§ 2-9-22 — State-chartered warehousemen - Reinsurance fee – Net worth

requirement - Bonds, certificates of deposit and irrevocable letters of credit - Bond cancellation. A. 1. It shall be unlawful and a misdemeanor for any person to operate a public warehouse unless such person shall have obtained and holds a charter therefor issued by the State Board of Agriculture or be licensed and bonded as required by the United States Warehouse Act. 2. Each application for a charter issued by the Board shall be on a form prescribed by the Board. The Board shall charge and collect a one-time fee of One Hundred Dollars ($100.00) for each charter. The Board shall deposit the fees in the State Department of Agriculture Revolving Fund. 3. No charter shall be issued by the Board until the applicant therefor has filed with the Board a financial statement prepared by an independent certified public accountant and such other financial information as shall be required by the Board. B. 1. The Board shall also charge and collect a fee of Ten Dollars ($10.00) per One Thousand Dollars ($1,000.00) of surety. The fee shall be deposited in the Commodity Storage Indemnity Fund and shall be specially designated and accounted for as a reinsurance fee. The Board shall use the reinsurance fee to provide protection to the Indemnity. If upon determination by the Board that the fee of Ten Dollars ($10.00) is not sufficient to adequately provide protection of the Indemnity, the Board is authorized to assess an additional fee in such an amount so as to provide the necessary protection for the Indemnity provided such additional fee shall not exceed Twenty Dollars ($20.00) per One Thousand Dollars ($1,000.00) of surety. The additional assessment shall only be collected from those persons securing surety through this section. 2. Surety required by this section shall be in the same amounts as shall be required for bonds or certificates of deposit as specified in subsection D of this section. Claims against the surety shall be paid by the Board from the Indemnity in the same manner as shall be required for bonds or certificates of deposit. A corporate surety bond or certificate of deposit, as specified in subsection D of this section, may be used to secure a charter in lieu of the reinsurance fee. C. The applicant, in order to qualify for a charter issued by the Board, as evidence of the applicant's financial status shall have a net worth equal to twenty-five cents ($0.25) per bushel for the first four million (4,000,000) bushels of chartered capacity but not less than Fifty Thousand Dollars ($50,000.00). All chartered capacity in excess of four million (4,000,000) bushels shall be computed at the rate of ten cents ($0.10) per bushel for net worth purposes. In case of a net worth deficiency, the warehouseman shall furnish a surety bond or certificate of deposit in an amount equal to such deficiency. The bond or certificate of deposit shall be filed and made payable to the Board for the benefit of all persons storing commodities with the applicant as a state-chartered warehouseman. Insurable property owned by the warehouseman may only be included in the net worth of the warehouse, provided it is insured to at least eighty percent (80%) of its appraised value. The Board may require a certified property appraisal provided by an appraiser approved by the Board. If the net worth of the applicant or charter holder is less than One Million Dollars ($1,000,000.00), a financial statement shall be submitted annually. Financial statements shall be prepared and submitted by an independent certified public accountant, describing the current financial position of the applicant, and include such other information required by the Board. Corporate surety bonds shall be on a form prescribed by the Board, on condition that the applicant will fulfill all obligations as a warehouseman. The Board may require the applicant or charter holder to provide a profit and loss statement and an audited financial statement prepared by an independent certified public accountant. D. The bond, certificates of deposit, or irrevocable letter of credit issued by a financial institution that is insured by the Federal Deposit Insurance Corporation (FDIC) or chartered by the farm credit system organized under the “Farm Credit Act of 1971” shall be payable to the Board for the benefit of all persons storing commodities with the applicant as a state-chartered warehouseman. The amount of bond or certificates of deposit to be furnished for each state-chartered warehouse shall be fixed at a rate of twenty- five cents ($0.25) per bushel of chartered capacity, provided that the amount of the bond or certificates of deposit shall be not less than Fifty Thousand Dollars ($50,000.00) nor more than Five Hundred Thousand Dollars ($500,000.00). The chartered capacity shall be the maximum number of bushels of commodities that the warehouse may accommodate. Depositors, including producers, suffering a loss due to a violation of any of the terms of the Public Warehouse and Commodity Indemnity Act may recover such loss up to the amount of the bond or certificates of deposit, and claims therefor may be instituted with the Board by such person. Each state charter issued pursuant to the provisions of this section shall be for the life of the person. Such state charter may be suspended, revoked or denied by the Board, after notice by registered mail and an opportunity to be heard has been given, for a failure to maintain the financial status required or adequate insurance on all commodities received in store, or received for storage or for handling for restorage, or for a violation of any of the provisions of the Public Warehouse and Commodity Indemnity Act or of any rule of the Board adopted pursuant thereto. Upon evidence of just and good cause, such state charter may be temporarily suspended without a hearing, for a period of not to exceed thirty (30) days. Whenever a state charter is suspended or revoked, the Board shall immediately give notice thereof, by registered United States mail, to the holder of such charter, who may, within twenty (20) days after receipt of such notice, appeal to the district court of Oklahoma County. The district court, after a full hearing, shall make an order either sustaining the action of the Board or reinstating the charter. E. Upon cancellation of the bond, all indemnifications held by the bonding company shall be released to the warehouseman following the second consecutive satisfactory inspection or examination by the Board.

Legislative History

Added by Laws 1955, p. 80, art. 9(B), § 2. Amended by Laws 1977, c. 106, § 2, emerg. eff. May 27, 1977; Laws 1980, c. 110, § 8; Laws 1982, c. 259, § 1, emerg. eff. May 14, 1982; Laws 1987, c. 125, § 3, emerg. eff. June 2, 1987; Laws 1988, c. 149, § 2, emerg. eff. May 2, 1988; Laws 1990, c. 155, § 2, emerg. eff. May 1, 1990; Laws 1997, c. 10, § 2, eff. July 1, 1997; Laws 2001, c. 119, § 2, eff. Nov. 1, 2001. NOTE: Laws 1980, c. 110, § 8 repealed by Laws 1982, c. 259, § 2, emerg. eff. May 14, 1982.