Ark. Code Ann. § 23-63-1602 — AR Code / Title 23 / Chapter 63 / Subchapter 16 / Section 23-63-1602
Application for license
Status: in_force

(a) When permitted by its organizational documents, a captive insurance company may apply to the Insurance Commissioner for a license to do all insurance, including workers' compensation insurance, authorized by the Arkansas Insurance Code. However: (1) A pure captive insurance company shall not insure any risks other than those of its parent and affiliated companies or controlled unaffiliated business; (2) An association captive insurance company shall not insure any risks other than those of the member organizations of its association and their affiliated companies; (3) An industrial insured captive insurance company shall not insure any risks other than those of the industrial insureds that compose the industrial insured group and their affiliated companies; (4) A captive insurance company shall not provide personal motor vehicle or homeowner's insurance coverage or any component of these coverages; (5) A captive insurance company shall not accept or cede reinsurance except as authorized by § 23-63-1611 ; (6) A producer reinsurance captive insurance company shall not reinsure any risks other than those written by or placed through its parent or an affiliate of its parent and written by authorized insurers; and (7) The following statement must appear on the front of every policy or certificate of insurance issued by a captive insurance company: "THIS CONTRACT IS REGISTERED AND DELIVERED AS A POLICY UNDER ARKANSAS CODE § 23-63-1601 ET SEQ. THIS POLICY MAY BE DIFFERENT FROM POLICIES ISSUED IN THE OPEN MARKET. IT MAY BE MORE OR LESS FAVORABLE TO AN INSURED THAN A CONTRACT ISSUED BY AN INSURER NOT SUBJECT TO ARKANSAS CODE § 23-63-1601 ET SEQ. THE PROTECTION OF THE ARKANSAS PROPERTY AND CASUALTY INSURANCE GUARANTY ACT, ARKANSAS CODE § 23-90-101 ET SEQ., DOES NOT APPLY TO THIS CONTRACT.". (b) To conduct insurance business in this state, a captive insurance company shall: (1) Be licensed to conduct insurance business in this state; (2) Hold at least one (1) board of directors meeting, or in the case of a reciprocal insurer, a subscriber's advisory committee meeting, each year in this state; (3) Maintain its registered office in this state, or in the case of a branch captive insurance company, maintain the registered office for its branch operations in this state; and (4) (A) Appoint a resident registered agent to accept service of process and to act on its behalf in this state. (B) In the case of a captive insurance company formed as a corporation or formed as a reciprocal insurer, the commissioner must be designated as the agent of the captive insurance company upon whom any process, notice, or demand may be served whenever the registered agent cannot, with reasonable diligence, be found at the registered office of the captive insurance company. (c) (1) Before receiving a license, a captive insurance company: (A) Formed as a corporation shall file with the commissioner: (i) A certified copy of its articles of incorporation and bylaws; (ii) A statement under oath of its president and secretary showing its financial condition; and (iii) Any other statements or documents required by the commissioner; or (B) Formed as a reciprocal shall: (i) File with the commissioner: (a) A certified copy of the power of attorney of its attorney in fact; (b) A certified copy of its subscribers' agreement; (c) A statement under oath of its attorney in fact showing its financial condition; and (d) Any other statements or documents required by the commissioner; or (ii) (a) Obtain the commissioner's approval of its coverages, deductibles, coverage limits, and rates. (b) If there is a subsequent material change in an item in the description, the reciprocal captive insurance company shall submit to the commissioner for approval an appropriate revision and may not offer any additional kinds of insurance until a revision of the description is approved by the commissioner. (c) The reciprocal captive insurance company shall inform the commissioner of any material change in rates within thirty (30) days of the adoption of the change. (2) In addition to the information required by subdivision (c)(1) of this section, a captive insurance company applying for a license shall file with the commissioner evidence of: (A) The amount and description of its assets relative to the risks to be assumed; (B) The adequacy of the expertise, experience, and character of the person or persons who will manage it; (C) The overall soundness of its plan of operation; (D) The adequacy of the loss-prevention programs of its parent, member organizations, or industrial insureds, as applicable; and (E) Other factors considered relevant by the commissioner in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations. (3) In addition to the information required by subdivisions (c)(1) and (2) of this section, an applicant producer reinsurance captive insurance company or a sponsored captive insurance company shall file with the commissioner: (A) A business plan demonstrating how the applicant will account for the loss and expense experience of each protected cell in as much detail as the commissioner may require, and the manner in which it will report the experience to the commissioner; (B) A statement acknowledging that all financial records of the captive insurance company, including records pertaining to any protected cells, must be made available for inspection or examination by the commissioner; and (C) Evidence that expenses will be allocated to each protected cell in an equitable manner. (4) In addition to the information required by subdivisions (c)(1)-(3) of this section, a sponsored captive insurance company shall file with the commissioner all contracts between the sponsored captive insurance company and any participants. (5) Information submitted under this subchapter is confidential and shall not be made public by the commissioner or an agent or employee of the commissioner without the written consent of the captive insurance company except that: (A) (i) Information may be discoverable by a party in a civil action or contested case to which the captive insurance company that submitted the information is a party, upon a showing by the party seeking to discover the information that: (a) The information sought is relevant to and necessary for the furtherance of the action or case; (b) The information sought is unavailable from other nonconfidential sources; and (c) A subpoena issued by a judicial or administrative officer of competent jurisdiction has been submitted to the commissioner. (ii) However, subdivision (c)(4) of this section does not apply to an industrial insured captive insurance company insuring the risks of an industrial insured group; and (B) The commissioner may disclose the information to a public official having jurisdiction over the regulation of insurance in another state if: (i) The public official agrees in writing to maintain the confidentiality of the information; and (ii) The laws of the state in which the public official serves require the information to be confidential. (d) (1) A captive insurance company shall pay to the State Insurance Department Trust Fund a nonrefundable fee in an amount and manner to be prescribed by rule. (2) The commissioner may retain legal, financial, and examination services from outside the State Insurance Department, the reasonable cost of which may be charged against the applicant. (3) Section 23-61-208 applies to examinations, investigations, and processing conducted under the authority of this section. (4) In addition, a captive insurance company shall pay to the fund a license fee for the year of registration and a renewal fee in an amount and manner to be prescribed by regulation. (e) If the commissioner is satisfied that the documents and statements filed by the captive insurance company comply with this subchapter, the commissioner may grant a license authorizing the company to do insurance business in this state until March 1, at which time the license may be renewed. Amended by Act 2021, No. 367,§ 13, eff. 7/28/2021. Amended by Act 2019, No. 315,§ 2640, eff. 7/24/2019. Amended by Act 2017, No. 370,§ 2, eff. 8/1/2017. Amended by Act 2017, No. 283,§ 9, eff. 8/1/2017. Acts 2001, No. 1391, § 2; 2003, No. 466, § 2.

(a) When permitted by its organizational documents, a captive insurance company may apply to the Insurance Commissioner for a license to do all insurance, including workers' compensation insurance, authorized by the Arkansas Insurance Code. However: (1) A pure captive insurance company shall not insure any risks other than those of its parent and affiliated companies or controlled unaffiliated business; (2) An association captive insurance company shall not insure any risks other than those of the member organizations of its association and their affiliated companies; (3) An industrial insured captive insurance company shall not insure any risks other than those of the industrial insureds that compose the industrial insured group and their affiliated companies; (4) A captive insurance company shall not provide personal motor vehicle or homeowner's insurance coverage or any component of these coverages; (5) A captive insurance company shall not accept or cede reinsurance except as authorized by § 23-63-1611 ; (6) A producer reinsurance captive insurance company shall not reinsure any risks other than those written by or placed through its parent or an affiliate of its parent and written by authorized insurers; and (7) The following statement must appear on the front of every policy or certificate of insurance issued by a captive insurance company: "THIS CONTRACT IS REGISTERED AND DELIVERED AS A POLICY UNDER ARKANSAS CODE § 23-63-1601 ET SEQ. THIS POLICY MAY BE DIFFERENT FROM POLICIES ISSUED IN THE OPEN MARKET. IT MAY BE MORE OR LESS FAVORABLE TO AN INSURED THAN A CONTRACT ISSUED BY AN INSURER NOT SUBJECT TO ARKANSAS CODE § 23-63-1601 ET SEQ. THE PROTECTION OF THE ARKANSAS PROPERTY AND CASUALTY INSURANCE GUARANTY ACT, ARKANSAS CODE § 23-90-101 ET SEQ., DOES NOT APPLY TO THIS CONTRACT.".

(1) A pure captive insurance company shall not insure any risks other than those of its parent and affiliated companies or controlled unaffiliated business;

(2) An association captive insurance company shall not insure any risks other than those of the member organizations of its association and their affiliated companies;

(3) An industrial insured captive insurance company shall not insure any risks other than those of the industrial insureds that compose the industrial insured group and their affiliated companies;

(4) A captive insurance company shall not provide personal motor vehicle or homeowner's insurance coverage or any component of these coverages;

(5) A captive insurance company shall not accept or cede reinsurance except as authorized by § 23-63-1611 ;

(6) A producer reinsurance captive insurance company shall not reinsure any risks other than those written by or placed through its parent or an affiliate of its parent and written by authorized insurers; and

(7) The following statement must appear on the front of every policy or certificate of insurance issued by a captive insurance company: "THIS CONTRACT IS REGISTERED AND DELIVERED AS A POLICY UNDER ARKANSAS CODE § 23-63-1601 ET SEQ. THIS POLICY MAY BE DIFFERENT FROM POLICIES ISSUED IN THE OPEN MARKET. IT MAY BE MORE OR LESS FAVORABLE TO AN INSURED THAN A CONTRACT ISSUED BY AN INSURER NOT SUBJECT TO ARKANSAS CODE § 23-63-1601 ET SEQ. THE PROTECTION OF THE ARKANSAS PROPERTY AND CASUALTY INSURANCE GUARANTY ACT, ARKANSAS CODE § 23-90-101 ET SEQ., DOES NOT APPLY TO THIS CONTRACT.".

"THIS CONTRACT IS REGISTERED AND DELIVERED AS A POLICY UNDER ARKANSAS CODE § 23-63-1601 ET SEQ. THIS POLICY MAY BE DIFFERENT FROM POLICIES ISSUED IN THE OPEN MARKET. IT MAY BE MORE OR LESS FAVORABLE TO AN INSURED THAN A CONTRACT ISSUED BY AN INSURER NOT SUBJECT TO ARKANSAS CODE § 23-63-1601 ET SEQ. THE PROTECTION OF THE ARKANSAS PROPERTY AND CASUALTY INSURANCE GUARANTY ACT, ARKANSAS CODE § 23-90-101 ET SEQ., DOES NOT APPLY TO THIS CONTRACT.".

(b) To conduct insurance business in this state, a captive insurance company shall: (1) Be licensed to conduct insurance business in this state; (2) Hold at least one (1) board of directors meeting, or in the case of a reciprocal insurer, a subscriber's advisory committee meeting, each year in this state; (3) Maintain its registered office in this state, or in the case of a branch captive insurance company, maintain the registered office for its branch operations in this state; and (4) (A) Appoint a resident registered agent to accept service of process and to act on its behalf in this state. (B) In the case of a captive insurance company formed as a corporation or formed as a reciprocal insurer, the commissioner must be designated as the agent of the captive insurance company upon whom any process, notice, or demand may be served whenever the registered agent cannot, with reasonable diligence, be found at the registered office of the captive insurance company.

(1) Be licensed to conduct insurance business in this state;

(2) Hold at least one (1) board of directors meeting, or in the case of a reciprocal insurer, a subscriber's advisory committee meeting, each year in this state;

(3) Maintain its registered office in this state, or in the case of a branch captive insurance company, maintain the registered office for its branch operations in this state; and

(4) (A) Appoint a resident registered agent to accept service of process and to act on its behalf in this state. (B) In the case of a captive insurance company formed as a corporation or formed as a reciprocal insurer, the commissioner must be designated as the agent of the captive insurance company upon whom any process, notice, or demand may be served whenever the registered agent cannot, with reasonable diligence, be found at the registered office of the captive insurance company.

(A) Appoint a resident registered agent to accept service of process and to act on its behalf in this state.

(B) In the case of a captive insurance company formed as a corporation or formed as a reciprocal insurer, the commissioner must be designated as the agent of the captive insurance company upon whom any process, notice, or demand may be served whenever the registered agent cannot, with reasonable diligence, be found at the registered office of the captive insurance company.

(c) (1) Before receiving a license, a captive insurance company: (A) Formed as a corporation shall file with the commissioner: (i) A certified copy of its articles of incorporation and bylaws; (ii) A statement under oath of its president and secretary showing its financial condition; and (iii) Any other statements or documents required by the commissioner; or (B) Formed as a reciprocal shall: (i) File with the commissioner: (a) A certified copy of the power of attorney of its attorney in fact; (b) A certified copy of its subscribers' agreement; (c) A statement under oath of its attorney in fact showing its financial condition; and (d) Any other statements or documents required by the commissioner; or (ii) (a) Obtain the commissioner's approval of its coverages, deductibles, coverage limits, and rates. (b) If there is a subsequent material change in an item in the description, the reciprocal captive insurance company shall submit to the commissioner for approval an appropriate revision and may not offer any additional kinds of insurance until a revision of the description is approved by the commissioner. (c) The reciprocal captive insurance company shall inform the commissioner of any material change in rates within thirty (30) days of the adoption of the change. (2) In addition to the information required by subdivision (c)(1) of this section, a captive insurance company applying for a license shall file with the commissioner evidence of: (A) The amount and description of its assets relative to the risks to be assumed; (B) The adequacy of the expertise, experience, and character of the person or persons who will manage it; (C) The overall soundness of its plan of operation; (D) The adequacy of the loss-prevention programs of its parent, member organizations, or industrial insureds, as applicable; and (E) Other factors considered relevant by the commissioner in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations. (3) In addition to the information required by subdivisions (c)(1) and (2) of this section, an applicant producer reinsurance captive insurance company or a sponsored captive insurance company shall file with the commissioner: (A) A business plan demonstrating how the applicant will account for the loss and expense experience of each protected cell in as much detail as the commissioner may require, and the manner in which it will report the experience to the commissioner; (B) A statement acknowledging that all financial records of the captive insurance company, including records pertaining to any protected cells, must be made available for inspection or examination by the commissioner; and (C) Evidence that expenses will be allocated to each protected cell in an equitable manner. (4) In addition to the information required by subdivisions (c)(1)-(3) of this section, a sponsored captive insurance company shall file with the commissioner all contracts between the sponsored captive insurance company and any participants. (5) Information submitted under this subchapter is confidential and shall not be made public by the commissioner or an agent or employee of the commissioner without the written consent of the captive insurance company except that: (A) (i) Information may be discoverable by a party in a civil action or contested case to which the captive insurance company that submitted the information is a party, upon a showing by the party seeking to discover the information that: (a) The information sought is relevant to and necessary for the furtherance of the action or case; (b) The information sought is unavailable from other nonconfidential sources; and (c) A subpoena issued by a judicial or administrative officer of competent jurisdiction has been submitted to the commissioner. (ii) However, subdivision (c)(4) of this section does not apply to an industrial insured captive insurance company insuring the risks of an industrial insured group; and (B) The commissioner may disclose the information to a public official having jurisdiction over the regulation of insurance in another state if: (i) The public official agrees in writing to maintain the confidentiality of the information; and (ii) The laws of the state in which the public official serves require the information to be confidential.

(1) Before receiving a license, a captive insurance company: (A) Formed as a corporation shall file with the commissioner: (i) A certified copy of its articles of incorporation and bylaws; (ii) A statement under oath of its president and secretary showing its financial condition; and (iii) Any other statements or documents required by the commissioner; or (B) Formed as a reciprocal shall: (i) File with the commissioner: (a) A certified copy of the power of attorney of its attorney in fact; (b) A certified copy of its subscribers' agreement; (c) A statement under oath of its attorney in fact showing its financial condition; and (d) Any other statements or documents required by the commissioner; or (ii) (a) Obtain the commissioner's approval of its coverages, deductibles, coverage limits, and rates. (b) If there is a subsequent material change in an item in the description, the reciprocal captive insurance company shall submit to the commissioner for approval an appropriate revision and may not offer any additional kinds of insurance until a revision of the description is approved by the commissioner. (c) The reciprocal captive insurance company shall inform the commissioner of any material change in rates within thirty (30) days of the adoption of the change.

(A) Formed as a corporation shall file with the commissioner: (i) A certified copy of its articles of incorporation and bylaws; (ii) A statement under oath of its president and secretary showing its financial condition; and (iii) Any other statements or documents required by the commissioner; or

(i) A certified copy of its articles of incorporation and bylaws;

(ii) A statement under oath of its president and secretary showing its financial condition; and

(iii) Any other statements or documents required by the commissioner; or

(B) Formed as a reciprocal shall: (i) File with the commissioner: (a) A certified copy of the power of attorney of its attorney in fact; (b) A certified copy of its subscribers' agreement; (c) A statement under oath of its attorney in fact showing its financial condition; and (d) Any other statements or documents required by the commissioner; or (ii) (a) Obtain the commissioner's approval of its coverages, deductibles, coverage limits, and rates. (b) If there is a subsequent material change in an item in the description, the reciprocal captive insurance company shall submit to the commissioner for approval an appropriate revision and may not offer any additional kinds of insurance until a revision of the description is approved by the commissioner. (c) The reciprocal captive insurance company shall inform the commissioner of any material change in rates within thirty (30) days of the adoption of the change.

(i) File with the commissioner: (a) A certified copy of the power of attorney of its attorney in fact; (b) A certified copy of its subscribers' agreement; (c) A statement under oath of its attorney in fact showing its financial condition; and (d) Any other statements or documents required by the commissioner; or

(a) A certified copy of the power of attorney of its attorney in fact;

(b) A certified copy of its subscribers' agreement;

(c) A statement under oath of its attorney in fact showing its financial condition; and

(d) Any other statements or documents required by the commissioner; or

(ii) (a) Obtain the commissioner's approval of its coverages, deductibles, coverage limits, and rates. (b) If there is a subsequent material change in an item in the description, the reciprocal captive insurance company shall submit to the commissioner for approval an appropriate revision and may not offer any additional kinds of insurance until a revision of the description is approved by the commissioner. (c) The reciprocal captive insurance company shall inform the commissioner of any material change in rates within thirty (30) days of the adoption of the change.

(a) Obtain the commissioner's approval of its coverages, deductibles, coverage limits, and rates.

(b) If there is a subsequent material change in an item in the description, the reciprocal captive insurance company shall submit to the commissioner for approval an appropriate revision and may not offer any additional kinds of insurance until a revision of the description is approved by the commissioner.

(c) The reciprocal captive insurance company shall inform the commissioner of any material change in rates within thirty (30) days of the adoption of the change.

(2) In addition to the information required by subdivision (c)(1) of this section, a captive insurance company applying for a license shall file with the commissioner evidence of: (A) The amount and description of its assets relative to the risks to be assumed; (B) The adequacy of the expertise, experience, and character of the person or persons who will manage it; (C) The overall soundness of its plan of operation; (D) The adequacy of the loss-prevention programs of its parent, member organizations, or industrial insureds, as applicable; and (E) Other factors considered relevant by the commissioner in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations.

(A) The amount and description of its assets relative to the risks to be assumed;

(B) The adequacy of the expertise, experience, and character of the person or persons who will manage it;

(C) The overall soundness of its plan of operation;

(D) The adequacy of the loss-prevention programs of its parent, member organizations, or industrial insureds, as applicable; and

(E) Other factors considered relevant by the commissioner in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations.

(3) In addition to the information required by subdivisions (c)(1) and (2) of this section, an applicant producer reinsurance captive insurance company or a sponsored captive insurance company shall file with the commissioner: (A) A business plan demonstrating how the applicant will account for the loss and expense experience of each protected cell in as much detail as the commissioner may require, and the manner in which it will report the experience to the commissioner; (B) A statement acknowledging that all financial records of the captive insurance company, including records pertaining to any protected cells, must be made available for inspection or examination by the commissioner; and (C) Evidence that expenses will be allocated to each protected cell in an equitable manner.

(A) A business plan demonstrating how the applicant will account for the loss and expense experience of each protected cell in as much detail as the commissioner may require, and the manner in which it will report the experience to the commissioner;

(B) A statement acknowledging that all financial records of the captive insurance company, including records pertaining to any protected cells, must be made available for inspection or examination by the commissioner; and

(C) Evidence that expenses will be allocated to each protected cell in an equitable manner.

(4) In addition to the information required by subdivisions (c)(1)-(3) of this section, a sponsored captive insurance company shall file with the commissioner all contracts between the sponsored captive insurance company and any participants.

(5) Information submitted under this subchapter is confidential and shall not be made public by the commissioner or an agent or employee of the commissioner without the written consent of the captive insurance company except that: (A) (i) Information may be discoverable by a party in a civil action or contested case to which the captive insurance company that submitted the information is a party, upon a showing by the party seeking to discover the information that: (a) The information sought is relevant to and necessary for the furtherance of the action or case; (b) The information sought is unavailable from other nonconfidential sources; and (c) A subpoena issued by a judicial or administrative officer of competent jurisdiction has been submitted to the commissioner. (ii) However, subdivision (c)(4) of this section does not apply to an industrial insured captive insurance company insuring the risks of an industrial insured group; and (B) The commissioner may disclose the information to a public official having jurisdiction over the regulation of insurance in another state if: (i) The public official agrees in writing to maintain the confidentiality of the information; and (ii) The laws of the state in which the public official serves require the information to be confidential.

(A) (i) Information may be discoverable by a party in a civil action or contested case to which the captive insurance company that submitted the information is a party, upon a showing by the party seeking to discover the information that: (a) The information sought is relevant to and necessary for the furtherance of the action or case; (b) The information sought is unavailable from other nonconfidential sources; and (c) A subpoena issued by a judicial or administrative officer of competent jurisdiction has been submitted to the commissioner. (ii) However, subdivision (c)(4) of this section does not apply to an industrial insured captive insurance company insuring the risks of an industrial insured group; and

(i) Information may be discoverable by a party in a civil action or contested case to which the captive insurance company that submitted the information is a party, upon a showing by the party seeking to discover the information that: (a) The information sought is relevant to and necessary for the furtherance of the action or case; (b) The information sought is unavailable from other nonconfidential sources; and (c) A subpoena issued by a judicial or administrative officer of competent jurisdiction has been submitted to the commissioner.

(a) The information sought is relevant to and necessary for the furtherance of the action or case;

(b) The information sought is unavailable from other nonconfidential sources; and

(c) A subpoena issued by a judicial or administrative officer of competent jurisdiction has been submitted to the commissioner.

(ii) However, subdivision (c)(4) of this section does not apply to an industrial insured captive insurance company insuring the risks of an industrial insured group; and

(B) The commissioner may disclose the information to a public official having jurisdiction over the regulation of insurance in another state if: (i) The public official agrees in writing to maintain the confidentiality of the information; and (ii) The laws of the state in which the public official serves require the information to be confidential.

(i) The public official agrees in writing to maintain the confidentiality of the information; and

(ii) The laws of the state in which the public official serves require the information to be confidential.

(d) (1) A captive insurance company shall pay to the State Insurance Department Trust Fund a nonrefundable fee in an amount and manner to be prescribed by rule. (2) The commissioner may retain legal, financial, and examination services from outside the State Insurance Department, the reasonable cost of which may be charged against the applicant. (3) Section 23-61-208 applies to examinations, investigations, and processing conducted under the authority of this section. (4) In addition, a captive insurance company shall pay to the fund a license fee for the year of registration and a renewal fee in an amount and manner to be prescribed by regulation.

(1) A captive insurance company shall pay to the State Insurance Department Trust Fund a nonrefundable fee in an amount and manner to be prescribed by rule.

(2) The commissioner may retain legal, financial, and examination services from outside the State Insurance Department, the reasonable cost of which may be charged against the applicant.

(3) Section 23-61-208 applies to examinations, investigations, and processing conducted under the authority of this section.

(4) In addition, a captive insurance company shall pay to the fund a license fee for the year of registration and a renewal fee in an amount and manner to be prescribed by regulation.

(e) If the commissioner is satisfied that the documents and statements filed by the captive insurance company comply with this subchapter, the commissioner may grant a license authorizing the company to do insurance business in this state until March 1, at which time the license may be renewed.

Amended by Act 2021, No. 367,§ 13, eff. 7/28/2021.

Amended by Act 2019, No. 315,§ 2640, eff. 7/24/2019.

Amended by Act 2017, No. 370,§ 2, eff. 8/1/2017.

Amended by Act 2017, No. 283,§ 9, eff. 8/1/2017.

Acts 2001, No. 1391, § 2; 2003, No. 466, § 2.
Ark. Code Ann. § 23-55-102 — AR Code / Title 23 / Chapter 55 / Section 23-55-102
Definitions
Status: in_force

In this chapter: (1) "Applicant" means a person that files an application for a license under this chapter. (2) "Authorized delegate" means a person a licensee designates to provide money services on behalf of the licensee. (3) "Bank" means an institution organized under federal or state law which: (A) accepts demand deposits or deposits that the depositor may use for payment to third parties and engages in the business of making commercial loans; or (B) engages in credit card operations and maintains only one office that accepts deposits, does not accept demand deposits or deposits that the depositor may use for payments to third parties, does not accept a savings or time deposit less than $100,000, and does not engage in the business of making commercial loans. (4) "Commissioner" means the Securities Commissioner. (5) (A) "Control" means: (i) the power to vote, directly or indirectly, at least 25 percent of a class of voting securities or voting interests of a licensee or person in control of a licensee; (ii) power to elect or appoint a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a licensee or person in control of a licensee; or (iii) the power to exercise directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee. (B) (i) A person: (a) is presumed to exercise a controlling influence if the person holds the power to vote, directly or indirectly, at least 10 percent of the outstanding voting shares or voting interests of a licensee or person in control of a licensee; and (b) that is presumed to exercise a controlling influence may rebut the presumption of control if the person is a passive investor. (ii) For purposes of determining the percentage of a person controlled by any other person, the person's interest shall be aggregated with the interest of any other immediate family member, including without limitation the person's spouse, parents, children, siblings, mothers-in law, fathers-in law, sons-in law, daughters-in law, brothers-in law, sisters-in law, and any other person who shares the person's home. (6) "Currency exchange" means receipt of revenues from the exchange of money of one government for money of another government. (7) "Executive officer" means a president, chairperson of the executive committee, chief financial officer, responsible individual, or other individual who performs similar functions. (8) "Key individual" means an individual who is ultimately responsible for establishing or directing policies and procedures of a licensee, including without limitation an executive officer, manager, director, or trustee. (9) "Licensee" means a person licensed under this chapter. (10) "Monetary value" means a medium of exchange, whether or not redeemable in money. (11) "Money" means a medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments. (12) "Money services" means money transmission or currency exchange. (13) (A) "Money transmission" means any of the following: (i) selling or issuing payment instruments to a person located in this state; (ii) selling or issuing stored value to a person located in this state; (iii) facilitating, selling, trading, transferring, or converting virtual currency or monetary value in this state; or (iv) receiving money for transmission from a person located in this state. (B) "Money transmission" does not include: (i) providing: (a) online services; (b) telecommunication services; (c) network access; (d) delivery services such as courier or package delivery services; or (ii) acting as a mere conduit for the transmission of data. (14) "Outstanding," with respect to a payment instrument, means issued or sold by or for the licensee and reported as sold but not yet paid by or for the licensee. (15) "Passive investor" means a person that: (A) does not have the power to elect: (i) a majority of key individuals; (ii) a majority of executive officers, managers, directors, or trustees; or (iii) other persons exercising managerial authority of a person in control of a licensee; (B) is not employed by and does not have any managerial duties of the licensee or person in control of a licensee; (C) does not have the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee; and (D) either: (i) attests to subdivisions (15)(A)-(C), in a form and in a medium prescribed by the commissioner; or (ii) commits to the passivity characteristics of subdivisions (15)(A)-(C), in a written document. (16) "Payment instrument" means a written or electronic check, draft, money order, traveler's check, or other written or electronic instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include stored value or any instrument that: (A) is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value; or (B) is not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program. (17) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government; governmental subdivision, agency or instrumentality; public corporation; or any other legal or commercial entity. (18) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. (19) "State" means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. (20) (A) "Stored value" means monetary value representing a claim against the issuer evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value, or payment for goods or services. (B) "Stored value" includes without limitation prepaid access as defined by 31 C.F.R. § 1010.100 , as it existed on January 1, 2023. (C) "Stored value" does not include a payment instrument or closed loop stored value or stored value not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program. (21) "Tangible net worth" means the aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined according to generally accepted accounting principles. (22) "Unsafe or unsound practice" means a practice or conduct by a person licensed to engage in money transmission or an authorized delegate of such a person which creates the likelihood of material loss, insolvency, or dissipation of the licensee's assets, or otherwise materially prejudices the interests of its customers. (23) (A) "Virtual currency" means a digital representation of value that: (i) is used as a medium of exchange, a unit of account, or a store of value; and (ii) does not have legal tender status as recognized by the United States Department of the Treasury. (B) "Virtual currency" does not include the software or protocols governing the transfer of a digital representation of value or other uses of a virtual distributed ledger system to verify ownership or authenticity in a digital capacity when the virtual currency is not used as a medium of exchange. Amended by Act 2023, No. 442,§ 1, eff. 8/1/2023. Amended by Act 2021, No. 532,§ 3, eff. 7/28/2021. Amended by Act 2021, No. 532,§ 2, eff. 7/28/2021. Amended by Act 2021, No. 532,§ 1, eff. 7/28/2021. Amended by Act 2013, No. 531,§ 1, eff. 8/16/2013. Acts 2007, No. 1595, § 1; 2009, No. 486, §§ 1 - 3; 2011, No. 733, § 1.

In this chapter:

(1) "Applicant" means a person that files an application for a license under this chapter.

(2) "Authorized delegate" means a person a licensee designates to provide money services on behalf of the licensee.

(3) "Bank" means an institution organized under federal or state law which: (A) accepts demand deposits or deposits that the depositor may use for payment to third parties and engages in the business of making commercial loans; or (B) engages in credit card operations and maintains only one office that accepts deposits, does not accept demand deposits or deposits that the depositor may use for payments to third parties, does not accept a savings or time deposit less than $100,000, and does not engage in the business of making commercial loans.

(A) accepts demand deposits or deposits that the depositor may use for payment to third parties and engages in the business of making commercial loans; or

(B) engages in credit card operations and maintains only one office that accepts deposits, does not accept demand deposits or deposits that the depositor may use for payments to third parties, does not accept a savings or time deposit less than $100,000, and does not engage in the business of making commercial loans.

(4) "Commissioner" means the Securities Commissioner.

(5) (A) "Control" means: (i) the power to vote, directly or indirectly, at least 25 percent of a class of voting securities or voting interests of a licensee or person in control of a licensee; (ii) power to elect or appoint a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a licensee or person in control of a licensee; or (iii) the power to exercise directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee. (B) (i) A person: (a) is presumed to exercise a controlling influence if the person holds the power to vote, directly or indirectly, at least 10 percent of the outstanding voting shares or voting interests of a licensee or person in control of a licensee; and (b) that is presumed to exercise a controlling influence may rebut the presumption of control if the person is a passive investor. (ii) For purposes of determining the percentage of a person controlled by any other person, the person's interest shall be aggregated with the interest of any other immediate family member, including without limitation the person's spouse, parents, children, siblings, mothers-in law, fathers-in law, sons-in law, daughters-in law, brothers-in law, sisters-in law, and any other person who shares the person's home.

(A) "Control" means: (i) the power to vote, directly or indirectly, at least 25 percent of a class of voting securities or voting interests of a licensee or person in control of a licensee; (ii) power to elect or appoint a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a licensee or person in control of a licensee; or (iii) the power to exercise directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee.

(i) the power to vote, directly or indirectly, at least 25 percent of a class of voting securities or voting interests of a licensee or person in control of a licensee;

(ii) power to elect or appoint a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a licensee or person in control of a licensee; or

(iii) the power to exercise directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee.

(B) (i) A person: (a) is presumed to exercise a controlling influence if the person holds the power to vote, directly or indirectly, at least 10 percent of the outstanding voting shares or voting interests of a licensee or person in control of a licensee; and (b) that is presumed to exercise a controlling influence may rebut the presumption of control if the person is a passive investor. (ii) For purposes of determining the percentage of a person controlled by any other person, the person's interest shall be aggregated with the interest of any other immediate family member, including without limitation the person's spouse, parents, children, siblings, mothers-in law, fathers-in law, sons-in law, daughters-in law, brothers-in law, sisters-in law, and any other person who shares the person's home.

(i) A person: (a) is presumed to exercise a controlling influence if the person holds the power to vote, directly or indirectly, at least 10 percent of the outstanding voting shares or voting interests of a licensee or person in control of a licensee; and (b) that is presumed to exercise a controlling influence may rebut the presumption of control if the person is a passive investor.

(a) is presumed to exercise a controlling influence if the person holds the power to vote, directly or indirectly, at least 10 percent of the outstanding voting shares or voting interests of a licensee or person in control of a licensee; and

(b) that is presumed to exercise a controlling influence may rebut the presumption of control if the person is a passive investor.

(ii) For purposes of determining the percentage of a person controlled by any other person, the person's interest shall be aggregated with the interest of any other immediate family member, including without limitation the person's spouse, parents, children, siblings, mothers-in law, fathers-in law, sons-in law, daughters-in law, brothers-in law, sisters-in law, and any other person who shares the person's home.

(6) "Currency exchange" means receipt of revenues from the exchange of money of one government for money of another government.

(7) "Executive officer" means a president, chairperson of the executive committee, chief financial officer, responsible individual, or other individual who performs similar functions.

(8) "Key individual" means an individual who is ultimately responsible for establishing or directing policies and procedures of a licensee, including without limitation an executive officer, manager, director, or trustee.

(9) "Licensee" means a person licensed under this chapter.

(10) "Monetary value" means a medium of exchange, whether or not redeemable in money.

(11) "Money" means a medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments.

(12) "Money services" means money transmission or currency exchange.

(13) (A) "Money transmission" means any of the following: (i) selling or issuing payment instruments to a person located in this state; (ii) selling or issuing stored value to a person located in this state; (iii) facilitating, selling, trading, transferring, or converting virtual currency or monetary value in this state; or (iv) receiving money for transmission from a person located in this state. (B) "Money transmission" does not include: (i) providing: (a) online services; (b) telecommunication services; (c) network access; (d) delivery services such as courier or package delivery services; or (ii) acting as a mere conduit for the transmission of data.

(A) "Money transmission" means any of the following: (i) selling or issuing payment instruments to a person located in this state; (ii) selling or issuing stored value to a person located in this state; (iii) facilitating, selling, trading, transferring, or converting virtual currency or monetary value in this state; or (iv) receiving money for transmission from a person located in this state.

(i) selling or issuing payment instruments to a person located in this state;

(ii) selling or issuing stored value to a person located in this state;

(iii) facilitating, selling, trading, transferring, or converting virtual currency or monetary value in this state; or

(iv) receiving money for transmission from a person located in this state.

(B) "Money transmission" does not include: (i) providing: (a) online services; (b) telecommunication services; (c) network access; (d) delivery services such as courier or package delivery services; or (ii) acting as a mere conduit for the transmission of data.

(i) providing: (a) online services; (b) telecommunication services; (c) network access; (d) delivery services such as courier or package delivery services; or

(a) online services;

(b) telecommunication services;

(c) network access;

(d) delivery services such as courier or package delivery services; or

(ii) acting as a mere conduit for the transmission of data.

(14) "Outstanding," with respect to a payment instrument, means issued or sold by or for the licensee and reported as sold but not yet paid by or for the licensee.

(15) "Passive investor" means a person that: (A) does not have the power to elect: (i) a majority of key individuals; (ii) a majority of executive officers, managers, directors, or trustees; or (iii) other persons exercising managerial authority of a person in control of a licensee; (B) is not employed by and does not have any managerial duties of the licensee or person in control of a licensee; (C) does not have the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee; and (D) either: (i) attests to subdivisions (15)(A)-(C), in a form and in a medium prescribed by the commissioner; or (ii) commits to the passivity characteristics of subdivisions (15)(A)-(C), in a written document.

(A) does not have the power to elect: (i) a majority of key individuals; (ii) a majority of executive officers, managers, directors, or trustees; or (iii) other persons exercising managerial authority of a person in control of a licensee;

(i) a majority of key individuals;

(ii) a majority of executive officers, managers, directors, or trustees; or

(iii) other persons exercising managerial authority of a person in control of a licensee;

(B) is not employed by and does not have any managerial duties of the licensee or person in control of a licensee;

(C) does not have the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee; and

(D) either: (i) attests to subdivisions (15)(A)-(C), in a form and in a medium prescribed by the commissioner; or (ii) commits to the passivity characteristics of subdivisions (15)(A)-(C), in a written document.

(i) attests to subdivisions (15)(A)-(C), in a form and in a medium prescribed by the commissioner; or

(ii) commits to the passivity characteristics of subdivisions (15)(A)-(C), in a written document.

(16) "Payment instrument" means a written or electronic check, draft, money order, traveler's check, or other written or electronic instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include stored value or any instrument that: (A) is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value; or (B) is not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

(A) is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value; or

(B) is not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

(17) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government; governmental subdivision, agency or instrumentality; public corporation; or any other legal or commercial entity.

(18) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(19) "State" means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(20) (A) "Stored value" means monetary value representing a claim against the issuer evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value, or payment for goods or services. (B) "Stored value" includes without limitation prepaid access as defined by 31 C.F.R. § 1010.100 , as it existed on January 1, 2023. (C) "Stored value" does not include a payment instrument or closed loop stored value or stored value not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

(A) "Stored value" means monetary value representing a claim against the issuer evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value, or payment for goods or services.

(B) "Stored value" includes without limitation prepaid access as defined by 31 C.F.R. § 1010.100 , as it existed on January 1, 2023.

(C) "Stored value" does not include a payment instrument or closed loop stored value or stored value not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

(21) "Tangible net worth" means the aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined according to generally accepted accounting principles.

(22) "Unsafe or unsound practice" means a practice or conduct by a person licensed to engage in money transmission or an authorized delegate of such a person which creates the likelihood of material loss, insolvency, or dissipation of the licensee's assets, or otherwise materially prejudices the interests of its customers.

(23) (A) "Virtual currency" means a digital representation of value that: (i) is used as a medium of exchange, a unit of account, or a store of value; and (ii) does not have legal tender status as recognized by the United States Department of the Treasury. (B) "Virtual currency" does not include the software or protocols governing the transfer of a digital representation of value or other uses of a virtual distributed ledger system to verify ownership or authenticity in a digital capacity when the virtual currency is not used as a medium of exchange.

(A) "Virtual currency" means a digital representation of value that: (i) is used as a medium of exchange, a unit of account, or a store of value; and (ii) does not have legal tender status as recognized by the United States Department of the Treasury.

(i) is used as a medium of exchange, a unit of account, or a store of value; and

(ii) does not have legal tender status as recognized by the United States Department of the Treasury.

(B) "Virtual currency" does not include the software or protocols governing the transfer of a digital representation of value or other uses of a virtual distributed ledger system to verify ownership or authenticity in a digital capacity when the virtual currency is not used as a medium of exchange.

Amended by Act 2023, No. 442,§ 1, eff. 8/1/2023.

Amended by Act 2021, No. 532,§ 3, eff. 7/28/2021.

Amended by Act 2021, No. 532,§ 2, eff. 7/28/2021.

Amended by Act 2021, No. 532,§ 1, eff. 7/28/2021.

Amended by Act 2013, No. 531,§ 1, eff. 8/16/2013.

Acts 2007, No. 1595, § 1; 2009, No. 486, §§ 1 - 3; 2011, No. 733, § 1.
Ark. Code Ann. § 23-13-302 — AR Code / Title 23 / Chapter 13 / Subchapter 3 / Section 23-13-302
Authority of department
Status: in_force

The Arkansas Department of Transportation may, in all matters within its jurisdiction, issue subpoenas, subpoenas duces tecum, and all necessary process in proceedings pending before the department; may administer oaths, examine witnesses, compel the production of records, books, papers, files, documents, contracts, correspondence, agreements, or accounts necessary for any investigation being conducted; and may certify official acts. Amended by Act 2017, No. 707,§ 221, eff. 8/1/2017. Acts 1939, No. 315, § 7; A.S.A. 1947, § 73-1736.

The Arkansas Department of Transportation may, in all matters within its jurisdiction, issue subpoenas, subpoenas duces tecum, and all necessary process in proceedings pending before the department; may administer oaths, examine witnesses, compel the production of records, books, papers, files, documents, contracts, correspondence, agreements, or accounts necessary for any investigation being conducted; and may certify official acts.

Amended by Act 2017, No. 707,§ 221, eff. 8/1/2017.

Acts 1939, No. 315, § 7; A.S.A. 1947, § 73-1736.
Ark. Code Ann. § 23-65-310 — AR Code / Title 23 / Chapter 65 / Subchapter 3 / Section 23-65-310
Surplus lines insurance in solvent insurers
Status: in_force

(a) A surplus lines broker shall place surplus lines insurance only with insurers that have been approved by the Insurance Commissioner. (b) (1) The commissioner may maintain a list of approved foreign and alien surplus lines insurers in addition to those alien insurers maintaining status on the current National Association of Insurance Commissioners' nonadmitted insurers' quarterly listing. (2) The approved list shall not contain: (A) An insurer that is not licensed in at least one (1) state of the United States for the kind of insurance involved; (B) A stock insurer having capital and surplus amounting to less than three million dollars ($3,000,000); (C) A type of insurer, other than stock insurers, having surplus of less than three million dollars ($3,000,000); (D) (i) An alien insurer, unless: (a) The insurer has an established and effective trust fund within the United States administered by a recognized financial institution and held for the benefit of its policyholders; and (b) The trust fund is in the amount of not less than one million dollars ($1,000,000). (ii) (a) The broker may place casualty insurance with an alien insurer or a pool of alien insurers having combined capital and surplus of five million dollars ($5,000,000) or more, so long as the insured signs an affidavit accepting the insurance. (b) The affidavit shall include a statement that the insurance is not available to him or her elsewhere. (iii) The alien insurer shall: (a) Annually report the location and balance of the trust fund to the commissioner as the commissioner prescribes; and (b) Report to the commissioner any change in the location of the trust fund; (E) An insurer owned or controlled by a political sovereign or an agency of a political sovereign; or (F) (i) An insurer that does not maintain on deposit under § 23-63-901 et seq. eligible securities having a market value at all times of at least one hundred thousand dollars ($100,000) conditioned on the payment of creditors or obligees of the insurer in this state and the prompt payment of all claims arising and accruing to any persons during the term of the securities under a policy issued by the insurer. (ii) This subdivision (b)(2)(F) does not apply to foreign and alien surplus lines insurers as of July 21, 2011, if the requirements of the Nonadmitted and Reinsurance Reform Act of 2010, Pub. L. No. 111-203, as it existed on January 1, 2013, are met. (c) Upon receipt of a written request from the commissioner, an insurer shall promptly furnish to the commissioner information concerning its transactions or affairs. Amended by Act 2013, No. 355,§ 9, eff. 8/16/2013. Amended by Act 2013, No. 355,§ 8, eff. 8/16/2013. Acts 1959, No. 148, § 196; 1961, No. 466, § 10; 1973, No. 66, § 7; 1977, No. 789, § 5; 1981, No. 809, § 4; 1983, No. 522, §§ 25, 26; A.S.A. 1947, § 66-2916; Acts 1989, No. 772, §§ 7, 8; 2011, No. 1055, § 2.

(a) A surplus lines broker shall place surplus lines insurance only with insurers that have been approved by the Insurance Commissioner.

(b) (1) The commissioner may maintain a list of approved foreign and alien surplus lines insurers in addition to those alien insurers maintaining status on the current National Association of Insurance Commissioners' nonadmitted insurers' quarterly listing. (2) The approved list shall not contain: (A) An insurer that is not licensed in at least one (1) state of the United States for the kind of insurance involved; (B) A stock insurer having capital and surplus amounting to less than three million dollars ($3,000,000); (C) A type of insurer, other than stock insurers, having surplus of less than three million dollars ($3,000,000); (D) (i) An alien insurer, unless: (a) The insurer has an established and effective trust fund within the United States administered by a recognized financial institution and held for the benefit of its policyholders; and (b) The trust fund is in the amount of not less than one million dollars ($1,000,000). (ii) (a) The broker may place casualty insurance with an alien insurer or a pool of alien insurers having combined capital and surplus of five million dollars ($5,000,000) or more, so long as the insured signs an affidavit accepting the insurance. (b) The affidavit shall include a statement that the insurance is not available to him or her elsewhere. (iii) The alien insurer shall: (a) Annually report the location and balance of the trust fund to the commissioner as the commissioner prescribes; and (b) Report to the commissioner any change in the location of the trust fund; (E) An insurer owned or controlled by a political sovereign or an agency of a political sovereign; or (F) (i) An insurer that does not maintain on deposit under § 23-63-901 et seq. eligible securities having a market value at all times of at least one hundred thousand dollars ($100,000) conditioned on the payment of creditors or obligees of the insurer in this state and the prompt payment of all claims arising and accruing to any persons during the term of the securities under a policy issued by the insurer. (ii) This subdivision (b)(2)(F) does not apply to foreign and alien surplus lines insurers as of July 21, 2011, if the requirements of the Nonadmitted and Reinsurance Reform Act of 2010, Pub. L. No. 111-203, as it existed on January 1, 2013, are met.

(1) The commissioner may maintain a list of approved foreign and alien surplus lines insurers in addition to those alien insurers maintaining status on the current National Association of Insurance Commissioners' nonadmitted insurers' quarterly listing.

(2) The approved list shall not contain: (A) An insurer that is not licensed in at least one (1) state of the United States for the kind of insurance involved; (B) A stock insurer having capital and surplus amounting to less than three million dollars ($3,000,000); (C) A type of insurer, other than stock insurers, having surplus of less than three million dollars ($3,000,000); (D) (i) An alien insurer, unless: (a) The insurer has an established and effective trust fund within the United States administered by a recognized financial institution and held for the benefit of its policyholders; and (b) The trust fund is in the amount of not less than one million dollars ($1,000,000). (ii) (a) The broker may place casualty insurance with an alien insurer or a pool of alien insurers having combined capital and surplus of five million dollars ($5,000,000) or more, so long as the insured signs an affidavit accepting the insurance. (b) The affidavit shall include a statement that the insurance is not available to him or her elsewhere. (iii) The alien insurer shall: (a) Annually report the location and balance of the trust fund to the commissioner as the commissioner prescribes; and (b) Report to the commissioner any change in the location of the trust fund; (E) An insurer owned or controlled by a political sovereign or an agency of a political sovereign; or (F) (i) An insurer that does not maintain on deposit under § 23-63-901 et seq. eligible securities having a market value at all times of at least one hundred thousand dollars ($100,000) conditioned on the payment of creditors or obligees of the insurer in this state and the prompt payment of all claims arising and accruing to any persons during the term of the securities under a policy issued by the insurer. (ii) This subdivision (b)(2)(F) does not apply to foreign and alien surplus lines insurers as of July 21, 2011, if the requirements of the Nonadmitted and Reinsurance Reform Act of 2010, Pub. L. No. 111-203, as it existed on January 1, 2013, are met.

(A) An insurer that is not licensed in at least one (1) state of the United States for the kind of insurance involved;

(B) A stock insurer having capital and surplus amounting to less than three million dollars ($3,000,000);

(C) A type of insurer, other than stock insurers, having surplus of less than three million dollars ($3,000,000);

(D) (i) An alien insurer, unless: (a) The insurer has an established and effective trust fund within the United States administered by a recognized financial institution and held for the benefit of its policyholders; and (b) The trust fund is in the amount of not less than one million dollars ($1,000,000). (ii) (a) The broker may place casualty insurance with an alien insurer or a pool of alien insurers having combined capital and surplus of five million dollars ($5,000,000) or more, so long as the insured signs an affidavit accepting the insurance. (b) The affidavit shall include a statement that the insurance is not available to him or her elsewhere. (iii) The alien insurer shall: (a) Annually report the location and balance of the trust fund to the commissioner as the commissioner prescribes; and (b) Report to the commissioner any change in the location of the trust fund;

(i) An alien insurer, unless: (a) The insurer has an established and effective trust fund within the United States administered by a recognized financial institution and held for the benefit of its policyholders; and (b) The trust fund is in the amount of not less than one million dollars ($1,000,000).

(a) The insurer has an established and effective trust fund within the United States administered by a recognized financial institution and held for the benefit of its policyholders; and

(b) The trust fund is in the amount of not less than one million dollars ($1,000,000).

(ii) (a) The broker may place casualty insurance with an alien insurer or a pool of alien insurers having combined capital and surplus of five million dollars ($5,000,000) or more, so long as the insured signs an affidavit accepting the insurance. (b) The affidavit shall include a statement that the insurance is not available to him or her elsewhere.

(a) The broker may place casualty insurance with an alien insurer or a pool of alien insurers having combined capital and surplus of five million dollars ($5,000,000) or more, so long as the insured signs an affidavit accepting the insurance.

(b) The affidavit shall include a statement that the insurance is not available to him or her elsewhere.

(iii) The alien insurer shall: (a) Annually report the location and balance of the trust fund to the commissioner as the commissioner prescribes; and (b) Report to the commissioner any change in the location of the trust fund;

(a) Annually report the location and balance of the trust fund to the commissioner as the commissioner prescribes; and

(b) Report to the commissioner any change in the location of the trust fund;

(E) An insurer owned or controlled by a political sovereign or an agency of a political sovereign; or

(F) (i) An insurer that does not maintain on deposit under § 23-63-901 et seq. eligible securities having a market value at all times of at least one hundred thousand dollars ($100,000) conditioned on the payment of creditors or obligees of the insurer in this state and the prompt payment of all claims arising and accruing to any persons during the term of the securities under a policy issued by the insurer. (ii) This subdivision (b)(2)(F) does not apply to foreign and alien surplus lines insurers as of July 21, 2011, if the requirements of the Nonadmitted and Reinsurance Reform Act of 2010, Pub. L. No. 111-203, as it existed on January 1, 2013, are met.

(i) An insurer that does not maintain on deposit under § 23-63-901 et seq. eligible securities having a market value at all times of at least one hundred thousand dollars ($100,000) conditioned on the payment of creditors or obligees of the insurer in this state and the prompt payment of all claims arising and accruing to any persons during the term of the securities under a policy issued by the insurer.

(ii) This subdivision (b)(2)(F) does not apply to foreign and alien surplus lines insurers as of July 21, 2011, if the requirements of the Nonadmitted and Reinsurance Reform Act of 2010, Pub. L. No. 111-203, as it existed on January 1, 2013, are met.

(c) Upon receipt of a written request from the commissioner, an insurer shall promptly furnish to the commissioner information concerning its transactions or affairs.

Amended by Act 2013, No. 355,§ 9, eff. 8/16/2013.

Amended by Act 2013, No. 355,§ 8, eff. 8/16/2013.

Acts 1959, No. 148, § 196; 1961, No. 466, § 10; 1973, No. 66, § 7; 1977, No. 789, § 5; 1981, No. 809, § 4; 1983, No. 522, §§ 25, 26; A.S.A. 1947, § 66-2916; Acts 1989, No. 772, §§ 7, 8; 2011, No. 1055, § 2.
Ark. Code Ann. § 23-39-502 — AR Code / Title 23 / Chapter 39 / Subchapter 5 / Section 23-39-502
Definitions
Status: in_force

As used in this subchapter: (1) "Applicant" means a person that has applied to become licensed under this subchapter as a loan officer, transitional loan officer, mortgage broker, mortgage banker, or mortgage servicer; (2) "Branch manager" means the individual who is in charge of the business operations of one (1) or more branch offices of a mortgage broker, mortgage banker, or mortgage servicer; (3) "Branch office" means a location that is separate and distinct from the licensee's principal place of business and includes any location from which business is conducted under the license or in the name of the mortgage broker, mortgage banker, or mortgage servicer: (A) The address of which appears on business cards, stationery, or advertising used by the licensee in connection with business conducted under this subchapter at the branch office; (B) At which the licensee's name, advertising, promotional materials, or signage suggests that mortgage loans are originated, solicited, accepted, negotiated, funded, or serviced or from which mortgage loan commitments or interest rate guarantee agreements are issued; or (C) Which, due to the actions of any employee, associate, loan officer, or transitional loan officer of the licensee, may be construed by the public as a branch office of the licensee where mortgage loans are originated, solicited, accepted, negotiated, funded, or serviced or from which mortgage loan commitments or interest rate guarantee agreements are issued; (4) "Commissioner" means the Securities Commissioner and includes the commissioner's designees; (5) (A) "Control" means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. (B) A person is presumed to control a company if the person: (i) Is a director, general partner, or executive officer of the company; (ii) Directly or indirectly has the right to vote twenty-five percent (25%) or more of a class of a voting security of the company or has the power to sell or direct the sale of twenty-five percent (25%) or more of a class of voting securities of the company; (iii) In the case of a limited liability company, is a managing member of the limited liability company; or (iv) In the case of a partnership, has the right to receive upon dissolution or has contributed ten percent (10%) or more of the capital of the partnership; (6) "Control affiliate" means a partnership, corporation, trust, limited liability company, or other organization that directly or indirectly controls or is controlled by the applicant; (7) "Control person" means an individual who directly or indirectly exercises control over the applicant; (8) "Employee" means an individual who is licensed with or employed by a mortgage broker, mortgage banker, or mortgage servicer, whether by employment contract, agency, or other arrangement and regardless of whether the individual is treated as an employee for purposes of compliance with the federal income tax laws; (9) (A) "Exempt person" means a person not required to be licensed as a mortgage broker, mortgage banker, mortgage servicer, loan officer, or transitional loan officer under this subchapter. (B) "Exempt person" includes any of the following: (i) An employee of a licensee whose responsibilities are limited to clerical and administrative tasks for his or her employer and who does not solicit borrowers, accept applications, or negotiate the terms of loans on behalf of the employer; (ii) An agency or corporate instrumentality of the federal government or any state, county, or municipal government granting mortgage loans under specific authority of the laws of any state or of the United States; (iii) A trust company or industrial loan company chartered under the laws of Arkansas; (iv) A small-business investment corporation licensed under the Small Business Investment Act of 1958, 15 U.S.C. § 661 et seq., as it existed on January 1, 2011; (v) A real estate investment trust as defined in 26 U.S.C. § 856 , as it existed on January 1, 2011; (vi) A state or federally chartered bank, an operating subsidiary of a state-chartered bank regulated by the State Bank Department, a savings bank, a savings and loan association, or a credit union, the accounts of which are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration; (vii) An agricultural loan organization that is subject to licensing, supervision, or auditing by the United States Farm Service Agency, Commodity Credit Corporation, Rural Development Housing and Community Facilities Programs, United States Farm Credit Administration, or the United States Department of Agriculture; (viii) A nonprofit corporation that: (a) Qualifies as a nonprofit entity under § 501(c)(3) of the Internal Revenue Code; (b) Is not primarily in the business of soliciting or brokering mortgage loans; and (c) Makes or services mortgage loans to promote home ownership or home improvements for the disadvantaged; (ix) (a) A licensed real estate agent or broker who is performing those activities subject to the regulation of the Arkansas Real Estate Commission. (b) Notwithstanding subdivision (9)(B)(ix) (a) of this section, "exempt person" does not include a real estate agent or broker who receives compensation of any kind in connection with the referral, placement, or origination of a mortgage loan; (x) A person who engages in seller-financed transactions or who as a seller of real property receives mortgages, deeds of trust, or other security instruments on real estate as security for a purchase money obligation if: (a) The person does not receive from or hold on behalf of the borrower any funds for the payment of insurance or taxes on the real property; and (b) The seller does not sell the liens or mortgages in the secondary market other than to affiliated or subsidiary persons; (xi) An individual or husband and wife who provide funds for investment in loans secured by a lien on real property on his or her or their own account and who do not: (a) Charge a fee or cause a fee to be paid for any service other than the normal and scheduled rates for escrow, title insurance, and recording services; and (b) Collect funds to be used for the payment of any taxes or insurance premiums on the property securing the loans; (xii) An attorney licensed in Arkansas rendering legal services to his or her client, when the conduct that would subject the attorney to the jurisdiction of this subchapter is ancillary to the provision of the legal services offered; (xiii) A person performing any act under order of any court; (xiv) A person acting as a mortgage broker, mortgage banker, or mortgage servicer for any person located in Arkansas, if the mortgage broker, mortgage banker, or mortgage servicer has no office or employee in Arkansas and the real property that is the subject of the mortgage is located outside of Arkansas; (xv) An officer or employee of an exempt person described in subdivisions (9)(B)(ii)-(xiv) of this section if acting in the scope of employment for the exempt person; and (xvi) A manufactured or modular home retailer and its employees if: (a) The manufactured or modular home retailer or its employees perform only administrative or clerical tasks on behalf of a person required to be licensed under this subchapter; or (b) The manufactured or modular home retailer and its employees: (1) Do not receive compensation or financial gain for engaging in loan officer activities that exceeds the amount of compensation or financial gain that could be received in a comparable cash transaction for a manufactured home; (2) Disclose to the consumer in writing any corporate affiliation with a mortgage banker; (3) Provide referral information for at least one (1) unaffiliated creditor if the manufactured or modular home retailer has a corporate affiliation with a mortgage banker and the mortgage banker offers a recommendation; and (4) (A) Do not directly negotiate loan terms with the consumer or lender. (B) As used in subdivision (9)(B)(xvi) (b)(4)(A) of this section, "loan terms" includes rates, fees, and other costs; (10) "Licensee" means a loan officer, transitional loan officer, mortgage broker, mortgage banker, or mortgage servicer that is licensed under this subchapter; (11) (A) "Loan officer" means an individual other than an exempt person described in subdivision (9) of this section who in exchange for compensation as an employee of or who otherwise receives compensation or remuneration from a mortgage broker or a mortgage banker: (i) Solicits or offers to solicit an application for a mortgage loan; (ii) Accepts or offers to accept an application for a mortgage loan; (iii) Negotiates or offers to negotiate the terms or conditions of a mortgage loan; (iv) Issues or offers to issue a mortgage loan commitment or interest rate guarantee agreement; or (v) Provides or offers to provide modification of a mortgage loan. (B) "Loan officer" does not include: (i) An individual who performs clerical or administrative tasks in the processing of a mortgage loan at the direction of and subject to the supervision and instruction of a licensed loan officer; (ii) An underwriter if the individual performs no activities under subdivision (11)(A) of this section; or (iii) An individual who is solely involved in extensions of credit relating to timeshare plans, as that term is defined in 11 U.S.C. § 101(53D) , as it existed on January 1, 2011; (12) "Make a mortgage loan" means to close a mortgage loan, to advance funds, to offer to advance funds, or to make a commitment to advance funds to a borrower under a mortgage loan; (13) (A) "Managing principal" means a person who meets the requirements of § 23-39-508 and who agrees to be primarily responsible for the operations of a licensed mortgage broker, mortgage banker, or mortgage servicer. (B) "Managing principal" includes a qualifying individual; (14) "Mortgage banker" means a person who engages in the business of making mortgage loans for compensation or other gain; (15) "Mortgage broker" means a person who for compensation or other gain or in the expectation of compensation or other gain and, regardless of whether the acts are done directly or indirectly, through contact by telephone, by electronic means, by mail, or in person with the borrowers or potential borrowers: (A) Accepts or offers to accept an application for a mortgage loan; (B) Solicits or offers to solicit an application for a mortgage loan; (C) Negotiates or offers to negotiate the terms or conditions of a mortgage loan; or (D) Issues or offers to issue mortgage loan commitments or interest rate guarantee agreements to borrowers; (16) "Mortgage loan" means a loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, reverse mortgage, or other equivalent consensual security interest encumbering: (A) A dwelling as defined in section 1602(w) of the Truth in Lending Act, 15 U.S.C. § 1601 et seq., as it existed on January 1, 2011; or (B) Residential real estate upon which is constructed or intended to be constructed a dwelling; (17) (A) "Mortgage servicer" means a person that receives or has the right to receive from or on behalf of a borrower: (i) Funds or credits in payment for a mortgage loan; or (ii) The taxes or insurance associated with a mortgage loan. (B) In the case of a home equity conversion mortgage or a reverse mortgage, "mortgage servicer" includes a person that makes a payment to the borrower; (18) "Operating subsidiary" means a separate corporation, limited liability company, or similar entity in which a national or state bank, savings and loan association, or credit union, the accounts of which are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration, maintains more than fifty percent (50%) voting rights, a controlling interest, or otherwise controls the subsidiary and no other party controls more than fifty percent (50%) of the voting rights or a controlling interest in the subsidiary; (19) "Person" means an individual, partnership, limited liability company, limited partnership, corporation, association, or other group engaged in joint business activities, however organized; (20) "Principal place of business" means a stationary construction consisting of at least one (1) enclosed room or building in which negotiations of mortgage loan transactions of others may be conducted in private or in which the primary business functions of the licensee are conducted; (21) "Reverse mortgage" means a nonrecourse loan that pays a homeowner loan proceeds drawn from accumulated home equity; (22) "Sponsor" means a mortgage broker or mortgage banker licensed under this subchapter that has assumed the responsibility for and agrees to supervise the actions of a loan officer or transitional loan officer; (23) "Transitional loan officer" means an individual who, in exchange for compensation as an employee of, or who otherwise receives compensation or remuneration from, a mortgage broker or a mortgage banker, is authorized to act as a loan officer subject to a transitional loan officer license; (24) "Transitional loan officer license" means a license that: (A) Is issued to an individual who is employed and sponsored by a mortgage banker or mortgage broker licensed under this subchapter; (B) Is limited to a term of no more than one hundred twenty (120) days; and (C) Is not subject to reapplication, renewal, or extension by the commissioner; and (25) "Unique identifier" means a number or other identifier assigned by protocols established by the automated licensing system approved by the commissioner. Amended by Act 2023, No. 325,§ 2, eff. 8/1/2023. Amended by Act 2023, No. 325,§ 1, eff. 8/1/2023. Amended by Act 2021, No. 531,§ 3, eff. 7/28/2021. Amended by Act 2021, No. 531,§ 2, eff. 7/28/2021. Amended by Act 2021, No. 531,§ 1, eff. 7/28/2021. Amended by Act 2019, No. 200,§ 8, eff. 7/24/2019. Amended by Act 2019, No. 200,§ 7, eff. 7/24/2019. Amended by Act 2019, No. 200,§ 6, eff. 7/24/2019. Amended by Act 2019, No. 200,§ 5, eff. 7/24/2019. Amended by Act 2019, No. 200,§ 4, eff. 7/24/2019. Amended by Act 2019, No. 200,§ 3, eff. 7/24/2019. Amended by Act 2019, No. 200,§ 2, eff. 7/24/2019. Amended by Act 2019, No. 200,§ 1, eff. 7/24/2019. Amended by Act 2013, No. 1167,§ 4, eff. 8/16/2013. Amended by Act 2013, No. 1167,§ 3, eff. 8/16/2013. Amended by Act 2013, No. 1167,§ 2, eff. 8/16/2013. Amended by Act 2013, No. 1167,§ 1, eff. 8/16/2013. Acts 2003, No. 554, § 1; 2005, No. 1679, § 1; 2007, No. 748, § 1; 2009, No. 731, §§ 1-5; 2011, No. 894, §§ 1-4.

As used in this subchapter:

(1) "Applicant" means a person that has applied to become licensed under this subchapter as a loan officer, transitional loan officer, mortgage broker, mortgage banker, or mortgage servicer;

(2) "Branch manager" means the individual who is in charge of the business operations of one (1) or more branch offices of a mortgage broker, mortgage banker, or mortgage servicer;

(3) "Branch office" means a location that is separate and distinct from the licensee's principal place of business and includes any location from which business is conducted under the license or in the name of the mortgage broker, mortgage banker, or mortgage servicer: (A) The address of which appears on business cards, stationery, or advertising used by the licensee in connection with business conducted under this subchapter at the branch office; (B) At which the licensee's name, advertising, promotional materials, or signage suggests that mortgage loans are originated, solicited, accepted, negotiated, funded, or serviced or from which mortgage loan commitments or interest rate guarantee agreements are issued; or (C) Which, due to the actions of any employee, associate, loan officer, or transitional loan officer of the licensee, may be construed by the public as a branch office of the licensee where mortgage loans are originated, solicited, accepted, negotiated, funded, or serviced or from which mortgage loan commitments or interest rate guarantee agreements are issued;

(A) The address of which appears on business cards, stationery, or advertising used by the licensee in connection with business conducted under this subchapter at the branch office;

(B) At which the licensee's name, advertising, promotional materials, or signage suggests that mortgage loans are originated, solicited, accepted, negotiated, funded, or serviced or from which mortgage loan commitments or interest rate guarantee agreements are issued; or

(C) Which, due to the actions of any employee, associate, loan officer, or transitional loan officer of the licensee, may be construed by the public as a branch office of the licensee where mortgage loans are originated, solicited, accepted, negotiated, funded, or serviced or from which mortgage loan commitments or interest rate guarantee agreements are issued;

(4) "Commissioner" means the Securities Commissioner and includes the commissioner's designees;

(5) (A) "Control" means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. (B) A person is presumed to control a company if the person: (i) Is a director, general partner, or executive officer of the company; (ii) Directly or indirectly has the right to vote twenty-five percent (25%) or more of a class of a voting security of the company or has the power to sell or direct the sale of twenty-five percent (25%) or more of a class of voting securities of the company; (iii) In the case of a limited liability company, is a managing member of the limited liability company; or (iv) In the case of a partnership, has the right to receive upon dissolution or has contributed ten percent (10%) or more of the capital of the partnership;

(A) "Control" means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise.

(B) A person is presumed to control a company if the person: (i) Is a director, general partner, or executive officer of the company; (ii) Directly or indirectly has the right to vote twenty-five percent (25%) or more of a class of a voting security of the company or has the power to sell or direct the sale of twenty-five percent (25%) or more of a class of voting securities of the company; (iii) In the case of a limited liability company, is a managing member of the limited liability company; or (iv) In the case of a partnership, has the right to receive upon dissolution or has contributed ten percent (10%) or more of the capital of the partnership;

(i) Is a director, general partner, or executive officer of the company;

(ii) Directly or indirectly has the right to vote twenty-five percent (25%) or more of a class of a voting security of the company or has the power to sell or direct the sale of twenty-five percent (25%) or more of a class of voting securities of the company;

(iii) In the case of a limited liability company, is a managing member of the limited liability company; or

(iv) In the case of a partnership, has the right to receive upon dissolution or has contributed ten percent (10%) or more of the capital of the partnership;

(6) "Control affiliate" means a partnership, corporation, trust, limited liability company, or other organization that directly or indirectly controls or is controlled by the applicant;

(7) "Control person" means an individual who directly or indirectly exercises control over the applicant;

(8) "Employee" means an individual who is licensed with or employed by a mortgage broker, mortgage banker, or mortgage servicer, whether by employment contract, agency, or other arrangement and regardless of whether the individual is treated as an employee for purposes of compliance with the federal income tax laws;

(9) (A) "Exempt person" means a person not required to be licensed as a mortgage broker, mortgage banker, mortgage servicer, loan officer, or transitional loan officer under this subchapter. (B) "Exempt person" includes any of the following: (i) An employee of a licensee whose responsibilities are limited to clerical and administrative tasks for his or her employer and who does not solicit borrowers, accept applications, or negotiate the terms of loans on behalf of the employer; (ii) An agency or corporate instrumentality of the federal government or any state, county, or municipal government granting mortgage loans under specific authority of the laws of any state or of the United States; (iii) A trust company or industrial loan company chartered under the laws of Arkansas; (iv) A small-business investment corporation licensed under the Small Business Investment Act of 1958, 15 U.S.C. § 661 et seq., as it existed on January 1, 2011; (v) A real estate investment trust as defined in 26 U.S.C. § 856 , as it existed on January 1, 2011; (vi) A state or federally chartered bank, an operating subsidiary of a state-chartered bank regulated by the State Bank Department, a savings bank, a savings and loan association, or a credit union, the accounts of which are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration; (vii) An agricultural loan organization that is subject to licensing, supervision, or auditing by the United States Farm Service Agency, Commodity Credit Corporation, Rural Development Housing and Community Facilities Programs, United States Farm Credit Administration, or the United States Department of Agriculture; (viii) A nonprofit corporation that: (a) Qualifies as a nonprofit entity under § 501(c)(3) of the Internal Revenue Code; (b) Is not primarily in the business of soliciting or brokering mortgage loans; and (c) Makes or services mortgage loans to promote home ownership or home improvements for the disadvantaged; (ix) (a) A licensed real estate agent or broker who is performing those activities subject to the regulation of the Arkansas Real Estate Commission. (b) Notwithstanding subdivision (9)(B)(ix) (a) of this section, "exempt person" does not include a real estate agent or broker who receives compensation of any kind in connection with the referral, placement, or origination of a mortgage loan; (x) A person who engages in seller-financed transactions or who as a seller of real property receives mortgages, deeds of trust, or other security instruments on real estate as security for a purchase money obligation if: (a) The person does not receive from or hold on behalf of the borrower any funds for the payment of insurance or taxes on the real property; and (b) The seller does not sell the liens or mortgages in the secondary market other than to affiliated or subsidiary persons; (xi) An individual or husband and wife who provide funds for investment in loans secured by a lien on real property on his or her or their own account and who do not: (a) Charge a fee or cause a fee to be paid for any service other than the normal and scheduled rates for escrow, title insurance, and recording services; and (b) Collect funds to be used for the payment of any taxes or insurance premiums on the property securing the loans; (xii) An attorney licensed in Arkansas rendering legal services to his or her client, when the conduct that would subject the attorney to the jurisdiction of this subchapter is ancillary to the provision of the legal services offered; (xiii) A person performing any act under order of any court; (xiv) A person acting as a mortgage broker, mortgage banker, or mortgage servicer for any person located in Arkansas, if the mortgage broker, mortgage banker, or mortgage servicer has no office or employee in Arkansas and the real property that is the subject of the mortgage is located outside of Arkansas; (xv) An officer or employee of an exempt person described in subdivisions (9)(B)(ii)-(xiv) of this section if acting in the scope of employment for the exempt person; and (xvi) A manufactured or modular home retailer and its employees if: (a) The manufactured or modular home retailer or its employees perform only administrative or clerical tasks on behalf of a person required to be licensed under this subchapter; or (b) The manufactured or modular home retailer and its employees: (1) Do not receive compensation or financial gain for engaging in loan officer activities that exceeds the amount of compensation or financial gain that could be received in a comparable cash transaction for a manufactured home; (2) Disclose to the consumer in writing any corporate affiliation with a mortgage banker; (3) Provide referral information for at least one (1) unaffiliated creditor if the manufactured or modular home retailer has a corporate affiliation with a mortgage banker and the mortgage banker offers a recommendation; and (4) (A) Do not directly negotiate loan terms with the consumer or lender. (B) As used in subdivision (9)(B)(xvi) (b)(4)(A) of this section, "loan terms" includes rates, fees, and other costs;

(A) "Exempt person" means a person not required to be licensed as a mortgage broker, mortgage banker, mortgage servicer, loan officer, or transitional loan officer under this subchapter.

(B) "Exempt person" includes any of the following: (i) An employee of a licensee whose responsibilities are limited to clerical and administrative tasks for his or her employer and who does not solicit borrowers, accept applications, or negotiate the terms of loans on behalf of the employer; (ii) An agency or corporate instrumentality of the federal government or any state, county, or municipal government granting mortgage loans under specific authority of the laws of any state or of the United States; (iii) A trust company or industrial loan company chartered under the laws of Arkansas; (iv) A small-business investment corporation licensed under the Small Business Investment Act of 1958, 15 U.S.C. § 661 et seq., as it existed on January 1, 2011; (v) A real estate investment trust as defined in 26 U.S.C. § 856 , as it existed on January 1, 2011; (vi) A state or federally chartered bank, an operating subsidiary of a state-chartered bank regulated by the State Bank Department, a savings bank, a savings and loan association, or a credit union, the accounts of which are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration; (vii) An agricultural loan organization that is subject to licensing, supervision, or auditing by the United States Farm Service Agency, Commodity Credit Corporation, Rural Development Housing and Community Facilities Programs, United States Farm Credit Administration, or the United States Department of Agriculture; (viii) A nonprofit corporation that: (a) Qualifies as a nonprofit entity under § 501(c)(3) of the Internal Revenue Code; (b) Is not primarily in the business of soliciting or brokering mortgage loans; and (c) Makes or services mortgage loans to promote home ownership or home improvements for the disadvantaged; (ix) (a) A licensed real estate agent or broker who is performing those activities subject to the regulation of the Arkansas Real Estate Commission. (b) Notwithstanding subdivision (9)(B)(ix) (a) of this section, "exempt person" does not include a real estate agent or broker who receives compensation of any kind in connection with the referral, placement, or origination of a mortgage loan; (x) A person who engages in seller-financed transactions or who as a seller of real property receives mortgages, deeds of trust, or other security instruments on real estate as security for a purchase money obligation if: (a) The person does not receive from or hold on behalf of the borrower any funds for the payment of insurance or taxes on the real property; and (b) The seller does not sell the liens or mortgages in the secondary market other than to affiliated or subsidiary persons; (xi) An individual or husband and wife who provide funds for investment in loans secured by a lien on real property on his or her or their own account and who do not: (a) Charge a fee or cause a fee to be paid for any service other than the normal and scheduled rates for escrow, title insurance, and recording services; and (b) Collect funds to be used for the payment of any taxes or insurance premiums on the property securing the loans; (xii) An attorney licensed in Arkansas rendering legal services to his or her client, when the conduct that would subject the attorney to the jurisdiction of this subchapter is ancillary to the provision of the legal services offered; (xiii) A person performing any act under order of any court; (xiv) A person acting as a mortgage broker, mortgage banker, or mortgage servicer for any person located in Arkansas, if the mortgage broker, mortgage banker, or mortgage servicer has no office or employee in Arkansas and the real property that is the subject of the mortgage is located outside of Arkansas; (xv) An officer or employee of an exempt person described in subdivisions (9)(B)(ii)-(xiv) of this section if acting in the scope of employment for the exempt person; and (xvi) A manufactured or modular home retailer and its employees if: (a) The manufactured or modular home retailer or its employees perform only administrative or clerical tasks on behalf of a person required to be licensed under this subchapter; or (b) The manufactured or modular home retailer and its employees: (1) Do not receive compensation or financial gain for engaging in loan officer activities that exceeds the amount of compensation or financial gain that could be received in a comparable cash transaction for a manufactured home; (2) Disclose to the consumer in writing any corporate affiliation with a mortgage banker; (3) Provide referral information for at least one (1) unaffiliated creditor if the manufactured or modular home retailer has a corporate affiliation with a mortgage banker and the mortgage banker offers a recommendation; and (4) (A) Do not directly negotiate loan terms with the consumer or lender. (B) As used in subdivision (9)(B)(xvi) (b)(4)(A) of this section, "loan terms" includes rates, fees, and other costs;

(i) An employee of a licensee whose responsibilities are limited to clerical and administrative tasks for his or her employer and who does not solicit borrowers, accept applications, or negotiate the terms of loans on behalf of the employer;

(ii) An agency or corporate instrumentality of the federal government or any state, county, or municipal government granting mortgage loans under specific authority of the laws of any state or of the United States;

(iii) A trust company or industrial loan company chartered under the laws of Arkansas;

(iv) A small-business investment corporation licensed under the Small Business Investment Act of 1958, 15 U.S.C. § 661 et seq., as it existed on January 1, 2011;

(v) A real estate investment trust as defined in 26 U.S.C. § 856 , as it existed on January 1, 2011;

(vi) A state or federally chartered bank, an operating subsidiary of a state-chartered bank regulated by the State Bank Department, a savings bank, a savings and loan association, or a credit union, the accounts of which are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration;

(vii) An agricultural loan organization that is subject to licensing, supervision, or auditing by the United States Farm Service Agency, Commodity Credit Corporation, Rural Development Housing and Community Facilities Programs, United States Farm Credit Administration, or the United States Department of Agriculture;

(viii) A nonprofit corporation that: (a) Qualifies as a nonprofit entity under § 501(c)(3) of the Internal Revenue Code; (b) Is not primarily in the business of soliciting or brokering mortgage loans; and (c) Makes or services mortgage loans to promote home ownership or home improvements for the disadvantaged;

(a) Qualifies as a nonprofit entity under § 501(c)(3) of the Internal Revenue Code;

(b) Is not primarily in the business of soliciting or brokering mortgage loans; and

(c) Makes or services mortgage loans to promote home ownership or home improvements for the disadvantaged;

(ix) (a) A licensed real estate agent or broker who is performing those activities subject to the regulation of the Arkansas Real Estate Commission. (b) Notwithstanding subdivision (9)(B)(ix) (a) of this section, "exempt person" does not include a real estate agent or broker who receives compensation of any kind in connection with the referral, placement, or origination of a mortgage loan;

(a) A licensed real estate agent or broker who is performing those activities subject to the regulation of the Arkansas Real Estate Commission.

(b) Notwithstanding subdivision (9)(B)(ix) (a) of this section, "exempt person" does not include a real estate agent or broker who receives compensation of any kind in connection with the referral, placement, or origination of a mortgage loan;

(x) A person who engages in seller-financed transactions or who as a seller of real property receives mortgages, deeds of trust, or other security instruments on real estate as security for a purchase money obligation if: (a) The person does not receive from or hold on behalf of the borrower any funds for the payment of insurance or taxes on the real property; and (b) The seller does not sell the liens or mortgages in the secondary market other than to affiliated or subsidiary persons;

(a) The person does not receive from or hold on behalf of the borrower any funds for the payment of insurance or taxes on the real property; and

(b) The seller does not sell the liens or mortgages in the secondary market other than to affiliated or subsidiary persons;

(xi) An individual or husband and wife who provide funds for investment in loans secured by a lien on real property on his or her or their own account and who do not: (a) Charge a fee or cause a fee to be paid for any service other than the normal and scheduled rates for escrow, title insurance, and recording services; and (b) Collect funds to be used for the payment of any taxes or insurance premiums on the property securing the loans;

(a) Charge a fee or cause a fee to be paid for any service other than the normal and scheduled rates for escrow, title insurance, and recording services; and

(b) Collect funds to be used for the payment of any taxes or insurance premiums on the property securing the loans;

(xii) An attorney licensed in Arkansas rendering legal services to his or her client, when the conduct that would subject the attorney to the jurisdiction of this subchapter is ancillary to the provision of the legal services offered;

(xiii) A person performing any act under order of any court;

(xiv) A person acting as a mortgage broker, mortgage banker, or mortgage servicer for any person located in Arkansas, if the mortgage broker, mortgage banker, or mortgage servicer has no office or employee in Arkansas and the real property that is the subject of the mortgage is located outside of Arkansas;

(xv) An officer or employee of an exempt person described in subdivisions (9)(B)(ii)-(xiv) of this section if acting in the scope of employment for the exempt person; and

(xvi) A manufactured or modular home retailer and its employees if: (a) The manufactured or modular home retailer or its employees perform only administrative or clerical tasks on behalf of a person required to be licensed under this subchapter; or (b) The manufactured or modular home retailer and its employees: (1) Do not receive compensation or financial gain for engaging in loan officer activities that exceeds the amount of compensation or financial gain that could be received in a comparable cash transaction for a manufactured home; (2) Disclose to the consumer in writing any corporate affiliation with a mortgage banker; (3) Provide referral information for at least one (1) unaffiliated creditor if the manufactured or modular home retailer has a corporate affiliation with a mortgage banker and the mortgage banker offers a recommendation; and (4) (A) Do not directly negotiate loan terms with the consumer or lender. (B) As used in subdivision (9)(B)(xvi) (b)(4)(A) of this section, "loan terms" includes rates, fees, and other costs;

(a) The manufactured or modular home retailer or its employees perform only administrative or clerical tasks on behalf of a person required to be licensed under this subchapter; or

(b) The manufactured or modular home retailer and its employees: (1) Do not receive compensation or financial gain for engaging in loan officer activities that exceeds the amount of compensation or financial gain that could be received in a comparable cash transaction for a manufactured home; (2) Disclose to the consumer in writing any corporate affiliation with a mortgage banker; (3) Provide referral information for at least one (1) unaffiliated creditor if the manufactured or modular home retailer has a corporate affiliation with a mortgage banker and the mortgage banker offers a recommendation; and (4) (A) Do not directly negotiate loan terms with the consumer or lender. (B) As used in subdivision (9)(B)(xvi) (b)(4)(A) of this section, "loan terms" includes rates, fees, and other costs;

(1) Do not receive compensation or financial gain for engaging in loan officer activities that exceeds the amount of compensation or financial gain that could be received in a comparable cash transaction for a manufactured home;

(2) Disclose to the consumer in writing any corporate affiliation with a mortgage banker;

(3) Provide referral information for at least one (1) unaffiliated creditor if the manufactured or modular home retailer has a corporate affiliation with a mortgage banker and the mortgage banker offers a recommendation; and

(4) (A) Do not directly negotiate loan terms with the consumer or lender. (B) As used in subdivision (9)(B)(xvi) (b)(4)(A) of this section, "loan terms" includes rates, fees, and other costs;

(A) Do not directly negotiate loan terms with the consumer or lender.

(B) As used in subdivision (9)(B)(xvi) (b)(4)(A) of this section, "loan terms" includes rates, fees, and other costs;

(10) "Licensee" means a loan officer, transitional loan officer, mortgage broker, mortgage banker, or mortgage servicer that is licensed under this subchapter;

(11) (A) "Loan officer" means an individual other than an exempt person described in subdivision (9) of this section who in exchange for compensation as an employee of or who otherwise receives compensation or remuneration from a mortgage broker or a mortgage banker: (i) Solicits or offers to solicit an application for a mortgage loan; (ii) Accepts or offers to accept an application for a mortgage loan; (iii) Negotiates or offers to negotiate the terms or conditions of a mortgage loan; (iv) Issues or offers to issue a mortgage loan commitment or interest rate guarantee agreement; or (v) Provides or offers to provide modification of a mortgage loan. (B) "Loan officer" does not include: (i) An individual who performs clerical or administrative tasks in the processing of a mortgage loan at the direction of and subject to the supervision and instruction of a licensed loan officer; (ii) An underwriter if the individual performs no activities under subdivision (11)(A) of this section; or (iii) An individual who is solely involved in extensions of credit relating to timeshare plans, as that term is defined in 11 U.S.C. § 101(53D) , as it existed on January 1, 2011;

(A) "Loan officer" means an individual other than an exempt person described in subdivision (9) of this section who in exchange for compensation as an employee of or who otherwise receives compensation or remuneration from a mortgage broker or a mortgage banker: (i) Solicits or offers to solicit an application for a mortgage loan; (ii) Accepts or offers to accept an application for a mortgage loan; (iii) Negotiates or offers to negotiate the terms or conditions of a mortgage loan; (iv) Issues or offers to issue a mortgage loan commitment or interest rate guarantee agreement; or (v) Provides or offers to provide modification of a mortgage loan.

(i) Solicits or offers to solicit an application for a mortgage loan;

(ii) Accepts or offers to accept an application for a mortgage loan;

(iii) Negotiates or offers to negotiate the terms or conditions of a mortgage loan;

(iv) Issues or offers to issue a mortgage loan commitment or interest rate guarantee agreement; or

(v) Provides or offers to provide modification of a mortgage loan.

(B) "Loan officer" does not include: (i) An individual who performs clerical or administrative tasks in the processing of a mortgage loan at the direction of and subject to the supervision and instruction of a licensed loan officer; (ii) An underwriter if the individual performs no activities under subdivision (11)(A) of this section; or (iii) An individual who is solely involved in extensions of credit relating to timeshare plans, as that term is defined in 11 U.S.C. § 101(53D) , as it existed on January 1, 2011;

(i) An individual who performs clerical or administrative tasks in the processing of a mortgage loan at the direction of and subject to the supervision and instruction of a licensed loan officer;

(ii) An underwriter if the individual performs no activities under subdivision (11)(A) of this section; or

(iii) An individual who is solely involved in extensions of credit relating to timeshare plans, as that term is defined in 11 U.S.C. § 101(53D) , as it existed on January 1, 2011;

(12) "Make a mortgage loan" means to close a mortgage loan, to advance funds, to offer to advance funds, or to make a commitment to advance funds to a borrower under a mortgage loan;

(13) (A) "Managing principal" means a person who meets the requirements of § 23-39-508 and who agrees to be primarily responsible for the operations of a licensed mortgage broker, mortgage banker, or mortgage servicer. (B) "Managing principal" includes a qualifying individual;

(A) "Managing principal" means a person who meets the requirements of § 23-39-508 and who agrees to be primarily responsible for the operations of a licensed mortgage broker, mortgage banker, or mortgage servicer.

(B) "Managing principal" includes a qualifying individual;

(14) "Mortgage banker" means a person who engages in the business of making mortgage loans for compensation or other gain;

(15) "Mortgage broker" means a person who for compensation or other gain or in the expectation of compensation or other gain and, regardless of whether the acts are done directly or indirectly, through contact by telephone, by electronic means, by mail, or in person with the borrowers or potential borrowers: (A) Accepts or offers to accept an application for a mortgage loan; (B) Solicits or offers to solicit an application for a mortgage loan; (C) Negotiates or offers to negotiate the terms or conditions of a mortgage loan; or (D) Issues or offers to issue mortgage loan commitments or interest rate guarantee agreements to borrowers;

(A) Accepts or offers to accept an application for a mortgage loan;

(B) Solicits or offers to solicit an application for a mortgage loan;

(C) Negotiates or offers to negotiate the terms or conditions of a mortgage loan; or

(D) Issues or offers to issue mortgage loan commitments or interest rate guarantee agreements to borrowers;

(16) "Mortgage loan" means a loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, reverse mortgage, or other equivalent consensual security interest encumbering: (A) A dwelling as defined in section 1602(w) of the Truth in Lending Act, 15 U.S.C. § 1601 et seq., as it existed on January 1, 2011; or (B) Residential real estate upon which is constructed or intended to be constructed a dwelling;

(A) A dwelling as defined in section 1602(w) of the Truth in Lending Act, 15 U.S.C. § 1601 et seq., as it existed on January 1, 2011; or

(B) Residential real estate upon which is constructed or intended to be constructed a dwelling;

(17) (A) "Mortgage servicer" means a person that receives or has the right to receive from or on behalf of a borrower: (i) Funds or credits in payment for a mortgage loan; or (ii) The taxes or insurance associated with a mortgage loan. (B) In the case of a home equity conversion mortgage or a reverse mortgage, "mortgage servicer" includes a person that makes a payment to the borrower;

(A) "Mortgage servicer" means a person that receives or has the right to receive from or on behalf of a borrower: (i) Funds or credits in payment for a mortgage loan; or (ii) The taxes or insurance associated with a mortgage loan.

(i) Funds or credits in payment for a mortgage loan; or

(ii) The taxes or insurance associated with a mortgage loan.

(B) In the case of a home equity conversion mortgage or a reverse mortgage, "mortgage servicer" includes a person that makes a payment to the borrower;

(18) "Operating subsidiary" means a separate corporation, limited liability company, or similar entity in which a national or state bank, savings and loan association, or credit union, the accounts of which are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration, maintains more than fifty percent (50%) voting rights, a controlling interest, or otherwise controls the subsidiary and no other party controls more than fifty percent (50%) of the voting rights or a controlling interest in the subsidiary;

(19) "Person" means an individual, partnership, limited liability company, limited partnership, corporation, association, or other group engaged in joint business activities, however organized;

(20) "Principal place of business" means a stationary construction consisting of at least one (1) enclosed room or building in which negotiations of mortgage loan transactions of others may be conducted in private or in which the primary business functions of the licensee are conducted;

(21) "Reverse mortgage" means a nonrecourse loan that pays a homeowner loan proceeds drawn from accumulated home equity;

(22) "Sponsor" means a mortgage broker or mortgage banker licensed under this subchapter that has assumed the responsibility for and agrees to supervise the actions of a loan officer or transitional loan officer;

(23) "Transitional loan officer" means an individual who, in exchange for compensation as an employee of, or who otherwise receives compensation or remuneration from, a mortgage broker or a mortgage banker, is authorized to act as a loan officer subject to a transitional loan officer license;

(24) "Transitional loan officer license" means a license that: (A) Is issued to an individual who is employed and sponsored by a mortgage banker or mortgage broker licensed under this subchapter; (B) Is limited to a term of no more than one hundred twenty (120) days; and (C) Is not subject to reapplication, renewal, or extension by the commissioner; and

(A) Is issued to an individual who is employed and sponsored by a mortgage banker or mortgage broker licensed under this subchapter;

(B) Is limited to a term of no more than one hundred twenty (120) days; and

(C) Is not subject to reapplication, renewal, or extension by the commissioner; and

(25) "Unique identifier" means a number or other identifier assigned by protocols established by the automated licensing system approved by the commissioner.

Amended by Act 2023, No. 325,§ 2, eff. 8/1/2023.

Amended by Act 2023, No. 325,§ 1, eff. 8/1/2023.

Amended by Act 2021, No. 531,§ 3, eff. 7/28/2021.

Amended by Act 2021, No. 531,§ 2, eff. 7/28/2021.

Amended by Act 2021, No. 531,§ 1, eff. 7/28/2021.

Amended by Act 2019, No. 200,§ 8, eff. 7/24/2019.

Amended by Act 2019, No. 200,§ 7, eff. 7/24/2019.

Amended by Act 2019, No. 200,§ 6, eff. 7/24/2019.

Amended by Act 2019, No. 200,§ 5, eff. 7/24/2019.

Amended by Act 2019, No. 200,§ 4, eff. 7/24/2019.

Amended by Act 2019, No. 200,§ 3, eff. 7/24/2019.

Amended by Act 2019, No. 200,§ 2, eff. 7/24/2019.

Amended by Act 2019, No. 200,§ 1, eff. 7/24/2019.

Amended by Act 2013, No. 1167,§ 4, eff. 8/16/2013.

Amended by Act 2013, No. 1167,§ 3, eff. 8/16/2013.

Amended by Act 2013, No. 1167,§ 2, eff. 8/16/2013.

Amended by Act 2013, No. 1167,§ 1, eff. 8/16/2013.

Acts 2003, No. 554, § 1; 2005, No. 1679, § 1; 2007, No. 748, § 1; 2009, No. 731, §§ 1-5; 2011, No. 894, §§ 1-4.
Ark. Code Ann. § 23-111-405 — AR Code / Title 23 / Chapter 111 / Subchapter 4 / Section 23-111-405
Investigation by Arkansas Racing Commission
Status: in_force

(a) (1) (A) The Arkansas Racing Commission is authorized to conduct a thorough investigation of the personal background of each officer, each director, and each principal stockholder of an applicant for, or holder of, a franchise for conducting dog racing in this state. (B) In the event a corporation, partnership, or association qualifies as a principal stockholder of an applicant for, or holder of, a franchise for conducting dog racing in this state, then the commission is authorized to conduct a thorough investigation of the personal background of each officer, director, and stockholder of the corporation or the personal background of each member of the partnership or association. (2) In investigating the personal background of an officer, director, or principal stockholder of an applicant for, or holder of, a dog racing franchise, or the officers, directors, and stockholders of a corporation qualifying as a principal stockholder or the members of any partnership or association qualifying as a principal stockholder, the commission may take into consideration: (A) Present and past business associations of a person and corporate stockholdings of the person; (B) Any connection the person has or may have had with any gambling operations or other unlawful operations in this state or any other state; (C) Any criminal convictions of the person; and (D) Such other matters as the commission shall deem helpful in determining whether the ownership by the person, corporation, partnership, or association qualifying as a principal stockholder of a substantial amount of stock in the corporate applicant for, or holder of, a franchise to conduct dog racing in this state would or would not be detrimental to the public interest of this state. (b) The commission may refuse to grant a franchise or temporary franchise or it may suspend or revoke an existing franchise if after investigation and hearing it determines that an officer, director, or principal stockholder of the applicant for, or holder of, a franchise is of undesirable personal background. (c) The commission may refuse to grant a franchise or temporary franchise or it may suspend or revoke an existing franchise if after investigation and hearing it determines that an officer, director, or stockholder of a corporation qualifying as a principal stockholder under § 23-111-402 or a member of any partnership or association qualifying as a principal stockholder under the provisions of § 23-111-402 is of undesirable personal background. (d) (1) Before the commission refuses to grant any franchise or temporary franchise or suspends or revokes an existing franchise on the basis of the personal background of any officer, director, or principal stockholder of the applicant for, or holder of, a franchise, the commission shall: (A) Set a date and time for a hearing on the matter; (B) Notify the applicant or franchise holder of: (i) The specific findings of the commission upon the basis of which it proposed to refuse, suspend, or revoke the franchise; and (ii) The date and time of the hearing; and (C) At least ten (10) days prior to the hearing, publish notice of the hearing in a newspaper of general circulation in the county in which dog racing is held or proposed to be held under the franchise. (2) Notice shall be given to the applicant or franchise holder by registered mail addressed to the applicant or franchise holder at its principal office as shown in the application or in other records of the commission at least ten (10) days prior to the date of the hearing. (3) At the hearing the applicant for, or holder of, a franchise and other interested persons shall be permitted to appear and present evidence relevant to the issue or finding upon which the commission proposes to deny, suspend, or revoke a franchise. (4) All proceedings before the commission pursuant to this section and the right of appeal therefrom shall be conducted in accordance with, and taken in the manner provided in, and in every way subject to, the Arkansas Administrative Procedure Act, § 25-15-201 et seq. Acts 1968 (2nd Ex. Sess.), No. 8, §§ 3, 5; A.S.A. 1947, §§ 84-2823.3, 84-2823.5.

(a) (1) (A) The Arkansas Racing Commission is authorized to conduct a thorough investigation of the personal background of each officer, each director, and each principal stockholder of an applicant for, or holder of, a franchise for conducting dog racing in this state. (B) In the event a corporation, partnership, or association qualifies as a principal stockholder of an applicant for, or holder of, a franchise for conducting dog racing in this state, then the commission is authorized to conduct a thorough investigation of the personal background of each officer, director, and stockholder of the corporation or the personal background of each member of the partnership or association. (2) In investigating the personal background of an officer, director, or principal stockholder of an applicant for, or holder of, a dog racing franchise, or the officers, directors, and stockholders of a corporation qualifying as a principal stockholder or the members of any partnership or association qualifying as a principal stockholder, the commission may take into consideration: (A) Present and past business associations of a person and corporate stockholdings of the person; (B) Any connection the person has or may have had with any gambling operations or other unlawful operations in this state or any other state; (C) Any criminal convictions of the person; and (D) Such other matters as the commission shall deem helpful in determining whether the ownership by the person, corporation, partnership, or association qualifying as a principal stockholder of a substantial amount of stock in the corporate applicant for, or holder of, a franchise to conduct dog racing in this state would or would not be detrimental to the public interest of this state.

(1) (A) The Arkansas Racing Commission is authorized to conduct a thorough investigation of the personal background of each officer, each director, and each principal stockholder of an applicant for, or holder of, a franchise for conducting dog racing in this state. (B) In the event a corporation, partnership, or association qualifies as a principal stockholder of an applicant for, or holder of, a franchise for conducting dog racing in this state, then the commission is authorized to conduct a thorough investigation of the personal background of each officer, director, and stockholder of the corporation or the personal background of each member of the partnership or association.

(A) The Arkansas Racing Commission is authorized to conduct a thorough investigation of the personal background of each officer, each director, and each principal stockholder of an applicant for, or holder of, a franchise for conducting dog racing in this state.

(B) In the event a corporation, partnership, or association qualifies as a principal stockholder of an applicant for, or holder of, a franchise for conducting dog racing in this state, then the commission is authorized to conduct a thorough investigation of the personal background of each officer, director, and stockholder of the corporation or the personal background of each member of the partnership or association.

(2) In investigating the personal background of an officer, director, or principal stockholder of an applicant for, or holder of, a dog racing franchise, or the officers, directors, and stockholders of a corporation qualifying as a principal stockholder or the members of any partnership or association qualifying as a principal stockholder, the commission may take into consideration: (A) Present and past business associations of a person and corporate stockholdings of the person; (B) Any connection the person has or may have had with any gambling operations or other unlawful operations in this state or any other state; (C) Any criminal convictions of the person; and (D) Such other matters as the commission shall deem helpful in determining whether the ownership by the person, corporation, partnership, or association qualifying as a principal stockholder of a substantial amount of stock in the corporate applicant for, or holder of, a franchise to conduct dog racing in this state would or would not be detrimental to the public interest of this state.

(A) Present and past business associations of a person and corporate stockholdings of the person;

(B) Any connection the person has or may have had with any gambling operations or other unlawful operations in this state or any other state;

(C) Any criminal convictions of the person; and

(D) Such other matters as the commission shall deem helpful in determining whether the ownership by the person, corporation, partnership, or association qualifying as a principal stockholder of a substantial amount of stock in the corporate applicant for, or holder of, a franchise to conduct dog racing in this state would or would not be detrimental to the public interest of this state.

(b) The commission may refuse to grant a franchise or temporary franchise or it may suspend or revoke an existing franchise if after investigation and hearing it determines that an officer, director, or principal stockholder of the applicant for, or holder of, a franchise is of undesirable personal background.

(c) The commission may refuse to grant a franchise or temporary franchise or it may suspend or revoke an existing franchise if after investigation and hearing it determines that an officer, director, or stockholder of a corporation qualifying as a principal stockholder under § 23-111-402 or a member of any partnership or association qualifying as a principal stockholder under the provisions of § 23-111-402 is of undesirable personal background.

(d) (1) Before the commission refuses to grant any franchise or temporary franchise or suspends or revokes an existing franchise on the basis of the personal background of any officer, director, or principal stockholder of the applicant for, or holder of, a franchise, the commission shall: (A) Set a date and time for a hearing on the matter; (B) Notify the applicant or franchise holder of: (i) The specific findings of the commission upon the basis of which it proposed to refuse, suspend, or revoke the franchise; and (ii) The date and time of the hearing; and (C) At least ten (10) days prior to the hearing, publish notice of the hearing in a newspaper of general circulation in the county in which dog racing is held or proposed to be held under the franchise. (2) Notice shall be given to the applicant or franchise holder by registered mail addressed to the applicant or franchise holder at its principal office as shown in the application or in other records of the commission at least ten (10) days prior to the date of the hearing. (3) At the hearing the applicant for, or holder of, a franchise and other interested persons shall be permitted to appear and present evidence relevant to the issue or finding upon which the commission proposes to deny, suspend, or revoke a franchise. (4) All proceedings before the commission pursuant to this section and the right of appeal therefrom shall be conducted in accordance with, and taken in the manner provided in, and in every way subject to, the Arkansas Administrative Procedure Act, § 25-15-201 et seq.

(1) Before the commission refuses to grant any franchise or temporary franchise or suspends or revokes an existing franchise on the basis of the personal background of any officer, director, or principal stockholder of the applicant for, or holder of, a franchise, the commission shall: (A) Set a date and time for a hearing on the matter; (B) Notify the applicant or franchise holder of: (i) The specific findings of the commission upon the basis of which it proposed to refuse, suspend, or revoke the franchise; and (ii) The date and time of the hearing; and (C) At least ten (10) days prior to the hearing, publish notice of the hearing in a newspaper of general circulation in the county in which dog racing is held or proposed to be held under the franchise.

(A) Set a date and time for a hearing on the matter;

(B) Notify the applicant or franchise holder of: (i) The specific findings of the commission upon the basis of which it proposed to refuse, suspend, or revoke the franchise; and (ii) The date and time of the hearing; and

(i) The specific findings of the commission upon the basis of which it proposed to refuse, suspend, or revoke the franchise; and

(ii) The date and time of the hearing; and

(C) At least ten (10) days prior to the hearing, publish notice of the hearing in a newspaper of general circulation in the county in which dog racing is held or proposed to be held under the franchise.

(2) Notice shall be given to the applicant or franchise holder by registered mail addressed to the applicant or franchise holder at its principal office as shown in the application or in other records of the commission at least ten (10) days prior to the date of the hearing.

(3) At the hearing the applicant for, or holder of, a franchise and other interested persons shall be permitted to appear and present evidence relevant to the issue or finding upon which the commission proposes to deny, suspend, or revoke a franchise.

(4) All proceedings before the commission pursuant to this section and the right of appeal therefrom shall be conducted in accordance with, and taken in the manner provided in, and in every way subject to, the Arkansas Administrative Procedure Act, § 25-15-201 et seq.

Acts 1968 (2nd Ex. Sess.), No. 8, §§ 3, 5; A.S.A. 1947, §§ 84-2823.3, 84-2823.5.
Ark. Code Ann. § 23-119-105 — AR Code / Title 23 / Chapter 119 / Section 23-119-105
Enforcement
Status: in_force

(a) The Oil and Gas Commission shall have jurisdiction of and authority over all persons and property necessary to administer and enforce effectively: (1) This chapter; and (2) The Arkansas Data Centers Act of 2023, § 14-1-601 et seq. (b) Upon receipt of a complaint under subsection (d) of this section, the commission may make inquiries it deems proper relating to its duties to administer and enforce this chapter and the Arkansas Data Centers Act of 2023, § 14-1-601 et seq., including without limitation: (1) Making reasonable investigations and inspections; (2) Examining properties, leases, papers, books, and records; (3) Holding hearings; (4) Requiring the keeping of records and the making of reports; and (5) Taking such action as may be reasonably necessary to enforce this chapter. (c) Upon receipt of a complaint under subsection (d) of this section, the commission may make, after hearing and notice, such reasonable orders as necessary from time to time in the proper administration and enforcement of this chapter and the Arkansas Data Centers Act of 2023, § 14-1-601 et seq. (d) (1) An individual or legal entity may file a complaint with the commission relating to the compliance of digital asset mining businesses with state law, the requirements and terms of a permit, or the rules of the commission. (2) Upon receipt of a complaint, the commission may: (A) Investigate the complaint; and (B) Assess penalties in response to any identified noncompliance. (e) The commission shall promulgate rules establishing: (1) The procedures for ensuring compliance with state law, the requirements and terms of a permit, and rules of the commission; and (2) (A) Penalties for failure to comply with state law, the requirements and terms of a permit, or rules of the commission, including without limitation: (i) Financial penalties; and (ii) The suspension or revocation of a permit issued under this chapter. (B) Financial penalties under this subdivision (e)(2) shall not exceed five thousand dollars ($5,000) per day of a violation. (f) This chapter does not: (1) Prohibit a local government from adopting one (1) or more ordinances, resolutions, or other appropriate legislative enactments to regulate digital asset mining businesses that: (A) Address areas of regulation that are not otherwise addressed by federal law, state law, or the rules of the commission; and (B) Are not inconsistent with federal law, state law, or the rules of the commission; and (2) Prevent a local government from enforcing an ordinance, resolution, or other appropriate legislative enactment regulating digital asset mining businesses that is not inconsistent with federal law, state law, or the rules of the commission. Added by Act 2024, No. 174,§ 4, eff. 5/3/2024.

(a) The Oil and Gas Commission shall have jurisdiction of and authority over all persons and property necessary to administer and enforce effectively: (1) This chapter; and (2) The Arkansas Data Centers Act of 2023, § 14-1-601 et seq.

(1) This chapter; and

(2) The Arkansas Data Centers Act of 2023, § 14-1-601 et seq.

(b) Upon receipt of a complaint under subsection (d) of this section, the commission may make inquiries it deems proper relating to its duties to administer and enforce this chapter and the Arkansas Data Centers Act of 2023, § 14-1-601 et seq., including without limitation: (1) Making reasonable investigations and inspections; (2) Examining properties, leases, papers, books, and records; (3) Holding hearings; (4) Requiring the keeping of records and the making of reports; and (5) Taking such action as may be reasonably necessary to enforce this chapter.

(1) Making reasonable investigations and inspections;

(2) Examining properties, leases, papers, books, and records;

(3) Holding hearings;

(4) Requiring the keeping of records and the making of reports; and

(5) Taking such action as may be reasonably necessary to enforce this chapter.

(c) Upon receipt of a complaint under subsection (d) of this section, the commission may make, after hearing and notice, such reasonable orders as necessary from time to time in the proper administration and enforcement of this chapter and the Arkansas Data Centers Act of 2023, § 14-1-601 et seq.

(d) (1) An individual or legal entity may file a complaint with the commission relating to the compliance of digital asset mining businesses with state law, the requirements and terms of a permit, or the rules of the commission. (2) Upon receipt of a complaint, the commission may: (A) Investigate the complaint; and (B) Assess penalties in response to any identified noncompliance.

(1) An individual or legal entity may file a complaint with the commission relating to the compliance of digital asset mining businesses with state law, the requirements and terms of a permit, or the rules of the commission.

(2) Upon receipt of a complaint, the commission may: (A) Investigate the complaint; and (B) Assess penalties in response to any identified noncompliance.

(A) Investigate the complaint; and

(B) Assess penalties in response to any identified noncompliance.

(e) The commission shall promulgate rules establishing: (1) The procedures for ensuring compliance with state law, the requirements and terms of a permit, and rules of the commission; and (2) (A) Penalties for failure to comply with state law, the requirements and terms of a permit, or rules of the commission, including without limitation: (i) Financial penalties; and (ii) The suspension or revocation of a permit issued under this chapter. (B) Financial penalties under this subdivision (e)(2) shall not exceed five thousand dollars ($5,000) per day of a violation.

(1) The procedures for ensuring compliance with state law, the requirements and terms of a permit, and rules of the commission; and

(2) (A) Penalties for failure to comply with state law, the requirements and terms of a permit, or rules of the commission, including without limitation: (i) Financial penalties; and (ii) The suspension or revocation of a permit issued under this chapter. (B) Financial penalties under this subdivision (e)(2) shall not exceed five thousand dollars ($5,000) per day of a violation.

(A) Penalties for failure to comply with state law, the requirements and terms of a permit, or rules of the commission, including without limitation: (i) Financial penalties; and (ii) The suspension or revocation of a permit issued under this chapter.

(i) Financial penalties; and

(ii) The suspension or revocation of a permit issued under this chapter.

(B) Financial penalties under this subdivision (e)(2) shall not exceed five thousand dollars ($5,000) per day of a violation.

(f) This chapter does not: (1) Prohibit a local government from adopting one (1) or more ordinances, resolutions, or other appropriate legislative enactments to regulate digital asset mining businesses that: (A) Address areas of regulation that are not otherwise addressed by federal law, state law, or the rules of the commission; and (B) Are not inconsistent with federal law, state law, or the rules of the commission; and (2) Prevent a local government from enforcing an ordinance, resolution, or other appropriate legislative enactment regulating digital asset mining businesses that is not inconsistent with federal law, state law, or the rules of the commission.

(1) Prohibit a local government from adopting one (1) or more ordinances, resolutions, or other appropriate legislative enactments to regulate digital asset mining businesses that: (A) Address areas of regulation that are not otherwise addressed by federal law, state law, or the rules of the commission; and (B) Are not inconsistent with federal law, state law, or the rules of the commission; and

(A) Address areas of regulation that are not otherwise addressed by federal law, state law, or the rules of the commission; and

(B) Are not inconsistent with federal law, state law, or the rules of the commission; and

(2) Prevent a local government from enforcing an ordinance, resolution, or other appropriate legislative enactment regulating digital asset mining businesses that is not inconsistent with federal law, state law, or the rules of the commission.

Added by Act 2024, No. 174,§ 4, eff. 5/3/2024.
Ark. Code Ann. § 23-4-422 — AR Code / Title 23 / Chapter 4 / Subchapter 4 / Section 23-4-422
Cost allocation - Definition
Status: in_force

(a) (1) The Arkansas Public Service Commission shall establish and regulate the rates and charges of a public utility under this subchapter and shall allocate or assign costs among all classes of customers of the public utility. (2) In determining the rates for utility services and the cost allocation among all of a public utility's classes of customers, the commission shall: (A) Consider the costs and expenses incurred by the public utility in providing the utility services to customers in each class; (B) Consider the economic impact of the proposed rates and charges for utility services by giving equal consideration to each class of customers; and (C) Make findings that are based on substantial evidence. (b) Notwithstanding the commission's authority to otherwise determine and fix rates for all classes of customers, including allocating or assigning costs and designing rates, if the commission finds that it will be beneficial to economic development or the promotion of employment opportunities, and that it will result in just and reasonable rates for all classes of customers, the commission shall determine rates and charges for utility services that: (1) For the class of customers with the highest level of consumption per customer which has rates that include a demand component, and any successors to such class, as they existed on January 1, 2021, ensure that all costs and expenses related to demand and capacity are identified and allocated on a demand basis and recovered from customers in those classes through a demand rate component and not through a volumetric rate component unless the commission determines that the rates should be adjusted under subsections (e) and (f) of this section; (2) For the retail jurisdiction rate classes, ensure that: (A) All electric utility production plant, production-related costs, nonfuel production-related costs, purchased capacity costs, and any energy costs incurred resulting from the electric utility's environmental compliance are classified as production demand costs; and (B) (i) Production demand costs are allocated to each customer class pursuant to the average and excess method shown in Table 4-10B on page 51 of the 1992 National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual, as it existed on January 1, 2021, using the average of the four (4) monthly coincident peaks for the months of June, July, August, and September for each class for the coincident peak referenced in Table 4-10B of the 1992 National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual, as it existed on January 1, 2021, or any subsequent version of the National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual to the extent it produces an equivalent result. (ii) Subdivision (b)(2)(B)(i) of this section does not prescribe an allocation for a wind production plant; and (3) (A) (i) For purposes of allocation of natural gas distribution plant costs, including costs in distribution mains and related distribution plant expenses, among the state's retail jurisdiction rate classes, ensure that each natural gas public utility classifies all natural gas distribution plant costs as customer-related or capacity-related. (ii) For purposes of subdivision (b)(3)(A)(i) of this section, the natural gas distribution plant costs shall include: (a) Amounts charged to account numbers 374 through 387, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission; and (b) Related depreciation, return on investment, property insurance and taxes, excluding state and federal income taxes, and fixed operation and maintenance expense charged to account numbers 870 through 894, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, including all labor-related costs for the expenses described in this subdivision (b)(3)(A). (iii) To develop a cost allocation method under this section for natural gas utilities, the commission shall use the Gas Distribution Rate Design Manual, June 1989 edition, as prepared by the National Association of Regulatory Utility Commissioners, as it existed on January 1, 2021, or any subsequent version of the Gas Distribution Rate Design Manual, to the extent it produces an equivalent result. (B) (i) The customer-related natural gas distribution plant costs shall be allocated to each customer class based on the number of customers in each class. (ii) The customer-related portion of natural gas distribution plant costs related to account numbers 374 through 376, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, shall be the percentage of the average cost of all mains that is represented by the average cost of the minimum size main and computed using a cost allocation method based upon the predominant size main that is installed by the natural gas public utility that is at least two inches (2") in diameter, with the investment costs of the predominant size mains set as the minimum size. (iii) The customer-related portion of natural gas distribution costs related to account numbers 377 through 387, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, shall be computed using a study that reflects the investments required to meter, regulate, and connect each class of customers to the natural gas utility's system. (iv) Any remaining natural gas distribution plant costs shall be classified as capacity-related costs. (C) (i) Except for natural gas distribution plant costs related to account numbers 380 through 385, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, the natural gas distribution plant costs classified as capacity-related costs shall be allocated to the customer classes based on the contribution to peak day demand that is made by each customer class. (ii) As used in subdivision (b)(3)(C)(i) of this section, "peak day demand" means the computed quantity of gas that would be supplied to each customer class calculated using the coldest day in a recent thirty-year period for each gas utility. (c) In an application for a general change or modification in a public utility's rates and charges under this subchapter: (1) A public utility may present evidence that demonstrates that the implementation of rates under subsection (b) of this section will result in rates that will be beneficial to economic development or the promotion of employment opportunities and result in just and reasonable rates for all classes of customers; and (2) A public utility shall present evidence of whether or not rate design in subdivision (b)(1) of this section results in an increase to the base rate charges that are billed to customers in the affected class of more than ten percent (10%) as compared to the then currently approved base rate charges of the applicable rate schedules. (d) (1) Unless the commission adjusts the rates under subsection (e) or subsection (f) of this section, the commission shall by order establish and design rates, allocate or assign costs to all classes of customers, and regulate the rates for each class of customers of a public utility according to this section except as limited under § 23-4-1205(c)(3)(B) , § 23-4-1207(d) , and § 23-4-1208(a)(2)(B) and (C) . (2) For an electric utility whose class of customers with the highest level of consumption per customer that has rates that include a demand component, and any successors to such a class, as they existed on January 1, 2021, has an annual usage for the class as a whole in excess of five million megawatt hours (5,000,000 MWh), and if the electric utility has a formula rate review approved and in effect under § 23-4-1208(a)(1) on or before March 15, 2021: (A) The commission shall determine rates and charges for utility services in accord with subdivisions (b)(1) and (2) of this section without regard to any findings described in this section; and (B) The commission shall not adjust the rates under subsection (e) or subsection (f) of this section, except as provided in § 23-4-1207(d) and § 23-4-1208(a)(2)(B) and (C) . (e) Pursuant to the commission's authority to otherwise determine and fix rates for all classes of customers, including allocating or assigning costs and designing rates, the commission may adjust rates under subdivisions (b)(2) and (3) of this section if the commission finds: (1) It is in the public interest; (2) It is necessary to produce just and reasonable rates; or (3) Implementation of rates under subdivisions (b)(2) and (3) of this section will result in rates that are not beneficial to economic development or the promotion of employment opportunities. (f) If implementation of rates under subdivision (b)(1) of this section will result in an increase in the base rate charges billed to customers in the affected class of more than ten percent (10%) as compared to the currently approved base rate charges of the applicable rate schedules, the commission may adjust the rates to ensure that the greatest increase in the base rate charges billed to customers in the affected class is ten percent (10%) as compared to the then currently approved base rate charges of the applicable rate schedules. (g) If the commission makes any adjustment under subsections (e) and (f) of this section, the commission shall provide in an order the rationale for determining that rates under subsection (b) of this section may not be just and reasonable and the rationale for determining that the rates adjusted in the order of the commission are just and reasonable and in the public interest. The commission shall make its findings based on substantial evidence. (h) An electric cooperative corporation established under the Electric Cooperative Corporation Act, § 23-18-301 et seq., is not subject to this section. (i) Effective March 27, 2015, the cost allocation provisions of this section shall apply to any pending application for a change in general rates and charges. Amended by Act 2021, No. 894,§ 1, eff. 4/25/2021. Amended by Act 2021, No. 404,§ 1, eff. 3/22/2021. Superseded by Act 2021, No. 894and repealed by Act 2023, No. 180,§ 1, eff. 8/1/2023 Amended by Act 2017, No. 334,§ 3, eff. 8/1/2017. Added by Act 2015, No. 725,§ 2, eff. 3/27/2015.

(a) (1) The Arkansas Public Service Commission shall establish and regulate the rates and charges of a public utility under this subchapter and shall allocate or assign costs among all classes of customers of the public utility. (2) In determining the rates for utility services and the cost allocation among all of a public utility's classes of customers, the commission shall: (A) Consider the costs and expenses incurred by the public utility in providing the utility services to customers in each class; (B) Consider the economic impact of the proposed rates and charges for utility services by giving equal consideration to each class of customers; and (C) Make findings that are based on substantial evidence.

(1) The Arkansas Public Service Commission shall establish and regulate the rates and charges of a public utility under this subchapter and shall allocate or assign costs among all classes of customers of the public utility.

(2) In determining the rates for utility services and the cost allocation among all of a public utility's classes of customers, the commission shall: (A) Consider the costs and expenses incurred by the public utility in providing the utility services to customers in each class; (B) Consider the economic impact of the proposed rates and charges for utility services by giving equal consideration to each class of customers; and (C) Make findings that are based on substantial evidence.

(A) Consider the costs and expenses incurred by the public utility in providing the utility services to customers in each class;

(B) Consider the economic impact of the proposed rates and charges for utility services by giving equal consideration to each class of customers; and

(C) Make findings that are based on substantial evidence.

(b) Notwithstanding the commission's authority to otherwise determine and fix rates for all classes of customers, including allocating or assigning costs and designing rates, if the commission finds that it will be beneficial to economic development or the promotion of employment opportunities, and that it will result in just and reasonable rates for all classes of customers, the commission shall determine rates and charges for utility services that: (1) For the class of customers with the highest level of consumption per customer which has rates that include a demand component, and any successors to such class, as they existed on January 1, 2021, ensure that all costs and expenses related to demand and capacity are identified and allocated on a demand basis and recovered from customers in those classes through a demand rate component and not through a volumetric rate component unless the commission determines that the rates should be adjusted under subsections (e) and (f) of this section; (2) For the retail jurisdiction rate classes, ensure that: (A) All electric utility production plant, production-related costs, nonfuel production-related costs, purchased capacity costs, and any energy costs incurred resulting from the electric utility's environmental compliance are classified as production demand costs; and (B) (i) Production demand costs are allocated to each customer class pursuant to the average and excess method shown in Table 4-10B on page 51 of the 1992 National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual, as it existed on January 1, 2021, using the average of the four (4) monthly coincident peaks for the months of June, July, August, and September for each class for the coincident peak referenced in Table 4-10B of the 1992 National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual, as it existed on January 1, 2021, or any subsequent version of the National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual to the extent it produces an equivalent result. (ii) Subdivision (b)(2)(B)(i) of this section does not prescribe an allocation for a wind production plant; and (3) (A) (i) For purposes of allocation of natural gas distribution plant costs, including costs in distribution mains and related distribution plant expenses, among the state's retail jurisdiction rate classes, ensure that each natural gas public utility classifies all natural gas distribution plant costs as customer-related or capacity-related. (ii) For purposes of subdivision (b)(3)(A)(i) of this section, the natural gas distribution plant costs shall include: (a) Amounts charged to account numbers 374 through 387, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission; and (b) Related depreciation, return on investment, property insurance and taxes, excluding state and federal income taxes, and fixed operation and maintenance expense charged to account numbers 870 through 894, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, including all labor-related costs for the expenses described in this subdivision (b)(3)(A). (iii) To develop a cost allocation method under this section for natural gas utilities, the commission shall use the Gas Distribution Rate Design Manual, June 1989 edition, as prepared by the National Association of Regulatory Utility Commissioners, as it existed on January 1, 2021, or any subsequent version of the Gas Distribution Rate Design Manual, to the extent it produces an equivalent result. (B) (i) The customer-related natural gas distribution plant costs shall be allocated to each customer class based on the number of customers in each class. (ii) The customer-related portion of natural gas distribution plant costs related to account numbers 374 through 376, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, shall be the percentage of the average cost of all mains that is represented by the average cost of the minimum size main and computed using a cost allocation method based upon the predominant size main that is installed by the natural gas public utility that is at least two inches (2") in diameter, with the investment costs of the predominant size mains set as the minimum size. (iii) The customer-related portion of natural gas distribution costs related to account numbers 377 through 387, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, shall be computed using a study that reflects the investments required to meter, regulate, and connect each class of customers to the natural gas utility's system. (iv) Any remaining natural gas distribution plant costs shall be classified as capacity-related costs. (C) (i) Except for natural gas distribution plant costs related to account numbers 380 through 385, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, the natural gas distribution plant costs classified as capacity-related costs shall be allocated to the customer classes based on the contribution to peak day demand that is made by each customer class. (ii) As used in subdivision (b)(3)(C)(i) of this section, "peak day demand" means the computed quantity of gas that would be supplied to each customer class calculated using the coldest day in a recent thirty-year period for each gas utility.

(1) For the class of customers with the highest level of consumption per customer which has rates that include a demand component, and any successors to such class, as they existed on January 1, 2021, ensure that all costs and expenses related to demand and capacity are identified and allocated on a demand basis and recovered from customers in those classes through a demand rate component and not through a volumetric rate component unless the commission determines that the rates should be adjusted under subsections (e) and (f) of this section;

(2) For the retail jurisdiction rate classes, ensure that: (A) All electric utility production plant, production-related costs, nonfuel production-related costs, purchased capacity costs, and any energy costs incurred resulting from the electric utility's environmental compliance are classified as production demand costs; and (B) (i) Production demand costs are allocated to each customer class pursuant to the average and excess method shown in Table 4-10B on page 51 of the 1992 National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual, as it existed on January 1, 2021, using the average of the four (4) monthly coincident peaks for the months of June, July, August, and September for each class for the coincident peak referenced in Table 4-10B of the 1992 National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual, as it existed on January 1, 2021, or any subsequent version of the National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual to the extent it produces an equivalent result. (ii) Subdivision (b)(2)(B)(i) of this section does not prescribe an allocation for a wind production plant; and

(A) All electric utility production plant, production-related costs, nonfuel production-related costs, purchased capacity costs, and any energy costs incurred resulting from the electric utility's environmental compliance are classified as production demand costs; and

(B) (i) Production demand costs are allocated to each customer class pursuant to the average and excess method shown in Table 4-10B on page 51 of the 1992 National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual, as it existed on January 1, 2021, using the average of the four (4) monthly coincident peaks for the months of June, July, August, and September for each class for the coincident peak referenced in Table 4-10B of the 1992 National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual, as it existed on January 1, 2021, or any subsequent version of the National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual to the extent it produces an equivalent result. (ii) Subdivision (b)(2)(B)(i) of this section does not prescribe an allocation for a wind production plant; and

(i) Production demand costs are allocated to each customer class pursuant to the average and excess method shown in Table 4-10B on page 51 of the 1992 National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual, as it existed on January 1, 2021, using the average of the four (4) monthly coincident peaks for the months of June, July, August, and September for each class for the coincident peak referenced in Table 4-10B of the 1992 National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual, as it existed on January 1, 2021, or any subsequent version of the National Association of Regulatory Utility Commissioners Electric Utility Cost Allocation Manual to the extent it produces an equivalent result.

(ii) Subdivision (b)(2)(B)(i) of this section does not prescribe an allocation for a wind production plant; and

(3) (A) (i) For purposes of allocation of natural gas distribution plant costs, including costs in distribution mains and related distribution plant expenses, among the state's retail jurisdiction rate classes, ensure that each natural gas public utility classifies all natural gas distribution plant costs as customer-related or capacity-related. (ii) For purposes of subdivision (b)(3)(A)(i) of this section, the natural gas distribution plant costs shall include: (a) Amounts charged to account numbers 374 through 387, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission; and (b) Related depreciation, return on investment, property insurance and taxes, excluding state and federal income taxes, and fixed operation and maintenance expense charged to account numbers 870 through 894, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, including all labor-related costs for the expenses described in this subdivision (b)(3)(A). (iii) To develop a cost allocation method under this section for natural gas utilities, the commission shall use the Gas Distribution Rate Design Manual, June 1989 edition, as prepared by the National Association of Regulatory Utility Commissioners, as it existed on January 1, 2021, or any subsequent version of the Gas Distribution Rate Design Manual, to the extent it produces an equivalent result. (B) (i) The customer-related natural gas distribution plant costs shall be allocated to each customer class based on the number of customers in each class. (ii) The customer-related portion of natural gas distribution plant costs related to account numbers 374 through 376, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, shall be the percentage of the average cost of all mains that is represented by the average cost of the minimum size main and computed using a cost allocation method based upon the predominant size main that is installed by the natural gas public utility that is at least two inches (2") in diameter, with the investment costs of the predominant size mains set as the minimum size. (iii) The customer-related portion of natural gas distribution costs related to account numbers 377 through 387, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, shall be computed using a study that reflects the investments required to meter, regulate, and connect each class of customers to the natural gas utility's system. (iv) Any remaining natural gas distribution plant costs shall be classified as capacity-related costs. (C) (i) Except for natural gas distribution plant costs related to account numbers 380 through 385, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, the natural gas distribution plant costs classified as capacity-related costs shall be allocated to the customer classes based on the contribution to peak day demand that is made by each customer class. (ii) As used in subdivision (b)(3)(C)(i) of this section, "peak day demand" means the computed quantity of gas that would be supplied to each customer class calculated using the coldest day in a recent thirty-year period for each gas utility.

(A) (i) For purposes of allocation of natural gas distribution plant costs, including costs in distribution mains and related distribution plant expenses, among the state's retail jurisdiction rate classes, ensure that each natural gas public utility classifies all natural gas distribution plant costs as customer-related or capacity-related. (ii) For purposes of subdivision (b)(3)(A)(i) of this section, the natural gas distribution plant costs shall include: (a) Amounts charged to account numbers 374 through 387, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission; and (b) Related depreciation, return on investment, property insurance and taxes, excluding state and federal income taxes, and fixed operation and maintenance expense charged to account numbers 870 through 894, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, including all labor-related costs for the expenses described in this subdivision (b)(3)(A). (iii) To develop a cost allocation method under this section for natural gas utilities, the commission shall use the Gas Distribution Rate Design Manual, June 1989 edition, as prepared by the National Association of Regulatory Utility Commissioners, as it existed on January 1, 2021, or any subsequent version of the Gas Distribution Rate Design Manual, to the extent it produces an equivalent result.

(i) For purposes of allocation of natural gas distribution plant costs, including costs in distribution mains and related distribution plant expenses, among the state's retail jurisdiction rate classes, ensure that each natural gas public utility classifies all natural gas distribution plant costs as customer-related or capacity-related.

(ii) For purposes of subdivision (b)(3)(A)(i) of this section, the natural gas distribution plant costs shall include: (a) Amounts charged to account numbers 374 through 387, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission; and (b) Related depreciation, return on investment, property insurance and taxes, excluding state and federal income taxes, and fixed operation and maintenance expense charged to account numbers 870 through 894, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, including all labor-related costs for the expenses described in this subdivision (b)(3)(A).

(a) Amounts charged to account numbers 374 through 387, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission; and

(b) Related depreciation, return on investment, property insurance and taxes, excluding state and federal income taxes, and fixed operation and maintenance expense charged to account numbers 870 through 894, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, including all labor-related costs for the expenses described in this subdivision (b)(3)(A).

(iii) To develop a cost allocation method under this section for natural gas utilities, the commission shall use the Gas Distribution Rate Design Manual, June 1989 edition, as prepared by the National Association of Regulatory Utility Commissioners, as it existed on January 1, 2021, or any subsequent version of the Gas Distribution Rate Design Manual, to the extent it produces an equivalent result.

(B) (i) The customer-related natural gas distribution plant costs shall be allocated to each customer class based on the number of customers in each class. (ii) The customer-related portion of natural gas distribution plant costs related to account numbers 374 through 376, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, shall be the percentage of the average cost of all mains that is represented by the average cost of the minimum size main and computed using a cost allocation method based upon the predominant size main that is installed by the natural gas public utility that is at least two inches (2") in diameter, with the investment costs of the predominant size mains set as the minimum size. (iii) The customer-related portion of natural gas distribution costs related to account numbers 377 through 387, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, shall be computed using a study that reflects the investments required to meter, regulate, and connect each class of customers to the natural gas utility's system. (iv) Any remaining natural gas distribution plant costs shall be classified as capacity-related costs.

(i) The customer-related natural gas distribution plant costs shall be allocated to each customer class based on the number of customers in each class.

(ii) The customer-related portion of natural gas distribution plant costs related to account numbers 374 through 376, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, shall be the percentage of the average cost of all mains that is represented by the average cost of the minimum size main and computed using a cost allocation method based upon the predominant size main that is installed by the natural gas public utility that is at least two inches (2") in diameter, with the investment costs of the predominant size mains set as the minimum size.

(iii) The customer-related portion of natural gas distribution costs related to account numbers 377 through 387, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, shall be computed using a study that reflects the investments required to meter, regulate, and connect each class of customers to the natural gas utility's system.

(iv) Any remaining natural gas distribution plant costs shall be classified as capacity-related costs.

(C) (i) Except for natural gas distribution plant costs related to account numbers 380 through 385, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, the natural gas distribution plant costs classified as capacity-related costs shall be allocated to the customer classes based on the contribution to peak day demand that is made by each customer class. (ii) As used in subdivision (b)(3)(C)(i) of this section, "peak day demand" means the computed quantity of gas that would be supplied to each customer class calculated using the coldest day in a recent thirty-year period for each gas utility.

(i) Except for natural gas distribution plant costs related to account numbers 380 through 385, as defined under the account numbering system in the Uniform System of Accounts prescribed for natural gas public utilities by the rules of the commission, the natural gas distribution plant costs classified as capacity-related costs shall be allocated to the customer classes based on the contribution to peak day demand that is made by each customer class.

(ii) As used in subdivision (b)(3)(C)(i) of this section, "peak day demand" means the computed quantity of gas that would be supplied to each customer class calculated using the coldest day in a recent thirty-year period for each gas utility.

(c) In an application for a general change or modification in a public utility's rates and charges under this subchapter: (1) A public utility may present evidence that demonstrates that the implementation of rates under subsection (b) of this section will result in rates that will be beneficial to economic development or the promotion of employment opportunities and result in just and reasonable rates for all classes of customers; and (2) A public utility shall present evidence of whether or not rate design in subdivision (b)(1) of this section results in an increase to the base rate charges that are billed to customers in the affected class of more than ten percent (10%) as compared to the then currently approved base rate charges of the applicable rate schedules.

(1) A public utility may present evidence that demonstrates that the implementation of rates under subsection (b) of this section will result in rates that will be beneficial to economic development or the promotion of employment opportunities and result in just and reasonable rates for all classes of customers; and

(2) A public utility shall present evidence of whether or not rate design in subdivision (b)(1) of this section results in an increase to the base rate charges that are billed to customers in the affected class of more than ten percent (10%) as compared to the then currently approved base rate charges of the applicable rate schedules.

(d) (1) Unless the commission adjusts the rates under subsection (e) or subsection (f) of this section, the commission shall by order establish and design rates, allocate or assign costs to all classes of customers, and regulate the rates for each class of customers of a public utility according to this section except as limited under § 23-4-1205(c)(3)(B) , § 23-4-1207(d) , and § 23-4-1208(a)(2)(B) and (C) . (2) For an electric utility whose class of customers with the highest level of consumption per customer that has rates that include a demand component, and any successors to such a class, as they existed on January 1, 2021, has an annual usage for the class as a whole in excess of five million megawatt hours (5,000,000 MWh), and if the electric utility has a formula rate review approved and in effect under § 23-4-1208(a)(1) on or before March 15, 2021: (A) The commission shall determine rates and charges for utility services in accord with subdivisions (b)(1) and (2) of this section without regard to any findings described in this section; and (B) The commission shall not adjust the rates under subsection (e) or subsection (f) of this section, except as provided in § 23-4-1207(d) and § 23-4-1208(a)(2)(B) and (C) .

(1) Unless the commission adjusts the rates under subsection (e) or subsection (f) of this section, the commission shall by order establish and design rates, allocate or assign costs to all classes of customers, and regulate the rates for each class of customers of a public utility according to this section except as limited under § 23-4-1205(c)(3)(B) , § 23-4-1207(d) , and § 23-4-1208(a)(2)(B) and (C) .

(2) For an electric utility whose class of customers with the highest level of consumption per customer that has rates that include a demand component, and any successors to such a class, as they existed on January 1, 2021, has an annual usage for the class as a whole in excess of five million megawatt hours (5,000,000 MWh), and if the electric utility has a formula rate review approved and in effect under § 23-4-1208(a)(1) on or before March 15, 2021: (A) The commission shall determine rates and charges for utility services in accord with subdivisions (b)(1) and (2) of this section without regard to any findings described in this section; and (B) The commission shall not adjust the rates under subsection (e) or subsection (f) of this section, except as provided in § 23-4-1207(d) and § 23-4-1208(a)(2)(B) and (C) .

(A) The commission shall determine rates and charges for utility services in accord with subdivisions (b)(1) and (2) of this section without regard to any findings described in this section; and

(B) The commission shall not adjust the rates under subsection (e) or subsection (f) of this section, except as provided in § 23-4-1207(d) and § 23-4-1208(a)(2)(B) and (C) .

(e) Pursuant to the commission's authority to otherwise determine and fix rates for all classes of customers, including allocating or assigning costs and designing rates, the commission may adjust rates under subdivisions (b)(2) and (3) of this section if the commission finds: (1) It is in the public interest; (2) It is necessary to produce just and reasonable rates; or (3) Implementation of rates under subdivisions (b)(2) and (3) of this section will result in rates that are not beneficial to economic development or the promotion of employment opportunities.

(1) It is in the public interest;

(2) It is necessary to produce just and reasonable rates; or

(3) Implementation of rates under subdivisions (b)(2) and (3) of this section will result in rates that are not beneficial to economic development or the promotion of employment opportunities.

(f) If implementation of rates under subdivision (b)(1) of this section will result in an increase in the base rate charges billed to customers in the affected class of more than ten percent (10%) as compared to the currently approved base rate charges of the applicable rate schedules, the commission may adjust the rates to ensure that the greatest increase in the base rate charges billed to customers in the affected class is ten percent (10%) as compared to the then currently approved base rate charges of the applicable rate schedules.

(g) If the commission makes any adjustment under subsections (e) and (f) of this section, the commission shall provide in an order the rationale for determining that rates under subsection (b) of this section may not be just and reasonable and the rationale for determining that the rates adjusted in the order of the commission are just and reasonable and in the public interest. The commission shall make its findings based on substantial evidence.

(h) An electric cooperative corporation established under the Electric Cooperative Corporation Act, § 23-18-301 et seq., is not subject to this section.

(i) Effective March 27, 2015, the cost allocation provisions of this section shall apply to any pending application for a change in general rates and charges.

Amended by Act 2021, No. 894,§ 1, eff. 4/25/2021.

Amended by Act 2021, No. 404,§ 1, eff. 3/22/2021. Superseded by Act 2021, No. 894and repealed by Act 2023, No. 180,§ 1, eff. 8/1/2023

Amended by Act 2017, No. 334,§ 3, eff. 8/1/2017.

Added by Act 2015, No. 725,§ 2, eff. 3/27/2015.
Ark. Code Ann. § 23-18-410 — AR Code / Title 23 / Chapter 18 / Subchapter 4 / Section 23-18-410
Tax on power used exclusively for taker's purposes
Status: in_force

If any person or corporation taking or using the power shall elect to use the power exclusively for its own use in manufacturing or other purposes named in this subchapter, the Arkansas Public Service Commission shall assess the tax for taking and using the power on the basis of power so taken and used, with the power to be charged for as if it had been sold to private consumers. Acts 1927, No. 121, § 6; Pope's Dig., § 14478; A.S.A. 1947, § 73-2006.

If any person or corporation taking or using the power shall elect to use the power exclusively for its own use in manufacturing or other purposes named in this subchapter, the Arkansas Public Service Commission shall assess the tax for taking and using the power on the basis of power so taken and used, with the power to be charged for as if it had been sold to private consumers.

Acts 1927, No. 121, § 6; Pope's Dig., § 14478; A.S.A. 1947, § 73-2006.
Ark. Code Ann. § 23-68-130 — AR Code / Title 23 / Chapter 68 / Section 23-68-130
Report and petition for assessment
Status: in_force

Within three (3) years after the date of the entry of an order of rehabilitation or liquidation of a domestic mutual insurer or a domestic reciprocal insurer, the Insurance Commissioner may make and file his or her report and petition to the court setting forth: (1) The reasonable value of the assets of the insurer; (2) The liabilities of the insurer to the extent thus far ascertained by the commissioner; (3) The aggregate amount of the assessment, if any, which the commissioner deems reasonably necessary to pay all claims, the costs and expenses of the collection of the assessments, and the costs and expenses of the delinquency proceedings in full; and (4) Any other information relative to the affairs or property of the insurer that the commissioner deems material. Acts 1959, No. 148, § 668; A.S.A. 1947, § 66-4831.

Within three (3) years after the date of the entry of an order of rehabilitation or liquidation of a domestic mutual insurer or a domestic reciprocal insurer, the Insurance Commissioner may make and file his or her report and petition to the court setting forth:

(1) The reasonable value of the assets of the insurer;

(2) The liabilities of the insurer to the extent thus far ascertained by the commissioner;

(3) The aggregate amount of the assessment, if any, which the commissioner deems reasonably necessary to pay all claims, the costs and expenses of the collection of the assessments, and the costs and expenses of the delinquency proceedings in full; and

(4) Any other information relative to the affairs or property of the insurer that the commissioner deems material.

Acts 1959, No. 148, § 668; A.S.A. 1947, § 66-4831.