California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 4 - Insurer Securities Permits
Article 6 - Impounding of Stock Sale Proceeds
Section 2606.01 - When Required

Permits issued to domestic applicants prior to a certificate of authority will normally require 100% of all stock sale proceeds to be impounded until release upon written order of the Commissioner. The same shall be required of the proceeds of stock sales in California by foreign applicants under similar circumstances. If applicant does not qualify for a certificate of authority within a reasonable time, subscription moneys will be returned in full to the subscribers without deduction of expenses. Extensions beyond such time will not be granted without the consent of all subscribers. The form of subscription agreement shall recite all of the foregoing. (A composite example of a subscription agreement is found in Section 2613.06, infra.)

A "reasonable time" as used in this section is ordinarily considered one year from the date the definitive permit is issued.

Impounding of funds may be dispensed with in cases of closed permits where applicant can demonstrate to the Commissioner's satisfaction that the protection of an impound to guarantee full return of stock purchase moneys in event no certificate of authority is granted is unnecessary. (Section 843)