(1) Any such corporation organized and duly licensed by the commissioner to conduct an insurance business may sell additional stock or increase its capital for the purpose, in the manner, and to the extent prescribed by law, but the expense incurred in connection with such sale shall not exceed twenty percent of the amount realized from the sale of its capital stock, whether in cash or notes, and said expense shall be paid from surplus funds of the corporation.
(2) The provisions of this title (except article 15) and article 14 of title 24, C.R.S., also apply in the formation and authorization of domestic insurance companies formed upon the mutual plan, and to associations formed upon the assessment plan, that are organized with a guaranty fund in lieu of capital as provided in said references.
Source: L. 13: p. 346, § 2. L. 15: p. 270, § 1. L. 21: p. 457, § 5. C.L. § 2503. CSA: C. 87, § 30. L. 41: p. 502, § 2. CRS 53: § 72-1-44. L. 57: p. 758, § 9. C.R.S. 1963: § 72-1-44. L. 92: (2) amended, p. 1538, § 29, effective May 20. L. 2004: (2) amended, p. 898, § 10, effective May 21. L. 2012: (2) amended, (HB 12-1266), ch. 280, p. 1503, § 23, effective July 1.
ANNOTATION
Law reviews. For article, "The Colorado Securities Law", see 35 Dicta 271 (1958).
Contract to pay 20 percent commission is valid. A contract to pay 20 percent commission for the sale of the stock of a newly organized insurance company is not invalid as a violation of this section. Colo. Life Ins. Co. v. Madden, 73 Colo. 504, 216 P. 551 (1923).
More than 20 percent cannot be used for organization. It cannot appear that more than 20 percent of the total amount realized on the sale of stock was used in organization expenses. Colo. Life Ins. Co. v. Madden, 73 Colo. 504, 216 P. 551 (1923).
Promoters of a corporation cannot deduct 20 percent of a subscription for expenses unless they actually complete enterprise and raise the necessary capital and surplus. Alderman v. Thimgan, 76 Colo. 268, 230 P. 620 (1924).