Monday, April 7, 2008

Notification of Changes

I hope you are aware that when you change addresses or get a new qualifying person (one whose experience and maybe residency permits the company to get and maintain a license), add or close a branch, or change contact persons for licensing, audits, complaints, etc., you are supposed to notify the banking department. Each state has its own requirements of how much advance notice it requires, but generally the timeframe is thirty days prior written notice. You may be required to send a letter on company letterhead or complete a form that is on the banking department website. Check your state’s regulations so that you are in compliance.

The most radical change is change of control. Most states treat this situation as a new license application, when you notify them. There is usually an extensive form to complete and all new owners, officers, and directors must complete personal biographies, financial statements, and undergo fingerprinting, if it was required with the initial application for the company license. The new owners are not permitted to solicit new business until they receive approval from the banking department of the change in control. The new company owners can only finish out the existing pipeline. Because there is extensive background checking by the regulatory agency, the timeframe for approval is similar to that of a new license application. And approval is not just a rubber stamp. If the new owners would not have been licensed on their own, they will not be approved by the banking department just because they are part of a going concern.

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