Code of Colorado Regulations
700 - Department of Regulatory Agencies
703 - Division of Financial Services
3 CCR 703-4 - SMALL BUSINESS DEVELOPMENT CREDIT CORPORATION REGULATIONS
Section 3 CCR 703-4-IV - Continuing operations

Universal Citation: 700 CO Code Regs 3 CCR 703-4-IV

Current through Register Vol. 47, No. 5, March 10, 2024

A. Licensees shall maintain at all times an adequate financial condition.

(1)
a. Impairment shall be deemed to exist when the retained earnings deficit exceeds 50 percent combined paid-in capital and paid-in surplus, excluding treasury stock.

b. The executive director shall be given prompt written notice of any capital impairment within 30 days of the monthend financial report that first reflects the impairment.

c. Until said impairment is cured, a licensee shall not present any loans to SBA for guarnatee.

(2) Reserves for Losses. Licensees shall maintain a reserve in the amount of anticipated losses on loans and receivables, but not less than 2 percent of the total portfolio not guaranteed by the U.S. government or any agency thereof.

B. If a licensee provides financing assistance to a business firm or engages in another business transaction, and if that financing assistance or transaction involves a potential conflict of interest, the terms and conditions under which the licensee provides the financing assistance or engages in the transaction shall not be less favorable to the licensee than the terms and conditions that would be required by the licensee in the ordinary course of business if the transaction did not involve a potential conflict of interest. Each person who participates in the decision of the licensee relating to a transaction described in this section and has knowledge of a potential conflict of interest involving that transaction shall ensure that the potential conflict of insterest is disclosed in the financing documents of the transaction or, for a business transaction not involving financing assistance, in another appropriate document. Such documents shall be submitted as part of the audit documents required by 11-36-109(3), CRS and Part III of these rules.

(1) For the purposes of section (C) transactions engaged in by a licensee which involve a potential conflict of interest include, but are not limited to, the following:
(a) Providing financing assistance to a principal shareholder of the licensee, to a person controlled by a principal shareholder of the licensee, or to a director, officer, partner, relative, controlling person, or affiliate of a principal shareholder of the licensee.

(b) Providing financing assistance to a business firm to which a principal shareholder of the licensee, a director, officer, partner, relative, controlling person, or affiliate of a principal shareholder of a licensee; or a person controlled by a principal shareholder of the licensee provides or plans to provide contemporaneous financing assistance.

(c) Providing financing assistance to a business firm which has or is expected to have a substantial business relationship with another business firm which has a director, officer, or controlling person who is also a director, officer, or controlling person of the licensee or who is the spouse of a director, officer, or controlling person of the licensee.

(d) Providing financing assistance to a business firm if that business firm, or a director, officer, or controlling person of that business firm, contemporaneously has lent or will lend money to an associate of the licensee.

(e) Providing financing assistance for the purchase of property of an associate or principal shareholder of the licensee.

(f) Selling or otherwise transferring any of its assets to an associate or principal shareholder of the licensee.

(g) Providing a benefit not available to the general public to an associate or relative through the exercise of undue influence by a director, officer or employee of the licensee.

2. Nothing in this section or in any other section of these rules and regulations limits the authority of the executive director to determine that an act involves a conflict of interest or to enforce disciplinary sanctions if a majority of the licensee's transactions involve conflicts of interest pursuant to 11-36-114(2) and 11-36-116, CRS.

C. Licensees shall continue to meet the requirements of 11-36-111, (1)(b) CRS as a condition to maintain the license. Any change which results in a licensee not meeting such requirements shall be reported to the executive director within ten (10) days.

D. Any change of condition, including address, phone number, identity of officers or directors, or other information which would result in the information on the application submitted to the executive director becoming untrue, shall be reported to the executive director in writing within ten days of the occurance of the change.

E. Licensees shall comply with orders issued by the executive director. Such orders may be appealed pursuant to 24-4-105, CRS.

F. No licensee shall provide false information to the executive director.

G. No licensee shall violate any applicable state or federal securities law or regulation.

Disclaimer: These regulations may not be the most recent version. Colorado may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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