.28 unless a true and correct copy of the service contract and the 11.29 provider's reimbursement insurance policy have been filed with 11.30 the commissioner and either (1) the commissioner has approved it 11.31 or (2) 60 days have elapsed and the commissioner has not 11.32 disapproved it as misleading or violative of public policy. The 11.33 commissioner may, by written notice to the provider, extend the 11.34 review for an additional period not to exceed 60 days. 11.35 Sec. 21. Minnesota Statutes 1998, section 72A.20, 11.36 subdivision 17, is amended to read: 12.1 Subd. 17. [RETURN OF PREMIUMS.] (a) Refusing, upon 12.2 surrender of an individual policy of life insurance in the case 12.3 of the insured's death, or in the case of a surrender prior to 12.4 death, of an individual insurance policy not covered by the 12.5 standard nonforfeiture laws under section 61A.24, to refund to 12.6 the owner all unearned premiums paid on the policy covering the 12.7 insured as of the time of the insured's death or surrender if 12.8 the unearned premium is for a period of more than one 12.9 month. The return of unearned premium must be delivered to the 12.10 insured within 30 days following receipt by the insurer of the 12.11 insured's request for cancellation. 12.12 (b) Refusing, upon termination or cancellation of a policy 12.13 of automobile insurance under section 65B.14, subdivision 2, or 12.14 a policy of homeowner's insurance under section 65A.27, 12.15 subdivision 4, or a policy of accident and sickness insurance 12.16 under section 62A.01, or a policy of comprehensive health 12.17 insurance under chapter 62E, to refund to the insured all 12.18 unearned premiums paid on the policy covering the insured as of 12.19 the time of the termination or cancellation if the unearned 12.20 premium is for a period of more than one month. The return of 12.21 unearned premium must be delivered to the insured within 30 days 12.22 following receipt by the insurer of the insured's request for 12.23 cancellation. 12.24 (c) This subdivision does not apply to policies of 12.25 insurance providing coverage only for motorcycles or other 12.26 seasonally rated or limited use vehicles where the rate is 12.27 reduced to reflect seasonal or limited use. 12.28 (d) For purposes of this section, a premium is unearned 12.29 during the period of time the insurer has not been exposed to 12.30 any risk of loss. Except for premiums for motorcycle coverage 12.31 or other seasonally rated or limited use vehicles where the rate 12.32 is reduced to reflect seasonal or limited use, the unearned 12.33 premium is determined by multiplying the premium by the fraction 12.34 that results from dividing the period of time from the date of 12.35 termination to the date the next scheduled premium is due by the 12.36 period of time for which the premium was paid. 13.1 (e) The owner may cancel a policy referred to in this 13.2 section at any time during the policy period. This provision 13.3 supersedes any inconsistent provision of law or any inconsistent 13.4 policy provision. 13.5 Sec. 22. Minnesota Statutes 1999 Supplement, section 13.6 72A.20, subdivision 23, is amended to read: 13.7 Subd. 23. [DISCRIMINATION IN AUTOMOBILE INSURANCE 13.8 POLICIES.] (a) No insurer that offers an automobile insurance 13.9 policy in this state shall: 13.10 (1) use the employment status of the applicant as an 13.11 underwriting standard or guideline; or 13.12 (2) deny coverage to a policyholder for the same reason. 13.13 (b) No insurer that offers an automobile insurance policy 13.14 in this state shall: 13.15 (1) use the applicant's status as a residential tenant, as 13.16 the term is defined in section 504B.001, subdivision 12, as an 13.17 underwriting standard or guideline; or 13.18 (2) deny coverage to a policyholder for the same reason; or 13.19 (3) make any discrimination in offering or establishing 13.20 rates, premiums, dividends, or benefits of any kind, or by way 13.21 of rebate, for the same reason. 13.22 (c) No insurer that offers an automobile insurance policy 13.23 in this state shall: 13.24 (1) use the failure of the applicant to have an automobile 13.25 policy in force during any period of time before the application 13.26 is made as an underwriting standard or guideline; or 13.27 (2) deny coverage to a policyholder for the same reason. 13.28 This provisionParagraph (c) does not apply if the 13.29 applicant was required by law to maintain automobile insurance 13.30 coverage and failed to do so. 13.31 An insurer may require reasonable proof that the applicant 13.32 did not fail to maintain this coverage. The insurer is not 13.33 required to accept the mere lack of a conviction or citation for 13.34 failure to maintain this coverage as proof of failure to 13.35 maintain coverage. The insurer must provide the applicant with 13.36 information identifying the documentation that is required to 14.1 establish reasonable proof that the applicant did not fail to 14.2 maintain the coverage. 14.3 (d) No insurer that offers an automobile insurance policy 14.4 in this state shall use an applicant's prior claims for benefits 14.5 paid under section 65B.44 as an underwriting standard or 14.6 guideline if the applicant was 50 percent or less negligent in 14.7 the accident or accidents causing the claims. 14.8 (e) No insurer shall refuse to issue any standard or 14.9 preferred policy of motor vehicle insurance or make any 14.10 discrimination in the acceptance of risks, in rates, premiums, 14.11 dividends, or benefits of any kind, or by way of rebate: 14.12 (1) between persons of the same class, or 14.13 (2) on account of race, or 14.14 (3) on account of physical handicap if the handicap is 14.15 compensated for by special training, equipment, prosthetic 14.16 device, corrective lenses, or medication and if the physically 14.17 handicapped person: 14.18 (i) is licensed by the department of public safety to 14.19 operate a motor vehicle in this state, and 14.20 (ii) operates only vehicles that are equipped with 14.21 auxiliary devices and equipment necessary for safe and effective 14.22 operation by the handicapped person, or 14.23 (4) on account of marital dissolution. 14.24 Sec. 23. Minnesota Statutes 1998, section 72A.499, 14.25 subdivision 1, is amended to read: 14.26 Subdivision 1. [NOTICE AND INFORMATION.] (a) In the event 14.27 of an adverse underwriting decision, the insurer or insurance 14.28 agent responsible for the decision shall provide in writing to 14.29 the applicant, policyholder, or individual proposed for coverage: 14.30 (1) the specific reason or reasons for the adverse 14.31 underwriting decision, a summary of the person's rights under 14.32 sections 72A.497 and 72A.498, and that upon request the person 14.33 may receive the specific items of personal information that 14.34 support those reasons and the specific sources of the 14.35 information; or 14.36 (2) the specific reason or reasons for the adverse 15.1 underwriting decision, the specific items of personal and 15.2 privileged information that support those reasons, the names and 15.3 addresses of the sources that supplied the specific items of 15.4 information specified, and a summary of the rights established 15.5 under sections 72A.497 and 72A.498. 15.6 (b) In addition to the requirements of paragraph (a), if 15.7 the adverse underwriting decision is either solely or partially 15.8 based upon a report of credit worthiness, credit standing, or 15.9 credit capacity that an insurer receives from a consumer 15.10 reporting agency, the insurer or insurance agent responsible for 15.11 the decision shall provide in writing to the applicant, 15.12 policyholder, or individual proposed for coverage the primary 15.13 reason or reasons for the credit score or other credit based 15.14 information used by the insurer in the insurer's adverse 15.15 underwriting decision. 15.16 Sec. 24. Minnesota Statutes 1998, section 79A.04, 15.17 subdivision 1, is amended to read: 15.18 Subdivision 1. [ANNUAL SECURING OF LIABILITY.] Each year 15.19 every private self-insuring employer shall secure incurred 15.20 liabilities for the payment of compensation and the performance 15.21 of theits obligations and the obligations of all self-insuring 15.22 employers imposed under chapter 176 by renewing the prior year's 15.23 security deposit or by making a new deposit of security. If a 15.24 new deposit is made, it must be posted within 60 days of the 15.25 filing of the self-insured employer's annual report with the 15.26 commissioner, but in no event later than July 1. 15.27 Sec. 25. Minnesota Statutes 1998, section 79A.04, 15.28 subdivision 2, is amended to read: 15.29 Subd. 2. [MINIMUM DEPOSIT.] The minimum deposit is 110 15.30 percent of the private self-insurer's estimated future liability. 15.31 Up to ten percent of thatThe deposit may be used to secure 15.32 payment of all administrative and legal costs, and unpaid 15.33 assessments required by section 79A.12, subdivision 2, relating 15.34 to or arising from the employer'sits or other employers' 15.35 self-insuring. As used in this section, "private self-insurer" 15.36 includes both current and former members of the self-insurers' 16.1 security fund; and "private self-insurers' estimated future 16.2 liability" means the private self-insurers' total of estimated 16.3 future liability as determined by an Associate or Fellow of the 16.4 Casualty Actuarial Society every year for group member private 16.5 self-insurers and, for a nongroup member private self-insurer's 16.6 authority to self-insure, every year for the first five years. 16.7 After the first five years, the nongroup member's total shall be 16.8 as determined by an Associate or Fellow of the Casualty 16.9 Actuarial Society at least every two years, and each such 16.10 actuarial study shall include a projection of future losses 16.11 during the period until the next scheduled actuarial study, less 16.12 payments anticipated to be made during that time. 16.13 All data and information furnished by a private 16.14 self-insurer to an Associate or Fellow of the Casualty Actuarial 16.15 Society for purposes of determining private self-insurers' 16.16 estimated future liability must be certified by an officer of 16.17 the private self-insurer to be true and correct with respect to 16.18 payroll and paid losses, and must be certified, upon information 16.19 and belief, to be true and correct with respect to reserves. 16.20 The certification must be made by sworn affidavit. In addition 16.21 to any other remedies provided by law, the certification of 16.22 false data or information pursuant to this subdivision may 16.23 result in a fine imposed by the commissioner of commerce on the 16.24 private self-insurer up to the amount of $5,000, and termination 16.25 of the private self-insurers' authority to self-insure. The 16.26 determination of private self-insurers' estimated future 16.27 liability by an Associate or Fellow of the Casualty Actuarial 16.28 Society shall be conducted in accordance with standards and 16.29 principles for establishing loss and loss adjustment expense 16.30 reserves by the Actuarial Standards Board, an affiliate of the 16.31 American Academy of Actuaries. The commissioner may reject an 16.32 actuarial report that does not meet the standards and principles 16.33 of the Actuarial Standards Board, and may further disqualify the 16.34 actuary who prepared the report from submitting any future 16.35 actuarial reports pursuant to this chapter. Within 30 days 16.36 after the actuary has been served by the commissioner with a 17.1 notice of disqualification, an actuary who is aggrieved by the 17.2 disqualification may request a hearing to be conducted in 17.3 accordance with chapter 14. Based on a review of the actuarial 17.4 report, the commissioner of commerce may require an increase in 17.5 the minimum security deposit in an amount the commissioner 17.6 considers sufficient. 17.7 Estimated future liability is determined by first taking 17.8 the total amount of the self-insured's future liability of 17.9 workers' compensation claims and then deducting the total amount 17.10 which is estimated to be returned to the self-insurer from any 17.11 specific excess insurance coverage, aggregate excess insurance 17.12 coverage, and any supplementary benefits or second injury 17.13 benefits which are estimated to be reimbursed by the special 17.14 compensation fund. Supplementary benefits or second injury 17.15 benefits will not be reimbursed by the special compensation fund 17.16 unless the special compensation fund assessment pursuant to 17.17 section 176.129 is paid and the reports required thereunder are 17.18 filed with the special compensation fund. In the case of surety 17.19 bonds, bonds shall secure administrative and legal costs in 17.20 addition to the liability for payment of compensation reflected 17.21 on the face of the bond. In no event shall the security be less 17.22 than the last retention limit selected by the self-insurer with 17.23 the workers' compensation reinsurance association, provided that 17.24 the commissioner may allow former members to post less than the 17.25 workers' compensation reinsurance association retention level if 17.26 that amount is adequate to secure payment of the self-insurers' 17.27 estimated future liability, as defined in this subdivision, 17.28 including payment of claims, administrative and legal costs, and 17.29 unpaid assessments required by section 79A.12, subdivision 2. 17.30 The posting or depositing of security pursuant to this section 17.31 shall release all previously posted or deposited security from 17.32 any obligations under the posting or depositing and any surety 17.33 bond so released shall be returned to the surety. Any other 17.34 security shall be returned to the depositor or the person 17.35 posting the bond. 17.36 As a condition for the granting or renewing of a 18.1 certificate to self-insure, the commissioner may require a 18.2 private self-insurer to furnish any additional security the 18.3 commissioner considers sufficient to insure payment of all 18.4 claims under chapter 176. 18.5 Sec. 26. Minnesota Statutes 1998, section 79A.04, 18.6 subdivision 7, is amended to read: 18.7 Subd. 7. [PERFECTION OF SECURITY.] Upon the commissioner 18.8 sending a request to renew, request to post, or request to 18.9 increase a security deposit, a perfected security interest is 18.10 created in the private self-insured's assets in favor of the 18.11 commissioner to the extent of any then unsecured portion of the 18.12 self-insured's incurred liabilities. That perfected security 18.13 interest is transferred to any cash or securities thereafter 18.14 posted by the private self-insured with the state treasurer and 18.15 is released only upon either of the following: 18.16 (1) the acceptance by the commissioner of a surety bond or 18.17 irrevocable letter of credit for the full amount of the incurred 18.18 liabilities for the payment of compensation; or 18.19 (2) the return of cash or securities by the commissioner. 18.20 The private self-insured employer loses all right, title, 18.21 and interest in and any right to control all assets or 18.22 obligations posted or left on deposit as security. In the event 18.23 of a declaration of bankruptcy or insolvency by a court of18.24 competent jurisdictionthat a private self-insurer is the 18.25 subject of a voluntary or involuntary petition under the United 18.26 States Bankruptcy Code, title 11, or a court of competent 18.27 jurisdiction has declared the private self-insurer to be 18.28 bankrupt or insolvent, or in the event of the issuance of a 18.29 certificate of default by the commissioner, the commissioner 18.30 shall liquidate the deposit as provided in this chapter, and 18.31 transfer it to the self-insurer's security fund for application 18.32 to the self-insured employer's incurred liability and other 18.33 current or future obligations of the self-insurers' security 18.34 fund. In the event that a private self-insurer is the subject 18.35 of a voluntary or involuntary petition under the United States 18.36 Bankruptcy Code, title 11, or a court of competent jurisdiction 19.1 has declared the private self-insurer to be bankrupt or 19.2 insolvent, or in the event of the issuance of a certificate of 19.3 default by the commissioner, all right, title, and interest in 19.4 and any right to control all assets or obligations which have 19.5 been posted or deposited as security must be transferred to the 19.6 self-insurers' security fund. 19.7 Sec. 27. Minnesota Statutes 1998, section 79A.04, 19.8 subdivision 9, is amended to read: 19.9 Subd. 9. [INSOLVENCY, BANKRUPTCY, OR DEFAULT; UTILIZATION 19.10 OF SECURITY DEPOSIT.] The commissioner of labor and industry 19.11 shall notify the commissioner and the security fund if the 19.12 commissioner of labor and industry has knowledge that any 19.13 private self-insurer has failed to pay workers' compensation 19.14 benefits as required by chapter 176. If the commissioner 19.15 determines that a private self-insurer is the subject of a 19.16 voluntary or involuntary petition under the United States 19.17 Bankruptcy Code, title 11, or the commissioner determines that a 19.18 court of competent jurisdiction has declared the private 19.19 self-insurer to be bankrupt or insolvent, and the private 19.20 self-insurer has failed to pay workers' compensation as required 19.21 by chapter 176 or, if the commissioner issues a certificate of 19.22 default against a private self-insurer for failure to pay 19.23 workers' compensation as required by chapter 176, or failure to 19.24 pay an assessment to the self-insurers' security fund when due, 19.25 then the security deposit shall be utilized to administer and 19.26 pay the private self-insurers' workers' compensation or 19.27 assessment obligations or any other current or future 19.28 obligations of the self-insurers' security fund. 19.29 Sec. 28. Minnesota Statutes 1998, section 79A.11, 19.30 subdivision 2, is amended to read: 19.31 Subd. 2. [SECURITY DEPOSITS.] The security fund shall have 19.32 the right and obligation to obtain fromand retain the security 19.33 deposit of an insolvent private self-insurer the amount ofto 19.34 apply to the private self-insurer's current or future 19.35 compensation obligations, including reasonable administrative 19.36 and legal costs, paid or assumed by the security fund and to 20.1 other current or future obligations of the security fund. 20.2 Reimbursement of administrative costs, including legal costs, 20.3 shall be subject to approval by a majority of the security 20.4 fund's voting trustees. The security fund shall be a party in 20.5 interest in any action to obtain the security deposit for the 20.6 payment of compensation obligations of an insolvent self-insurer. 20.7 Sec. 29. Minnesota Statutes 1998, section 79A.11, is 20.8 amended by adding a subdivision to read: 20.9 Subd. 2a. [REPLACEMENT INSURANCE POLICY.] The insolvent 20.10 self-insurer may obtain an insurance policy as described in 20.11 section 79A.06, subdivision 5, to discharge further workers' 20.12 compensation obligations assumed by the self-insurers' security 20.13 fund on behalf of the insolvent insurer. At the self-insurers' 20.14 security fund's option and in its sole discretion, any part of 20.15 the insolvent self-insurer's security deposit may be used to 20.16 fund the acquisition of this policy. After the security deposit 20.17 has been used to: (1) fund the acquisition of this policy; (2) 20.18 pay all direct and indirect administrative and professional 20.19 expenses of the fund related to the insolvent self-insurer; and 20.20 (3) to the extent not covered by the insurance policy, pay the 20.21 insolvent self-insurer's losses, allocated loss expense and 20.22 unallocated loss expense, any part of the insolvent 20.23 self-insurer's security deposit that remains must be promptly 20.24 returned to the insolvent self-insurer. 20.25 Sec. 30. Minnesota Statutes 1999 Supplement, section 20.26 79A.22, subdivision 2, is amended to read: 20.27 Subd. 2. [FINANCIAL STANDARDS.] Commercial self-insurance 20.28 groups shall have and maintain: 20.29 (1) combined net worth of all of the members in an amount 20.30 at least equal to 12ten times the group's selected retention 20.31 level of the workers' compensation reinsurance association. For 20.32 purposes of this clause, the amount of any retained surplus by 20.33 the group is considered part of the combined net worth of all 20.34 the members; 20.35 (2) sufficient assets and liquidity in the group's common 20.36 claims fund to promptly and completely meet all obligations of 21.1 its members under this chapter and chapter 176. 21.2 Sec. 31. Minnesota Statutes 1998, section 79A.22, 21.3 subdivision 3, is amended to read: 21.4 Subd. 3. [NEW MEMBERSHIP.] The commercial self-insurance 21.5 group shall file with the commissioner the name of any new 21.6 employer that has been accepted in the group prior to the 21.7 initiation date of membership along with the member's signed 21.8 indemnity agreement and evidence the member has deposited 21.9 sufficient premiums with the group as required by the commercial 21.10 self-insurance group's bylaws or plan of operation. The 21.11 security deposit of the group willshall be increased quarterly 21.12 to an amount equal to 50 percent of the new member's premium21.13 members' premiums for that quarter. If the total increase of 21.14 new members' premiums for the first quarter is less than five 21.15 percent of the total annual premium of the group, no quarterly 21.16 increase is necessary until the cumulative quarterly increases 21.17 for that calendar year exceed five percent of the total premium 21.18 of the group. The department of commercecommissioner may, at 21.19 itsthe commissioner's option, review the financial statement of 21.20 any applicant whose premium equals 25 percent or more of the 21.21 group's total premium. 21.22 Sec. 32. Minnesota Statutes 1998, section 79A.22, 21.23 subdivision 11, is amended to read: 21.24 Subd. 11. [DISBURSEMENT OF FUND SURPLUS.] (a) One hundred 21.25 percent of any surplus money for a fund year in excess of 125 21.26 percent of the amount necessary to fulfill all obligations under 21.27 the Workers' Compensation Act, chapter 176, for that fund year 21.28 may be declared refundable to a member at any time. The date 21.29 shall be no earlier than 18 months following the end of such 21.30 fund year. The first disbursement of fund surplus may not be 21.31 made prior to the completion of an operational audit by the21.32 commissionerwritten approval of the commissioner. There can be 21.33 no more than one refund made in any 12-month period. When all 21.34 the claims of any one fund year have been fully paid, as 21.35 certified by an actuary, all surplus money from that fund year 21.36 may be declared refundable. 22.1 (b) The commercial self-insurance group shall give notice 22.2 to the commissioner of any refund. Said notice shall be 22.3 accompanied by a statement from the commercial self-insurer 22.4 group's certified public accountant certifying that the proposed 22.5 refund is in compliance with paragraph (a). 22.6 Sec. 33. Minnesota Statutes 1999 Supplement, section 22.7 79A.23, subdivision 1, is amended to read: 22.8 Subdivision 1. [REQUIRED REPORTS TO COMMISSIONER.] Each 22.9 commercial self-insurance group shall submit the following 22.10 documents to the commissioner. 22.11 (a) An annual report shall be submitted by April 1 showing 22.12 the incurred losses, paid and unpaid, specifying indemnity and 22.13 medical losses by classification, payroll by classification, and 22.14 current estimated outstanding liability for workers' 22.15 compensation on a calendar year basis, in a manner and on forms 22.16 available from the commissioner. In addition each group will 22.17 submit a quarterly interim loss report showing incurred losses 22.18 for all its membership. 22.19 (b) Each commercial self-insurance group shall submit 22.20 within 45 days of the end of each quarter: 22.21 (1) a schedule showing all the members who participate in 22.22 the group, their date of inception, and date of withdrawal, if 22.23 applicable; 22.24 (2) a separate section identifying which members were added 22.25 or withdrawn during that quarter; and 22.26 (3) an internal financial statement and copies of the 22.27 fiscal agent's statements supporting the balances in the common 22.28 claims fund. 22.29 (c) The commercial self-insurance group shall submit an 22.30 annual certified financial audit report of the commercial 22.31 self-insurance group fund by April 1 of the following year. The 22.32 report must be accompanied by an expense schedule showing the 22.33 commercial self-insurance group's operational costs for the same 22.34 year including service company charges, accounting and actuarial 22.35 fees, fund administration charges, reinsurance premiums, 22.36 commissions, and any other costs associated with the 23.1 administration of the group program. 23.2 (d) An officer of the commercial self-insurance group 23.3 shall, under oath, attest to the accuracy of each report 23.4 submitted under paragraphs (a), (b), and (c). Upon sufficient 23.5 cause, the commissioner shall require the commercial 23.6 self-insurance group to submit a certified audit of payroll and 23.7 claim records conducted by an independent auditor approved by 23.8 the commissioner, based on generally accepted accounting 23.9 principles and generally accepted auditing standards, and 23.10 supported by an actuarial review and opinion of the future 23.11 contingent liabilities. The basis for sufficient cause shall 23.12 include the following factors: 23.13 (1) where the losses reported appear significantly 23.14 different from similar types of groups; 23.15 (2) where major changes in the reports exist from year to 23.16 year, which are not solely attributable to economic factors; or 23.17 (3) where the commissioner has reason to believe that the 23.18 losses and payroll in the report do not accurately reflect the 23.19 losses and payroll of the commercial self-insurance group. 23.20 If any discrepancy is found, the commissioner shall require 23.21 changes in the commercial self-insurance group's business plan 23.22 or service company recordkeeping practices. 23.23 (e) Each commercial self-insurance group shall submit by 23.24 September 15 a copy of the group's annual federal and state 23.25 income tax returns or provide proof that it has received an 23.26 exemption from these filings. 23.27 (f) With the annual loss report each commercial 23.28 self-insurance group shall report to the commissioner any 23.29 worker's compensation claim where the full, undiscounted value 23.30 is estimated to exceed $50,000, in a manner and on forms 23.31 prescribed by the commissioner. 23.32 (g) Each commercial self-insurance group shall submit by 23.33 May 1 a list of all members and the percentage of premium each 23.34 represents to the total group's premium for the previous 23.35 calendar year. 23.36 (h) Each commercial self-insurance group shall submit by 24.1 October 15 the following documents prepared by the group's 24.2 certified public accountant: 24.3 (1) a compiled combined financial statement of group 24.4 members and a list of members included in this statement. An 24.5 "Agreed Upon Procedures" report, as determined by the 24.6 commissioner, indicating combined net worth, total assets, cash24.7 flow,and net income of the group members may be filed in lieu 24.8 of the compiled combined financial statement; and 24.9 (2) a report that the statements which were combined have 24.10 met the requirements of subdivision 2. 24.11 (i) If any group member comprises over 25 percent of total 24.12 group premium, that member's financial statement must be 24.13 reviewed or audited, and, at the commissioner's option, must be 24.14 filed with the department of commercecommissioner by October 15 24.15 of the following year. 24.16 (j) Each commercial self-insurance group shall submit a 24.17 copy of each member's accountant's report letter from the 24.18 reports used in compiling the combined financial 24.19 statements. This requirement does not apply to any group that 24.20 has been in existence for at least three years. 24.21 Sec. 34. Minnesota Statutes 1999 Supplement, section 24.22 79A.23, subdivision 2, is amended to read: 24.23 Subd. 2. [REQUIRED REPORTS FROM MEMBERS TO GROUP.] (a) 24.24 Each member of the commercial self-insurance group shall, by 24.25 September 15, submit to the group its most recent annual 24.26 financial statement, together with other financial information 24.27 the group may require. These financial statements submitted 24.28 must not have a fiscal year end date older than January 15 of 24.29 the group's calendar year end. Individual group members 24.30 constituting at least 25 percent of the group's annual premium 24.31 shall submit to the group reviewed or audited financial 24.32 statements. The remaining members must submit compilation level 24.33 statements. 24.34 (b) For groups that have been in existence for at least 24.35 three years, individual group members may satisfy the 24.36 requirements of paragraph (a) by submitting compiled, reviewed, 25.1 or audited statements or the most recent federal income tax 25.2 return filed by the member. 25.3 Sec. 35. Minnesota Statutes 1999 Supplement, section 25.4 79A.23, subdivision 3, is amended to read: 25.5 Subd. 3. [OPERATIONAL AUDIT.] (a) The commissioner, prior 25.6 to authorizing surplus distribution of a commercial 25.7 self-insurance group's first fund year or no later than after 25.8 the third anniversary of the group's authority to self-insure, 25.9 shallmay conduct an operational audit of the commercial 25.10 self-insurance group's claim handling and reserve practices as 25.11 well as its underwriting procedures to determine if they adhere 25.12 to the group's business plan. The commissioner may select 25.13 outside consultants to assist in conducting the audit. After 25.14 completion of the audit, the commissioner shall either renew or 25.15 revoke the commercial self-insurance group's authority to 25.16 self-insure. The commissioner may also order any changes deemed 25.17 necessary in the claims handling, reserving practices, or 25.18 underwriting procedures of the group. 25.19 (b) The cost of the operational audit shall be borne by the 25.20 commercial self-insurance group. 25.21 Sec. 36. Minnesota Statutes 1999 Supplement, section 25.22 79A.24, subdivision 2, is amended to read: 25.23 Subd. 2. [MINIMUM DEPOSIT.] The minimum deposit is 125 25.24 percent of the commercial self-insurance group's estimated 25.25 future liability for the payment of compensation as determined 25.26 by an actuary. If allthe members of the commercial25.27 self-insurancegroup have submitted reviewed or audited25.28 financial statements to the group's accountanthas been in 25.29 existence for three years, this minimum deposit shall be 110 25.30 percent of the commercial self-insurance group's estimated 25.31 future liability for the payment of workers' compensation as 25.32 determined by an actuary. The group must file a letter with the25.33 commissioner from the group's accountant which confirms that the25.34 compiled combined financial statements were prepared from25.35 members reviewed or audited financial statements only before the25.36 lower security deposit is allowed.Each actuarial study shall 26.1 include a projection of future losses during a one-year period 26.2 until the next scheduled actuarial study, less payments 26.3 anticipated to be made during that time. Deduction should be 26.4 made for the total amount which is estimated to be returned to 26.5 the commercial self-insurance group from any specific excess 26.6 insurance coverage, aggregate excess insurance coverage, and any 26.7 supplementary benefits which are estimated to be reimbursed by 26.8 the special compensation fund. Supplementary benefits will not 26.9 be reimbursed by the special compensation fund unless the 26.10 special compensation fund assessment pursuant to section 176.129 26.11 is paid and the required reports are filed with the special 26.12 compensation fund. In the case of surety bonds, bonds shall 26.13 secure administrative and legal costs in addition to the 26.14 liability for payment of compensation reflected on the face of 26.15 the bond. In no event shall the security be less than the 26.16 group's selected retention limit of the workers' compensation 26.17 reinsurance association. The posting or depositing of security 26.18 under this section shall release all previously posted or 26.19 deposited security from any obligations under the posting or 26.20 depositing and any surety bond so released shall be returned to 26.21 the surety. Any other security shall be returned to the 26.22 depositor or the person posting the bond. 26.23 Sec. 37. Minnesota Statutes 1998, section 80A.04, 26.24 subdivision 2, is amended to read: 26.25 Subd. 2. It is unlawful for any broker-dealer or issuer to 26.26 employ an agent as a representative in this state unless the 26.27 agent is licensed. The licensing of an agent is not effective 26.28 during any period when the agent is not associated with a 26.29 specified broker-dealer licensed under this chapter or a 26.30 specified issuer. No agent shall at any time represent more 26.31 than one broker-dealer or issuer, except that where 26.32 broker-dealers affiliated by direct common control are licensed 26.33 under this chapter, an agent may represent the broker-dealer. 26.34 When an agent begins or terminates employment with a 26.35 broker-dealer or issuer, or begins or terminates those 26.36 activities which make that person an agent, the agent as well as 27.1 the broker-dealer or issuer shall promptly notify the 27.2 commissioner or the commissioner's designated representative. 27.3 A broker-dealer or investment adviser is affiliated by 27.4 direct common control when 80 percent or more of the equity of 27.5 each broker-dealer or investment adviser is beneficially owned 27.6 by the same person or group of persons. 27.7 Sec. 38. Minnesota Statutes 1998, section 80A.04, 27.8 subdivision 3, is amended to read: 27.9 Subd. 3. It is unlawful for any person to transact 27.10 business in this state as an investment adviser unless that 27.11 person is so licensed or licensed as a broker-dealer under this27.12 chapteras described in section 80A.14, subdivision 9, clause 27.13 (3), or unless: (1) that person's only clients in this state 27.14 are investment companies as defined in the Investment Company 27.15 Act of 1940, other investment advisers, broker-dealers, banks, 27.16 trust companies, savings associations, federal covered advisers 27.17 insurance companies, corporations with a class of equity 27.18 securities registered under section 12(b) or 12(g) of the 27.19 Securities Exchange Act of 1934, small business investment 27.20 companies, and government agencies or instrumentalities, whether 27.21 acting for themselves or as trustees with investment control, or 27.22 other institutional buyers; or (2) that person has no place of 27.23 business in this state and during the preceding 12-month period 27.24 has had fewer than six clients who are residents of this state. 27.25 Sec. 39. Minnesota Statutes 1998, section 80A.07, 27.26 subdivision 1, is amended to read: 27.27 Subdivision 1. [GENERAL GROUNDS.] The commissioner may by 27.28 order deny, suspend, or revoke any license or may censure the 27.29 licensee, if the commissioner finds (a) that the order is in the 27.30 public interest and (b) that the applicant or licensee or, in 27.31 the case of a broker-dealer or investment adviser, any partner, 27.32 officer, or director, any person occupying a similar status or 27.33 performing similar functions, or any person directly or 27.34 indirectly controlling the broker-dealer or investment adviser: 27.35 (1) has filed an application for license which as of its 27.36 effective date, or as of any date after filing in the case of an 28.1 order denying effectiveness, was incomplete in any material 28.2 respect or contained any statement which was, in light of the 28.3 circumstances under which it was made, false or misleading with 28.4 respect to any material fact; 28.5 (2) has willfully violated or failed to comply with any 28.6 provision of this chapter or a predecessor law or any provision 28.7 of the Securities Act of 1933, the Securities Exchange Act of 28.8 1934, the Investment Advisers Act of 1940, the Investment 28.9 Company Act of 1940, the Commodity Exchange Act, or any rule or 28.10 order under any of these statutes, of which that person has 28.11 notice and is subject; 28.12 (3) has been convicted, within the past ten years, of any 28.13 misdemeanor involving a security or any aspect of the securities 28.14 business, or any felony; 28.15 (4) is permanently or temporarily enjoined by any court of 28.16 competent jurisdiction from engaging in or continuing any 28.17 conduct or practice involving any aspect of the securities 28.18 business; 28.19 (5) is the subject of an order of the commissioner denying, 28.20 suspending, or revoking a license as a broker-dealer, agent or 28.21 investment adviser; 28.22 (6) is the subject of an order entered within the past five 28.23 years by the securities administrator of any other state or by 28.24 the securities and exchange commission, or any national 28.25 securities exchange or national securities association 28.26 registered under the Securities Exchange Act of 1934, denying or 28.27 revoking registration or license as a broker-dealer, agent, or 28.28 investment adviser, or is the subject of an order of the 28.29 securities and exchange commission or any national securities 28.30 exchange or national securities association registered under the 28.31 Securities Exchange Act of 1934, suspending, barring, or 28.32 expelling that person from a national securities exchange or 28.33 association registered under the Securities Exchange Act of 28.34 1934, or is the subject of a United States post office fraud 28.35 order. The commissioner may not institute a revocation or 28.36 suspension proceeding under this clause more than one year from 29.1 the date of the order relied on, and may not enter an order 29.2 under this clause on the basis of an order under another state 29.3 law unless the order was based on facts which would currently 29.4 constitute a ground for an order under this section; 29.5 (7) has engaged in dishonest or fraudulent practices in the 29.6 securities business; 29.7 (8) has failed to maintain the minimum net capital or to 29.8 comply with the limitation on aggregate indebtedness which the 29.9 commissioner by rule prescribes; 29.10 (9) is not qualified on the basis of such factors as 29.11 training, experience, and knowledge of the securities business; 29.12 (10) has failed reasonably to supervise agents, investment 29.13 adviser representatives, or employees to assure their compliance 29.14 with this chapter; 29.15 (11) has failed to pay the proper filing fee, but the 29.16 commissioner shall vacate the order when the deficiency has been 29.17 corrected; 29.18 (12) has offered or sold securities in this state through 29.19 any unlicensed agent; 29.20 (13) has made any material misrepresentation to the 29.21 commissioner, or upon request reasonably made by the 29.22 commissioner, has withheld or concealed information from, or 29.23 refused to furnish information to, the commissioner; 29.24 (14) has failed to reasonably supervise agents, investment 29.25 adviser representatives, or employees if that person has assumed 29.26 or has been designated to carry out the supervisory procedures 29.27 of the broker-dealer or investment adviser; or 29.28 (15) has failed, within 20 business days after receiving 29.29 written instructions from a customer, to do any of the following: 29.30 (a) transfer or deliver securities that have been 29.31 purchased; 29.32 (b) transfer or deliver any free credit balances reflecting 29.33 completed transactions; or 29.34 (c) transfer or deliver a customer's account securities 29.35 positions and balances to another broker-dealer. 29.36 This clause shall not serve as a basis for denial, suspension, 30.1 or revocation of a broker-dealer's or agent's license if: (i) 30.2 the transfer or delivery is between broker-dealers and meets the 30.3 rules and requirements established by the New York Stock 30.4 Exchange with regard to the transfer or delivery; or (ii) the 30.5 delivery of securities to a customer cannot be accomplished 30.6 within 20 business days, and the broker-dealer or agent has 30.7 notified the customer in writing of the inability to deliver the 30.8 securities and the reasons for the nondelivery within 20 30.9 business days of receiving the customer's written instructions. 30.10 Sec. 40. Minnesota Statutes 1998, section 80A.10, 30.11 subdivision 2, is amended to read: 30.12 Subd. 2. A registration statement under this section shall 30.13 contain the following information and be accompanied by the 30.14 following documents in addition to the information specified in 30.15 section 80A.12 and the consent to service of process required by 30.16 section 80A.27, subdivision 7; 30.17 (a) Two copiesOne copy of the latest form of prospectus 30.18 filed under the Securities Act of 1933; 30.19 (b) If the commissioner by rule or otherwise requires, a 30.20 copy of the articles of incorporation and bylaws (or their 30.21 substantial equivalent) currently in effect, a copy of any 30.22 agreements with or among underwriters, a copy of any indenture 30.23 or other instrument governing the issuance of the security to be 30.24 registered, and a specimen or copy of the security; 30.25 (c) If the commissioner requests, any other information, or 30.26 copies of any other documents, filed under the Securities Act of 30.27 1933; and 30.28 (d) An undertaking to forward all amendments to the federal 30.29 prospectus, other than an amendment which merely delays the 30.30 effective date of the registration statement, not later than the 30.31 first business day after the day they are forwarded to or filed 30.32 with the securities and exchange commission or such longer 30.33 period as the commissioner permits. 30.34 Sec. 41. Minnesota Statutes 1999 Supplement, section 30.35 80A.15, subdivision 2, is amended to read: 30.36 Subd. 2. The following transactions are exempted from 31.1 sections 80A.08 and 80A.16: 31.2 (a) Any sales, whether or not effected through a 31.3 broker-dealer, provided that: 31.4 (1) no person shall make more than ten sales of 31.5 securities in Minnesota of the same issuer pursuant to this 31.6 exemption, exclusive of sales according to clause (2), during 31.7 any period of 12 consecutive months; provided further, that in 31.8 the case of sales by an issuer, except sales of securities 31.9 registered under the Securities Act of 1933 or exempted by 31.10 section 3(b) of that act, (i) the seller reasonably believes 31.11 that all buyers are purchasing for investment, and (ii) the 31.12 securities are not advertised for sale to the general public in 31.13 newspapers or other publications of general circulation or 31.14 otherwise, or by radio, television, electronic means or similar 31.15 communications media, or through a program of general 31.16 solicitation by means of mail or telephone; andor 31.17 (2) no issuer shall make more than 25 sales of its 31.18 securities in Minnesota according to this exemption, exclusive 31.19 of sales pursuant to clause (1), during any period of 12 31.20 consecutive months; provided further, that the issuer meets the 31.21 conditions in clause (1) and, in addition meets the following 31.22 additional conditions: (i) files with the commissioner, ten 31.23 days before a sale according to this clause, a statement of 31.24 issuer on a form prescribed by the commissioner; and (ii) no 31.25 commission or other remuneration is paid or given directly or 31.26 indirectly for soliciting any prospective buyers in this state 31.27 in connection with a sale according to this clause except 31.28 reasonable and customary commissions paid by the issuer to a 31.29 broker-dealer licensed under this chapter. 31.30 (b) Any nonissuer distribution of an outstanding security 31.31 if (1) either Moody's, Fitch's, or Standard & Poor's Securities 31.32 Manuals, or other recognized manuals approved by the 31.33 commissioner contains the names of the issuer's officers and 31.34 directors, a balance sheet of the issuer as of a date not more 31.35 than 18 months prior to the date of the sale, and a profit and 31.36 loss statement for the fiscal year preceding the date of the 32.1 balance sheet, and (2) the issuer or its predecessor has been in 32.2 active, continuous business operation for the five-year period 32.3 next preceding the date of sale, and (3) if the security has a 32.4 fixed maturity or fixed interest or dividend provision, the 32.5 issuer has not, within the three preceding fiscal years, 32.6 defaulted in payment of principal, interest, or dividends on the 32.7 securities. 32.8 (c) The execution of any orders by a licensed broker-dealer 32.9 for the purchase or sale of any security, pursuant to an 32.10 unsolicited offer to purchase or sell; provided that the 32.11 broker-dealer acts as agent for the purchaser or seller, and has 32.12 no direct material interest in the sale or distribution of the 32.13 security, receives no commission, profit, or other compensation 32.14 from any source other than the purchaser and seller and delivers 32.15 to the purchaser and seller written confirmation of the 32.16 transaction which clearly itemizes the commission, or other 32.17 compensation. 32.18 (d) Any nonissuer sale of notes or bonds secured by a 32.19 mortgage lien if the entire mortgage, together with all notes or 32.20 bonds secured thereby, is sold to a single purchaser at a single 32.21 sale. 32.22 (e) Any judicial sale, exchange, or issuance of securities 32.23 made pursuant to an order of a court of competent jurisdiction. 32.24 (f) The sale, by a pledge holder, of a security pledged in 32.25 good faith as collateral for a bona fide debt. 32.26 (g) Any offer or sale to a bank, savings institution, trust 32.27 company, insurance company, investment company as defined in the 32.28 Investment Company Act of 1940, or other financial institution 32.29 or institutional buyer, or to a broker-dealer, whether the 32.30 purchaser is acting for itself or in some fiduciary capacity. 32.31 (h) An offer or sale of securities by an issuer made in 32.32 reliance on the exemptions provided by Rule 505 or 506 of 32.33 Regulation D promulgated by the Securities and Exchange 32.34 Commission, Code of Federal Regulations, title 17, sections 32.35 230.501 to 230.508, subject to the conditions and definitions 32.36 provided by Rules 501 to 503 of Regulation D, if the offer and 33.1 sale also satisfies the conditions and limitations in clauses 33.2 (1) to (10). 33.3 (1) The exemption under this paragraph is not available for 33.4 the securities of an issuer if any of the persons described in 33.5 Rule 252(c) to (f) of Regulation A promulgated by the Securities 33.6 and Exchange Commission, Code of Federal Regulations, title 17, 33.7 sections 230.251 to 230.263: 33.8 (i) has filed a registration statement that is the subject 33.9 of a currently effective order entered against the issuer, its 33.10 officers, directors, general partners, controlling persons, or 33.11 affiliates, according to any state's law within five years 33.12 before the filing of the notice required under clause (5), 33.13 denying effectiveness to, or suspending or revoking the 33.14 effectiveness of, the registration statement; 33.15 (ii) has been convicted, within five years before the 33.16 filing of the notice required under clause (5), of a felony or 33.17 misdemeanor in connection with the offer, sale, or purchase of a 33.18 security or franchise, or a felony involving fraud or deceit, 33.19 including but not limited to forgery, embezzlement, obtaining 33.20 money under false pretenses, larceny, or conspiracy to defraud; 33.21 (iii) is subject to an effective administrative order or 33.22 judgment entered by a state securities administrator within five 33.23 years before the filing of the notice required under clause (5), 33.24 that prohibits, denies, or revokes the use of an exemption from 33.25 securities registration, that prohibits the transaction of 33.26 business by the person as a broker-dealer or agent, orthat is 33.27 based on fraud, deceit, an untrue statement of a material fact, 33.28 or an omission to state a material fact; or 33.29 (iv) is subject to an order, judgment, or decree of a court 33.30 entered within five years before the filing of the notice 33.31 required under clause (5), temporarily, preliminarily, or 33.32 permanently restraining or enjoining the person from engaging in 33.33 or continuing any conduct or practice in connection with the 33.34 offer, sale, or purchase of a security, or the making of a false 33.35 filing with a state. 33.36 A disqualification under paragraph (h) involving a 34.1 broker-dealer or agent is waived if the broker-dealer or agent 34.2 is or continues to be licensed in the state in which the 34.3 administrative order or judgment was entered against the person 34.4 or if the broker-dealer or agent is or continues to be licensed 34.5 in this state as a broker-dealer or agent after notifying the 34.6 commissioner of the act or event causing disqualification. 34.7 The commissioner may waive a disqualification under 34.8 paragraph (h) upon a showing of good cause that it is not 34.9 necessary under the circumstances that use of the exemption be 34.10 denied. 34.11 A disqualification under paragraph (h) may be waived if the 34.12 state securities administrator or agency of the state that 34.13 created the basis for disqualification has determined, upon a 34.14 showing of good cause, that it is not necessary under the 34.15 circumstances that an exemption from registration of securities 34.16 under the state's laws be denied. 34.17 It is a defense to a violation of paragraph (h) based upon 34.18 a disqualification if the issuer sustains the burden of proof to 34.19 establish that the issuer did not know, and in the exercise of 34.20 reasonable care could not have known, that a disqualification 34.21 under paragraph (h) existed. 34.22 (2) This exemption must not be available to an issuer with 34.23 respect to a transaction that, although in technical compliance 34.24 with this exemption, is part of a plan or scheme to evade 34.25 registration or the conditions or limitations explicitly stated 34.26 in paragraph (h). 34.27 (3) No commission, finder's fee, or other remuneration 34.28 shall be paid or given, directly or indirectly, for soliciting a 34.29 prospective purchaser, unless the recipient is appropriately 34.30 licensed, or exempt from licensure, in this state as a 34.31 broker-dealer. 34.32 (4) Nothing in this exemption is intended to or should be 34.33 in any way construed as relieving issuers or persons acting on 34.34 behalf of issuers from providing disclosure to prospective 34.35 investors adequate to satisfy the antifraud provisions of the 34.36 securities law of Minnesota. 35.1 (5) The issuer shall file with the commissioner a notice on 35.2 form D as adopted by the Securities and Exchange Commission 35.3 according to Regulation D, Code of Federal Regulations, title 35.4 17, section 230.502. The notice must be filed not later than 15 35.5 days after the first sale in this state of securities in an 35.6 offering under this exemption. Every notice on form D must be 35.7 manually signed by a person duly authorized by the issuer and 35.8 must be accompanied by a consent to service of process on a form 35.9 prescribed by the commissioner. 35.10 (6) A failure to comply with a term, condition, or 35.11 requirement of paragraph (h) will not result in loss of the 35.12 exemption for an offer or sale to a particular individual or 35.13 entity if the person relying on the exemption shows that: (i) 35.14 the failure to comply did not pertain to a term, condition, or 35.15 requirement directly intended to protect that particular 35.16 individual or entity, and the failure to comply was 35.17 insignificant with respect to the offering as a whole; and (ii) 35.18 a good faith and reasonable attempt was made to comply with all 35.19 applicable terms, conditions, and requirements of paragraph (h), 35.20 except that, where an exemption is established only through 35.21 reliance upon this provision, the failure to comply shall 35.22 nonetheless constitute a violation of section 80A.08 and be 35.23 actionable by the commissioner. 35.24 (7) The issuer, upon request by the commissioner, shall, 35.25 within ten days of the request, furnish to the commissioner a 35.26 copy of any and all information, documents, or materials 35.27 furnished to investors or offerees in connection with the offer 35.28 and sale according to paragraph (h). 35.29 (8) Neither compliance nor attempted compliance with the 35.30 exemption provided by paragraph (h), nor the absence of an 35.31 objection or order by the commissioner with respect to an offer 35.32 or sale of securities undertaken according to this exemption, 35.33 shall be considered to be a waiver of a condition of the 35.34 exemption or considered to be a confirmation by the commissioner 35.35 of the availability of this exemption. 35.36 (9) The commissioner may, by rule or order, increase the 36.1 number of purchasers or waive any other condition of this 36.2 exemption. 36.3 (10) The determination whether offers and sales made in 36.4 reliance on the exemption set forth in paragraph (h) shall be 36.5 integrated with offers and sales according to other paragraphs 36.6 of this subdivision shall be made according to the integration 36.7 standard set forth in Rule 502 of Regulation D promulgated by 36.8 the Securities and Exchange Commission, Code of Federal 36.9 Regulations, title 17, section 230.502. If not subject to 36.10 integration according to that rule, offers and sales according 36.11 to paragraph (h) shall not otherwise be integrated with offers 36.12 and sales according to other exemptions set forth in this 36.13 subdivision. 36.14 (i) Any offer (but not a sale) of a security for which a 36.15 registration statement has been filed under sections 80A.01 to 36.16 80A.31, if no stop order or refusal order is in effect and no 36.17 public proceeding or examination looking toward an order is 36.18 pending; and any offer of a security if the sale of the security 36.19 is or would be exempt under this section. The commissioner may 36.20 by rule exempt offers (but not sales) of securities for which a 36.21 registration statement has been filed as the commissioner deems 36.22 appropriate, consistent with the purposes of sections 80A.01 to 36.23 80A.31. 36.24 (j) The offer and sale by a cooperative organized under 36.25 chapter 308A or under the laws of another state, of its 36.26 securities when the securities are offered and sold only to its 36.27 members, or when the purchase of the securities is necessary or 36.28 incidental to establishing membership in the cooperative, or 36.29 when such securities are issued as patronage dividends. This 36.30 paragraph applies to a cooperative organized under the laws of 36.31 another state only if the cooperative has filed with the 36.32 commissioner a consent to service of process under section 36.33 80A.27, subdivision 7, and has, not less than ten days prior to 36.34 the issuance or delivery, furnished the commissioner with a 36.35 written general description of the transaction and any other 36.36 information that the commissioner requires by rule or otherwise. 37.1 This exemption only applies when the issuing cooperative is 37.2 seeking to raise up to $1,000,000. 37.3 (l) The issuance and delivery of any securities of one 37.4 corporation to another corporation or its security holders in 37.5 connection with a merger, exchange of shares, or transfer of 37.6 assets whereby the approval of stockholders of the other 37.7 corporation is required to be obtained, provided, that the 37.8 commissioner has been furnished with a general description of 37.9 the transaction and with other information as the commissioner 37.10 by rule prescribes not less than ten days prior to the issuance 37.11 and delivery. 37.12 (m) Any transaction between the issuer or other person on 37.13 whose behalf the offering is made and an underwriter or among 37.14 underwriters. 37.15 (n) The distribution by a corporation of its or other 37.16 securities to its own security holders as a stock dividend or as 37.17 a dividend from earnings or surplus or as a liquidating 37.18 distribution; or upon conversion of an outstanding convertible 37.19 security; or pursuant to a stock split or reverse stock split. 37.20 (o) Any offer or sale of securities by an affiliate of the 37.21 issuer thereof if: (1) a registration statement is in effect 37.22 with respect to securities of the same class of the issuer and 37.23 (2) the offer or sale has been exempted from registration by 37.24 rule or order of the commissioner. 37.25 (p) Any transaction pursuant to an offer to existing 37.26 security holders of the issuer, including persons who at the 37.27 time of the transaction are holders of convertible securities, 37.28 nontransferable warrants, or transferable warrants exercisable 37.29 within not more than 90 days of their issuance, if: (1) no 37.30 commission or other remuneration (other than a standby 37.31 commission) is paid or given directly or indirectly for 37.32 soliciting any security holder in this state; and (2) the 37.33 commissioner has been furnished with a general description of 37.34 the transaction and with other information as the commissioner 37.35 may by rule prescribe no less than ten days prior to the 37.36 transaction. 38.1 (q) Any nonissuer sales of any security, including a 38.2 revenue obligation, issued by the state of Minnesota or any of 38.3 its political or governmental subdivisions, municipalities, 38.4 governmental agencies, or instrumentalities. 38.5 (r) Any transaction as to which the commissioner by rule or 38.6 order finds that registration is not necessary in the public 38.7 interest and for the protection of investors. 38.8 (s) An offer or sale of a security issued in connection 38.9 with an employee's stock purchase, savings, option, profit 38.10 sharing, pension, or similar employee benefit plan, if the 38.11 following conditions are met: 38.12 (1) the issuer, its parent corporation or any of its 38.13 majority-owned subsidiaries offers or sells the security 38.14 according to a written benefit plan or written contract relating 38.15 to the compensation of the purchaser; and 38.16 (2) the class of securities offered according to the plan 38.17 or contract, or if an option or right to purchase a security, 38.18 the class of securities to be issued upon the exercise of the 38.19 option or right, is registered under section 12 of the 38.20 Securities Exchange Act of 1934, or is a class of securities 38.21 with respect to which the issuer files reports according to 38.22 section 15(d) of the Securities Exchange Act of 1934; or 38.23 (3) the issuer fully complies with the provisions of Rule 38.24 701 as adopted by the Securities and Exchange Commission, Code 38.25 of Federal Regulations, title 12, section 230.701. 38.26 The issuer shall file not less than ten days before the 38.27 transaction, a general description of the transaction and any 38.28 other information that the commissioner requires by rule or 38.29 otherwise or, if applicable, a Securities and Exchange Form S-8. 38.30 Annually, within 90 days after the end of the issuer's fiscal 38.31 year, the issuer shall file a notice as provided with the 38.32 commissioner. 38.33 (t) Any sale of a security of an issuer that is a pooled 38.34 income fund, a charitable remainder trust, or a charitable lead 38.35 trust that has a qualified charity as the only charitable 38.36 beneficiary. 39.1 (u) Any sale by a qualified charity of a security that is a 39.2 charitable gift annuity if the issuer has a net worth, otherwise 39.3 defined as unrestricted fund balance, of not less than $300,000 39.4 and either: (1) has been in continuous operation for not less 39.5 than three years; or (2) is a successor or affiliate of a 39.6 qualified charity that has been in continuous operation for not 39.7 less than three years. 39.8 Sec. 42. Minnesota Statutes 1998, section 80C.05, 39.9 subdivision 4, is amended to read: 39.10 Subd. 4. An application for registration that has not39.11 become effective will be considered withdrawnIf no activity 39.12 occurs with respect to thean application for registration for a 39.13 period of 120 days, the commissioner may by order declare the 39.14 application withdrawn. 39.15 Sec. 43. Minnesota Statutes 1998, section 80C.07, is 39.16 amended to read: 39.17 80C.07 [AMENDMENT OF REGISTRATION.] 39.18 A person with a registration in effect shall, within 30 39.19 days after the occurrence of any material change in the 39.20 information on file with the commissioner, notify the 39.21 commissioner in writing of the change by an application to amend 39.22 the registration accompanied by a fee of $100. The commissioner 39.23 may by rule define what shall be considered a material change 39.24 for such purposes, and may determine the circumstances under 39.25 which a revised public offering statement must accompany the 39.26 application. If the amendment is approved by the commissioner, 39.27 it shall become effective upon the issuance by the commissioner 39.28 of an order amending the registration. 39.29 The commissioner may withdraw an amendment application that 39.30 has not become effective. If no activity occurs with respect to 39.31 the application for a period of 120 days, the commissioner may 39.32 by order declare the application withdrawn. 39.33 Sec. 44. Minnesota Statutes 1998, section 82.22, 39.34 subdivision 13, is amended to read: 39.35 Subd. 13. [CONTINUING EDUCATION.] (a) After their first 39.36 renewal date, all real estate salespersons and all real estate 40.1 brokers shall be required to successfully complete 30 hours of 40.2 real estate continuing education, either as a student or a 40.3 lecturer, in courses of study approved by the commissioner, 40.4 during each 24-month license period. At least 15 of the 30 40.5 credit hours must be completed during the first 12 months of the 40.6 24-month licensing period. Salespersons and brokers whose 40.7 initial license period extends more than 12 months are required 40.8 to complete 15 hours of real estate continuing education during 40.9 the initial license period. Those licensees who will receive a 40.10 12-month license on July 1, 1995, because of the staggered 40.11 implementation schedule must complete 15 hours of real estate 40.12 continuing education as a requirement for renewal on July 1, 40.13 1996. Licensees may not claim credit for continuing education 40.14 not actually completed as of the date their report of continuing 40.15 education compliance is filed. 40.16 (b) The commissioner shall adopt rules defining the 40.17 standards for course and instructor approval, and may adopt 40.18 rules for the proper administration of this subdivision. The 40.19 commissioner may not approve a course which can be completed by 40.20 the student at home or outside the classroom without the 40.21 supervision of an instructor approved by the department of 40.22 commerce. The commissioner has discretion to establish a pilot 40.23 program to explore delivery of accredited courses using new 40.24 delivery technology, including interactive technology. This 40.25 pilot program expires on August 1, 20002001. 40.26 (c) Any program approved by Minnesota continuing legal 40.27 education shall be approved by the commissioner of commerce for 40.28 continuing education for real estate brokers and salespeople if 40.29 the program or any part thereof relates to real estate. 40.30 (d) As part of the continuing education requirements of 40.31 this section, the commissioner shall require that all real 40.32 estate brokers and salespersons receive: 40.33 (1) at least two hours of training during each license 40.34 period in courses in laws or regulations on agency 40.35 representation and disclosure; and 40.36 (2) at least two hours of training during each license 41.1 period in courses in state and federal fair housing laws, 41.2 regulations, and rules, or other antidiscrimination laws. 41.3 Clause (1) does not apply to real estate salespersons and 41.4 real estate brokers engaged solely in the commercial real estate 41.5 business who file with the commissioner a verification of this 41.6 status along with the continuing education report required under 41.7 paragraph (a). 41.8 (e) The commissioner is authorized to establish a procedure 41.9 for renewal of course accreditation. 41.10 Sec. 45. Minnesota Statutes 1998, section 82A.04, 41.11 subdivision 4, is amended to read: 41.12 Subd. 4. [EFFECTIVE DATE.] Unless an order denying41.13 registration under section 82A.12 is in effect, or unless41.14 declared effective by order of the commissioner prior thereto,41.15 the application for registration shall automatically become41.16 effective upon the expiration of 15 business days following41.17 filing with the commissioner, but an applicant may consent in41.18 writing to the delay of registration until the time the41.19 commissioner may issue an order of registration. If the41.20 commissioner requests additional information with respect to the41.21 application, the application shall become effective upon the41.22 expiration of 15 business days following the filing with the41.23 commissioner of the additional information unless an order41.24 denying registration under section 82A.12 is in effect or unless41.25 declared effective by order of the commissioner prior thereto.41.26 The registration is effective on the date the commissioner 41.27 declares by order. 41.28 Sec. 46. Minnesota Statutes 1998, section 82A.04, is 41.29 amended by adding a subdivision to read: 41.30 Subd. 5. [WITHDRAWAL OF APPLICATION.] If no activity 41.31 occurs with respect to an application for a period of 120 days, 41.32 the commissioner may by order declare the application 41.33 withdrawn. No part of the filing fee will be returned by the 41.34 commissioner if a registration application is withdrawn 41.35 according to this subdivision. 41.36 Sec. 47. Minnesota Statutes 1998, section 82B.14, is 42.1 amended to read: 42.2 82B.14 [EXPERIENCE REQUIREMENT.] 42.3 (a) As a prerequisite for licensing as a registered real 42.4 property appraiser or licensed real property appraiser, an 42.5 applicant must present evidence satisfactory to the commissioner 42.6 that the person has obtained 2,000 hours of experience in real 42.7 property appraisal. 42.8 As a prerequisite for licensing as a certified residential 42.9 real property appraiser, an applicant must present evidence 42.10 satisfactory to the commissioner that the person has obtained 42.11 2,500 hours of experience in real property appraisal. 42.12 As a prerequisite for licensing as a certified general real 42.13 property appraiser, an applicant must present evidence 42.14 satisfactory to the commissioner that the person has obtained 42.15 3,000 hours of experience in real property appraisal. At least 42.16 50 percent, or 1,500 hours, must be in nonresidential appraisal 42.17 work. 42.18 (b) Each applicant for license under section 82B.11, 42.19 subdivision 3, 4, or 5, shall give under oath a detailed listing 42.20 of the real estate appraisal reports or file memoranda for which 42.21 experience is claimed by the applicant. Upon request, the 42.22 applicant shall make available to the commissioner for 42.23 examination, a sample of appraisal reports that the applicant 42.24 has prepared in the course of appraisal practice. 42.25 (c) Applicants may not receive credit for experience 42.26 accumulated while unlicensed, if the experience is based on 42.27 activities which required a license under this section. 42.28 Sec. 48. Minnesota Statutes 1998, section 83.23, is 42.29 amended by adding a subdivision to read: 42.30 Subd. 5. [WITHDRAWAL OF APPLICATION.] If no activity 42.31 occurs with respect to an application for a period of 120 days, 42.32 the commissioner may by order declare the application 42.33 withdrawn. No part of the filing fee will be returned by the 42.34 commissioner if a registration application is withdrawn 42.35 according to this subdivision. 42.36 Sec. 49. Minnesota Statutes 1998, section 308A.711, 43.1 subdivision 1, is amended to read: 43.2 Subdivision 1. [ALTERNATE PROCEDURE TO DISBURSE PROPERTY.] 43.3 Notwithstanding the provisions of section 345.43, a cooperative 43.4 may, in lieu of paying or delivering to the commissioner of 43.5 commerce the unclaimed property specified in its report of 43.6 unclaimed property, distribute the unclaimed property to a 43.7 corporation or organization that is exempt from taxation under 43.8 section 290.05, subdivision 1, paragraph (b), or 2. A 43.9 cooperative making the election to distribute unclaimed property 43.10 shall, within 20 days after the time specified in section 345.4243.11 for claiming the property from the holder,85 days following the 43.12 publication of lists of abandoned property file with the 43.13 commissioner of commerce: 43.14 (1) a verified written explanation of the proof of claim of 43.15 an owner establishing a right to receive the abandoned property; 43.16 (2) any errors in the presumption of abandonment; 43.17 (3) the name, address, and exemption number of the 43.18 corporation or organization to which the property was or is to 43.19 be distributed; and 43.20 (4) the approximate date of distribution. 43.21 Sec. 50. Minnesota Statutes 1998, section 326.975, 43.22 subdivision 1, is amended to read: 43.23 Subdivision 1. [GENERALLY.] (a) In addition to any other 43.24 fees, each applicant for a license under sections 326.83 to 43.25 326.98 shall pay a fee to the contractor's recovery fund. The 43.26 contractor's recovery fund is created in the state treasury and 43.27 must be administered by the commissioner in the manner and 43.28 subject to all the requirements and limitations provided by 43.29 section 82.34 with the following exceptions: 43.30 (1) each licensee who renews a license shall pay in 43.31 addition to the appropriate renewal fee an additional fee which 43.32 shall be credited to the contractor's recovery fund. The amount 43.33 of the fee shall be based on the licensee's gross annual 43.34 receipts for the licensee's most recent fiscal year preceding 43.35 the renewal, on the following scale: 43.36 Fee Gross Receipts 44.1 $100 under $1,000,000 44.2 $150 $1,000,000 to $5,000,000 44.3 $200 over $5,000,000 44.4 Any person who receives a new license shall pay a fee based on 44.5 the same scale; 44.6 (2) the sole purpose of this fund is to compensate any 44.7 aggrieved owner or lessee of residential property located within 44.8 this state who obtains a final judgment in any court of 44.9 competent jurisdiction against a licensee licensed under section 44.10 326.84, on grounds of fraudulent, deceptive, or dishonest 44.11 practices, conversion of funds, or failure of performance 44.12 arising directly out of any transaction when the judgment debtor 44.13 was licensed and performed any of the activities enumerated 44.14 under section 326.83, subdivision 19, on the owner's residential 44.15 property or on residential property rented by the lessee, or on 44.16 new residential construction which was never occupied prior to 44.17 purchase by the owner, or which was occupied by the licensee for 44.18 less than one year prior to purchase by the owner, and which 44.19 cause of action arose on or after April 1, 1994; 44.20 (3) nothing may obligate the fund for more than $50,000 per 44.21 claimant, nor more than $50,000 per licensee; and 44.22 (4) nothing may obligate the fund for claims based on a 44.23 cause of action that arose before the licensee paid the recovery 44.24 fund fee set in clause (1), or as provided in section 326.945, 44.25 subdivision 3. 44.26 (b) Should the commissioner pay from the contractor's 44.27 recovery fund any amount in settlement of a claim or toward 44.28 satisfaction of a judgment against a licensee, the license shall 44.29 be automatically suspended upon the effective date of an order 44.30 by the court authorizing payment from the fund. No licensee 44.31 shall be granted reinstatement until the licensee has repaid in 44.32 full, plus interest at the rate of 12 percent a year, twice the 44.33 amount paid from the fund on the licensee's account, and has 44.34 obtained a surety bond issued by an insurer authorized to 44.35 transact business in this state in the amount of at least 44.36 $40,000. 45.1 Sec. 51. [332.355] [AGENCY RESPONSIBILITY FOR COLLECTORS.] 45.2 The commissioner may take action against a collection 45.3 agency for any violations of debt collection laws by its debt 45.4 collectors. The commissioner may also take action against the 45.5 debt collectors themselves for these same violations. 45.6 Sec. 52. Minnesota Statutes 1998, section 345.515, is 45.7 amended to read: 45.8 345.515 [AGREEMENTS TO LOCATE REPORTED PROPERTY.] 45.9 It is unlawful for a person to seek or receive from another 45.10 person or contract with a person for a fee or compensation for 45.11 locating property, knowing it to have been reported or paid or 45.12 delivered to the commissioner pursuant to chapter 345 prior to 45.13 seven months after the date of published notice by the45.14 commissioner as required by section 345.4224 months after the 45.15 date the property is paid or delivered to the commissioner. 45.16 No agreement entered into after seven months from the date45.17 of published notice by the24 months after the date the property 45.18 is paid or delivered to the commissioner is valid if a person 45.19 thereby undertakes to locate property included in a report for a 45.20 fee or other compensation exceeding ten percent of the value of 45.21 the recoverable property unless the agreement is in writing and 45.22 signed by the owner and discloses the nature and value of the 45.23 property and the name and address of the holder thereof as such 45.24 facts have been reported. Nothing in this section shall be 45.25 construed to prevent an owner from asserting at any time that an 45.26 agreement to locate property is based upon an excessive or 45.27 unjust consideration. 45.28 Sec. 53. [359.085] [STANDARDS OF CONDUCT FOR NOTARIAL 45.29 ACTS.] 45.30 Subdivision 1. [ACKNOWLEDGMENTS.] In taking an 45.31 acknowledgment, the notarial officer must determine, either from 45.32 personal knowledge or from satisfactory evidence, that the 45.33 person appearing before the officer and making the 45.34 acknowledgment is the person whose true signature is on the 45.35 instrument. 45.36 Subd. 2. [VERIFICATIONS.] In taking a verification upon 46.1 oath or affirmation, the notarial officer must determine, either 46.2 from personal knowledge or from satisfactory evidence, that the 46.3 person appearing before the officer and making the verification 46.4 is the person whose true signature is on the statement verified. 46.5 Subd. 3. [WITNESSING OR ATTESTING SIGNATURES.] In 46.6 witnessing or attesting a signature the notarial officer must 46.7 determine, either from personal knowledge or from satisfactory 46.8 evidence, that the signature is that of the person appearing 46.9 before the officer and named in the document. 46.10 Subd. 4. [CERTIFYING OR ATTESTING DOCUMENTS.] In 46.11 certifying or attesting a copy of a document or other item, the 46.12 notarial officer must determine that the proffered copy is a 46.13 full, true, and accurate transcription or reproduction of that 46.14 which was copied. 46.15 Subd. 5. [MAKING OR NOTING PROTESTS OF NEGOTIABLE 46.16 INSTRUMENTS.] In making or noting a protest of a negotiable 46.17 instrument the notarial officer must determine the matters set 46.18 forth in section 336.3-505. 46.19 Subd. 6. [SATISFACTORY EVIDENCE.] A notarial officer has 46.20 satisfactory evidence that a person is the person whose true 46.21 signature is on a document if that person (i) is personally 46.22 known to the notarial officer, (ii) is identified upon the oath 46.23 or affirmation of a credible witness personally known to the 46.24 notarial officer, or (iii) is identified on the basis of 46.25 identification documents. 46.26 Subd. 7. [PROHIBITED ACTS.] A notarial officer may not 46.27 acknowledge, witness or attest to the officer's own signature, 46.28 or take a verification of the officer's own oath or affirmation. 46.29 Sec. 54. Laws 1999, chapter 177, section 89, is amended to 46.30 read: 46.31 Sec. 89. [EFFECTIVE DATES.] 46.32 (a) Sections 1, 3, 5 to 8, 20, 22 to 28, 31, 34, 35, 38, 46.33 39, 44 to 51, 54 to 56, 58 to 60, 66, 67, 69 to 87, and 88, 46.34 paragraph (b), are effective the day following final enactment. 46.35 (b) Sections 13 to 15 are effective the day following final 46.36 enactment and apply to plans of merger approved on or after that 47.1 date by the board of directors of the first of the constituent 47.2 corporations to grant such approval. Merging or consolidating 47.3 insurance corporations may, however, elect to have the changes 47.4 made by sections 13 to 15 not apply to a merger or consolidation 47.5 arising out of a joint agreement entered into prior to January 47.6 1, 2000. 47.7 (c) Section 32 is effective July 1, 20002001. 47.8 (d) Section 33 is effective December 1, 1999, and applies 47.9 to all license renewals on or after that date. 47.10 (e) Section 30 is effective as follows: 47.11 (1) The amendment to Minnesota Statutes, section 60K.03, 47.12 subdivision 2, paragraph (d), is effective January 1, 2000. 47.13 (2) The amendment to Minnesota Statutes, section 60K.03, 47.14 subdivision 2, paragraph (e), is effective the day following 47.15 final enactment. 47.16 Sec. 55. [REPEALER.] 47.17 Minnesota Statutes 1998, sections 62A.285, subdivision 4; 47.18 62A.651; and 65B.13, are repealed. 47.19 Sec. 56. [EFFECTIVE DATE.] 47.20 Sections 1, 2, 3, 5, 7 to 9, 11 to 13, 15 to 18, 22, 24, 47.21 36, 37, 38, 40 to 44, 47, and 50 to 55 are effective the day 47.22 following enactment. Section 19 is effective January 1, 2001.