N.J. Stat. tit. 17, ch. 16A

N.J. Stat. tit. 17, ch. 16A
in effect

N.J. Stat. § 17:16A-1 Definitions

As used in this chapter a. "Investment company" means any corporation, foreign or domestic, any partnership or any individual which engages principally in an investment business as defined in this section, but this chapter shall not be construed to affect any corporation, partnership or individual, other than an investment company, to which a certificate of authority to do business has been issued in accordance with, may be issued on compliance with, or the issue of which is prohibited by the provisions of any other chapter of this Title; b. "Investment contract" means any agreement, certificate, instrument or other writing containing an undertaking by the company making, issuing or guaranteeing the same to pay the holder thereof, or his assignee, or his personal representative, a stated or determinable maturity value in cash or its equivalent on a fixed or determinable date, the consideration for which consists of the payment to the company of payments, deposits, dues, installments or a single sum, according to a plan fixed by the contract, regardless of whether the holder is entitled to share in the profits or earnings of the issuer; c. "Investment business" means the business of making, issuing, or guaranteeing investment contracts, but does not include the business of any mortgage guaranty corporation, bank, trust company or other corporation of this State incorporated under any general or special law which makes insurance against, or guarantees against, loss by reason of nonpayment of principal or interest on bonds and mortgages, or any corporation authorized to do a life insurance business in this State. L.1938, c. 322, p. 816, s. 1.

N.J. Stat. § 17:16A-2 Compliance with law before doing business; liability of directors and corporators for transacting business without certificate of authority

Prohibition to do business. No investment company as defined in this chapter shall undertake the transaction of an investment business in this State until it shall have complied with the applicable requirements of this chapter and shall have received a certificate of authority from the Commissioner of Insurance setting forth that it has complied with the provisions of this chapter and specifying the kind of business to be transacted by it. The directors and corporators of any investment company incorporated under the laws of this State shall be jointly and severally liable for all obligations incurred by the company after the effective date of this chapter by reason of its having transacted such business in this State before it has received a certificate of authority from the commissioner pursuant to the provisions of this chapter. L.1938, c. 322, p. 817, s. 2. Amended by L.1970, c. 127, s. 1, eff. July 1, 1970.

N.J. Stat. § 17:16A-3 Authorization of domestic companies, individuals and partnerships

Authorization of domestic companies, individuals and partnerships. An investment company, other than a foreign corporation, desiring to secure a certificate of authority shall make application to the commissioner who may issue such certificate of authority to transact business to any such company when: a. The investment company, if a corporation of this State, has filed in the department a certified copy of its charter or certificate of incorporation and a statement, in such form as the commissioner shall prescribe, attested by its president or vice-president and secretary or treasurer under its corporate seal, showing the financial condition of the corporation; or if an individual or partnership, has filed in the department such evidence as may be satisfactory to the commissioner that the individual or members of the partnership are citizens of the United States and residents of this State and a statement, in such form as the commissioner shall prescribe, attested by the individual or by the members of the partnership, showing the financial condition of the individual or partnership. b. The commissioner shall be satisfied, by such examination and evidence as he sees fit to make and require; if a corporation, that the whole amount of the capital set forth in the certificate of incorporation and the required minimum surplus of the company has been actually paid in cash and is possessed by the company in money or in such stocks, bonds, bonds and mortgages, or other securities as are authorized for investment by this chapter, or, if an individual or partnership, that the minimum amount of unencumbered assets over its liabilities required by this chapter are held in such stocks, bonds, bonds and mortgages, or other securities authorized by this chapter for the investment of the funds of investment companies incorporated under the laws of this State. No investment company hereafter incorporated under the laws of this State shall be entitled to commence business unless it has a capital stock of at least one hundred thousand dollars ($100,000.00) and in addition thereto a surplus actually paid in cash equal to one-half the minimum capital stock required by this chapter. Any company heretofore incorporated under the laws of this State and engaged in the investment business as defined in this act, within this State, shall be entitled to make application to the commissioner for a certificate of authority, authorized by this act; provided, such company shall at all times have capital stock and surplus actually paid in cash amounting to twenty per centum (20%) of its liabilities, such liabilities to be determined by the Commissioner of Insurance of this State; and provided, further, that the said capital and surplus shall be at a minimum amount of at least thirty thousand dollars ($30,000.00). No individual or partnership shall be entitled to commence business unless the amount of its unencumbered assets, invested as herein provided, over its liabilities shall not be less than one hundred fifty thousand dollars ($150,000.00). c. The company shall have deposited with the custodian on behalf of the commissioner, securities with a market value of at least $100,000.00 to be held in physical form or purchased for its account in the Federal Reserve book-entry system. The deposits shall be held for the benefit and security of all policyholders of the company depositing them. The records of the custodian, through which an insurance company holds securities in the Federal Reserve book-entry system or in physical form, shall at all times show that these securities are held for an insurance company and for which accounts thereof. Every individual or partnership authorized to transact business pursuant to this chapter shall conform to all requirements of this chapter applicable to corporations of this State and which by their nature are applicable to individuals or partnerships. When in this chapter reference is made to officers of an investment company, such reference shall be deemed to be reference to the individual or to the members of a partnership. The commissioner may refuse to issue a certificate of authority to any individual or partnership and may cancel any outstanding certificate of authority of any individual or partnership, if in his judgment, the interests of the public would be best served by such refusal or cancellation. L.1938, c.322, s.3; amended 1939, c.353; 1941, c.420, s.2; 1989,c.264,s.9.

N.J. Stat. § 17:16A-4 Foreign investment companies; requirements for admission

Any investment company incorporated by authority of another State or Foreign Government, upon complying with the conditions hereinafter specified, may be admitted to transact in this State any business authorized by this chapter to be transacted by an investment company of this State. No such company shall be admitted until: a. It shall file in the department a certified copy of its charter, or deed of settlement or certificate of organization, and a statement of its financial condition and business, in such form and detail as the commissioner may require, signed and sworn to by its president and secretary or other proper officer; b. It shall satisfy the commissioner that it is fully and legally organized under the laws of its State to do the business it proposes to transact; that its condition or methods of operation are not such as would render its operation hazardous to the public or to its creditors in this State; that it has a fully paid-up, well invested and minimum unimpaired capital and surplus of not less than the amount required by section three of this chapter to be possessed by an investment company of this State; c. It shall, by an instrument filed in the department, constitute the commissioner and his successor in office its true and lawful attorney, upon whom all original process in any action or legal proceeding against it may be served, and therein shall agree that any original process against it which may be served upon said commissioner shall be of the same force and validity as if served on the company, and that the authority thereof shall continue in force irrevocable so long as any liability of the company remains outstanding in this State; d. It shall deposit with the commissioner securities amounting to at least thirty thousand dollars ($30,000.00) which securities shall be of such kinds and value as are prescribed for deposit by domestic companies by the provisions of section three of this chapter. The securities shall be held in trust for the benefit of the creditors of the company in this State. If any such company shall have and keep a deposit of at least one hundred thousand dollars ($100,000.00) in cash or such securities with any department or office of the State where the company is organized and the cash or securities so deposited are held in trust for all the creditors of the company, the commissioner shall not require the deposit of securities as herein provided; e. It shall obtain from the commissioner a certificate that it has complied with all the requirements of this chapter applicable to it, and is authorized to transact business in this State. The certificates shall expire on May first next after their issue, and shall be renewed each year before May first. All certificates issued to investment companies by the commissioner under any other law and outstanding and in force at the effective date of this chapter shall continue in full force and effect until May first, one thousand nine hundred and thirty-nine unless sooner revoked in the manner in this chapter provided. L.1938, c. 322, p. 819, s. 4.

N.J. Stat. § 17:16A-5 Officers or agents of foreign investment companies; certificate of authority

No officer or agent of any foreign investment corporation shall make, issue, sell, offer for sale, negotiate or guarantee any investment contract or transact any business or act, or aid in any way, in the transaction of any business authorized by a certificate of authority issued to such foreign corporation until he shall have procured from the commissioner a certificate of authority to do so. The certificate shall state in substance that the corporation is authorized to transact business in this State and that the person named therein is an agent of the company for the transaction of such business. Upon receipt of a certificate from such corporation of its appointment of a suitable person to act as its agent in this State, the commissioner shall, if the facts warrant it, grant such certificate which shall continue in force until May 1 after its issue, and by renewal thereof before May 1 of each year until revoked by the commissioner for noncompliance with the laws, or until the appointment of such agent is revoked by written notice from the corporation to that effect. A certificate may be issued by the commissioner to and in the name of any copartnership or corporation as agent for an investment company upon written request and payment of the $10.00 fee prescribed in section 15 of this chapter; provided, all members of the copartnership or all of the officers of the corporation, as the case may be, actively engaged in the investment company business of the copartnership or corporation in this State hold an unexpired certificate issued in accordance with the provisions of this act. All certificates outstanding and in force on the effective date of this chapter shall continue in full force and effect until May 1, 1939, unless sooner revoked in the manner above provided. L.1938, c. 322, p. 820, s. 5. Amended by L.1970, c. 127, s. 2, eff. July 1, 1970.

N.J. Stat. § 17:16A-6 Service of process on Commissioner as attorney for foreign investment company

When any original process is served upon the commissioner as attorney for an investment company of another State, and a service fee of $10.00 paid to him, he shall forthwith notify the company of such service by letter directed to its secretary, or resident manager in the case of a company of a foreign country; and shall within 2 days after such service forward by letter a copy of the process served on him to such secretary or manager, or to such other person as may have been previously designated by the company by written notice filed in the department. The commissioner shall keep a record of all such process, which shall show the day and hour of service. The serving of such process shall be made by leaving a copy of the same in the office of the commissioner with a service fee of $2.00. Service upon the commissioner as herein provided shall be deemed sufficient service upon the company. The plaintiff in the action shall be entitled to recover the amount of the service fee so paid as part of the taxable costs if he prevails in the action. L.1938, c. 322, p. 821, s. 6. Amended by L.1970, c. 127, s. 3, eff. July 1, 1970.

N.J. Stat. § 17:16A-7 Certificate of authority as prima facie evidence of incorporation of foreign company

When an investment company of another State shall hold the certificate of the commissioner authorizing it to transact business in this State, in any civil action in which such company is plaintiff or defendant, or in any criminal proceeding in this State, a copy of such certificate of authority, certified under the hand and official seal of the commissioner, shall be prima facie evidence of the incorporation of such company. L.1938, c. 322, p. 822, s. 7. Amended by L.1953, c. 17, p. 228, s. 96.

N.J. Stat. § 17:16A-8 Securities deposited with Commissioner

a. The commissioner may order a change of any of the securities deposited by any investment company incorporated under the laws of any other State or country as hereinabove provided, or any part of them, at any time during the continuance of the certificate of authority issued to the company, and during the same period the company may change the securities or any part thereof with the consent of the commissioner. The company so depositing securities shall be entitled to receive the dividends or interest thereon, and upon the termination of its authority to transact business in this State it shall be entitled to withdraw any part of or all of the securities. The amount of such deposit shall not be reduced by any withdrawal to less than the total outstanding liability of the company to its creditors in this State. b. As to investment companies other than those affected by paragraph (a) of this section, the commissioner shall hold the securities deposited for the benefit and security of all the creditors of the company depositing them, but shall, so long as the company shall continue solvent and comply with all the requisites of the laws of this State applicable to it, permit the company to collect the interest or dividends on the securities so deposited, and, from time to time, with his assent, to withdraw any of such securities, on depositing with him other like securities, the par value of which shall be equal to the par value of such as may be withdrawn. c. Whenever any investment company incorporated under the laws of this State shall voluntarily dissolve or a receiver thereof shall be appointed by the Superior Court, or shall have heretofore or hereafter become legally merged into another corporation, the commissioner shall thereupon deliver to such receiver or to the directors or trustees on dissolution, or to the corporation into which merged, the securities deposited as aforesaid, and upon such delivery the commissioner shall be relieved of all further responsibility or obligation in regard to the securities so deposited; provided, that said deposited securities shall not be delivered to the directors or trustees on dissolution until all proceedings in such voluntary dissolution shall have been first approved by the commissioner. d. The securities deposited by any individual or partnership shall not be returned to such individual or partnership until after cancellation of his or its outstanding certificate of authority and the commissioner is satisfied, on the basis of such reasonable evidence and security as he may require, that all liabilities under his or its investment contracts have been fully discharged. In the event of death or insolvency of the individual or insolvency of the partnership, the commissioner may deliver such securities to the executor, administrator, receiver, trustee in bankruptcy or such other legal representative as may be authorized by a court of competent jurisdiction to administer the estate of the deceased person or insolvent debtor. The commissioner shall not be liable for the surrender of securities pursuant to this subdivision. L.1938, c. 322, p. 822, s. 8. Amended by L.1953, c. 17, p. 228, s. 97.

N.J. Stat. § 17:16A-9 Investment of capital, surplus or other funds

An investment company incorporated under the laws of this State, for the purpose of investing its capital, surplus or other funds, or any part thereof, may purchase or hold as collateral security or invest in any and all the kinds of property and securities, to the same extent and subject to the same limitations, which are legally permitted to be acquired by life insurance companies for the purpose of investing their funds. An investment company may lend to the holder of any investment contract, at an interest rate not exceeding six per centum (6%) annually, any sum or sums which shall not exceed the company's liability thereon at the time the loan is made, and which shall be a lien upon such contract and all additions or credits thereon. L.1938, c. 322, p. 823, s. 9.

N.J. Stat. § 17:16A-10 Investment contracts; form; approval by Commissioner; review

Except as herein otherwise provided, no investment contract shall be issued by any investment company of this State or be made, issued, solicited, sold or delivered in this State by any investment company of another State or country until the expiration of at least thirty days after the form thereof shall have been filed with the commissioner. After the expiration of such period, or if prior to the expiration of such period the commissioner shall acknowledge such filing, investment contracts in the form so filed, or so filed and acknowledged, as the case may be, may thereafter be made, issued, solicited, sold and delivered in this State by the company filing the same while the company is authorized to transact an investment business in this State. If the commissioner shall at any time notify the company filing such form of his disapproval thereof, as containing provisions which are unfair, unjust, inequitable, contrary to law or to the public policy of this State, the company shall not thereafter make, issue, solicit, sell or deliver in this State any investment contract in the form so disapproved unless and until such disapproval is canceled or withdrawn by him. The disapproval of the commissioner shall be subject to review by the Superior Court in a proceeding in lieu of prerogative writ. L.1938, c. 322, p. 824, s. 10. Amended by L.1953, c. 17, p. 230, s. 98.

N.J. Stat. § 17:16A-11 Reserves on investment contracts

Every investment company authorized to transact business in this State shall maintain on all its outstanding investment contracts the reserves specified in this section. The reserve on any investment contract at any time shall not be less than the amount which the issuer, under the terms of such contract, is liable as of such time to pay in cash or its equivalent as a surrender value or otherwise to the holder of such contract. If the commissioner shall not be satisfied of the sufficiency of such minimum reserves as affording reasonable assurance of the company's ability to meet all such liabilities, including all deferred maturities under its outstanding investment contracts as they fall due, he may require the company to increase such reserves to such amount as shall be deemed by him sufficient for such purposes. The reserve on any investment contract shall not be required to be increased to an amount exceeding the net value of such investment contract as determined by the commissioner. The net value of an investment contract shall be based upon such assumed annual net payments as may bear reasonable relationship to the incidence of reasonable expenses of procurement, issue and maintenance of such contract, the net payments to be exactly sufficient to provide for the maturity payments provided for in such contract when due, at such rate of interest as may be determined by the commissioner in the exercise of reasonable discretion and based on the company's experience and on the rate of interest earned or earnable by the company on its investments. L.1938, c. 322, p. 824, s. 11.

N.J. Stat. § 17:16A-12 Surrender values under investment contracts

Every investment contract issued or delivered in this State to any resident of this State by any investment company, providing for payments, dues or deposits by the holder to the company on an installment plan over a period of years, shall contain a provision that after the payment by the holder of the contract of all deposits, payments, dues or assessments due thereon for at least one year, and after such contract shall have been maintained in force by such payments for the period for which the same have been made, the holder thereof shall be entitled to a surrender value payable in cash or its equivalent. The surrender value shall, if so required by the commissioner, be equal to the amount of the net value of the contract, as defined in section eleven of this chapter, less such reasonable surrender charge or charges as may be imposed thereon by the company subject to the right of the commissioner to approve or disapprove the same. If an investment contract filed pursuant to the provisions of this chapter shall contain a provision which stipulates the amounts of the surrender values available to the holder, at intervals not greater than the period covered by one year's payment or payments by the holder under the terms of the contract, during its entire duration prior to maturity, the surrender charge as determined thereby shall be deemed to have been imposed with the consent of the commissioner, and such surrender values are hereby authorized with respect to all such investment contracts legally issued prior to any disapproval of the form of such contract by the commissioner pursuant to this chapter. L.1938, c. 322, p. 825, s. 12.

N.J. Stat. § 17:16A-13 Annual reports of financial condition

Every investment company transacting business in this State shall annually on or before March first file in the department a statement, subscribed and sworn to by its president and secretary, or, in their absence, by two of its principal officers, showing its financial condition at the close of business on December thirty-first of the year last preceding, and its business for that year. The statement shall be in the form and contain the matters the commissioner prescribes. The commissioner may also address inquiries to the company or its officers in relation to its condition or affairs, or any matter connected with its transactions and the officers of the company shall promptly reply in writing to all such inquiries. For good cause shown the commissioner may extend the time within which any such statement may be filed. Any such company neglecting to make and file its annual statement in the form and within the time provided by this section shall forfeit one hundred dollars ($100.00) for each day's neglect, to be recovered in a civil action; and upon notice by the commissioner to that effect, its authority to do new business in this State shall cease while such default continues. L.1938, c. 322, p. 826, s. 13. Amended by L.1953, c. 17, p. 231, s. 99.

N.J. Stat. § 17:16A-14 Examination of affairs; expenses; duty to exhibit books, records and accounts

The commissioner may, whenever he deems the same expedient, make or cause to be made, an examination of the assets and liabilities, method of conducting business and all other affairs of every investment company authorized to transact business in this State. For the purpose of the examination the commissioner may authorize and employ such persons to conduct the same or to assist therein as he may deem advisable. The examination may be conducted in any State or country in which the company examined is incorporated or has an office, agent or place of business. The reasonable expenses of such examination shall be fixed and determined by the commissioner, and he shall collect them from the company examined, which shall pay them on presentation of a detailed account of the expenses. If any company, after the examination, shall be adjudged by the Superior Court to be insolvent, the expense of the examination, if unpaid, shall be ordered paid out of the assets of the company. No company shall, either directly or indirectly, pay, by way of gift, credit or otherwise, any other or further sum to the commissioner or to any person in the employ of the department for extra service or for purposes of legislation, or for any other purpose. It shall be the duty of the officers, agents and employees of any such company to exhibit all its books, records and accounts for the purpose of the examination, and otherwise to facilitate it so far as it may be in their power to do, and for that purpose the commissioner, his deputy, assistants and employees may examine, under oath, the officers, agents and employees of any such company relative to its business and affairs. L.1938, c. 322, p. 827, s. 14. Amended by L.1953, c. 17, p. 231, s. 100.

N.J. Stat. § 17:16A-15 Fees

The commissioner shall charge and collect for his services under the provisions of this chapter and pay into the State Treasury the following fees: for issue of certificate of authority annually, $250.00; for filing the certified copy of the charter, deed of settlement or certificate of organization of an investment company, $20.00; for filing each annual statement of each investment company, $20.00; for each certificate of authority to an agent of an investment company of another State, $50.00; for each certificate of the condition or qualification of an investment company, $1.00; for each copy of any paper filed in the department, $0.20 a sheet or folio of 100 words and $1.00 for certification; for services in connection with deposits of securities by investment companies, the depositing company shall pay to the commissioner an annual fee of $15.00 on January 1 of each year, and on each substitution of securities and clipping and forwarding of interest coupons an additional fee of $25.00; and all other fees and charges due and payable into the State Treasury for any official or service of the commissioner. L.1938, c. 322, p. 827, s. 15. Amended by L.1970, c. 127, s. 4, eff. July 1, 1970; L.1983, c. 532, s. 1.

N.J. Stat. § 17:16A-16 Revocation of certificate of authority of foreign investment company

When the commissioner shall find that the affairs of any investment company incorporated under the laws of another State or country are in an unsound condition because of illegal or unsafe investments, or that its assets do not exceed its liabilities including reserves and exclusive of capital stock, by at least one hundred thousand dollars ($100,000.00), or that the transaction of business in this State by the company has resulted in the establishing of a contract or contracts between the purchaser or purchasers and the company which are unlawful, unfair, unjust, oppressive, inequitable, or against the public policy of this State, or if the commissioner finds that the solicitation or selling plan, soliciting or selling representations, or methods of solicitation or selling used by the company or by its agents, in conducting solicitation or sales of investment contracts or securities within this State are unfair, unjust, oppressive, inequitable, or against the public policy of this State, or are calculated to mislead the purchaser thereof, the commissioner may cancel and revoke the certificate of authority issued to the company pursuant to the provisions of this chapter. L.1938, c. 322, p. 828, s. 16.

N.J. Stat. § 17:16A-17 Procedure for revocation of certificate of authority of foreign company

Before any such certificate of authority shall be cancelled or revoked as provided in section sixteen of this chapter, the commissioner shall give at least twenty days' notice by mail to the company whose certificate of authority is sought to be cancelled or revoked. The notice shall be directed to the address of the said company as shown on the records of the department, shall notify the company of the time and place of a hearing before the commissioner at which it will be required to show cause why its certificate of authority should not be cancelled or revoked, and shall contain a statement of the acts or conditions upon which the proceedings for revocation are based. L.1938, c. 322, p. 829, s. 17.

N.J. Stat. § 17:16A-18 Revocation, cancellation or refusal to issue certificate of authority; review

The revocation or cancellation by the commissioner of a certificate of authority or the refusal or failure by the commissioner to issue or renew a certificate of authority within a reasonable time shall be subject to review by the Superior Court in a proceeding in lieu of prerogative writ. L.1938, c. 322, p. 829, s. 18. Amended by L.1953, c. 17, p. 232, s. 101.

N.J. Stat. § 17:16A-19 Domestic investment companies; insolvency; suspension of business and other acts; receiver; injunction

When any investment company of this State shall become insolvent or shall suspend its ordinary business for want of funds to carry on the same, or when the commissioner shall ascertain, as a result of examination as authorized by this chapter, or in any other manner, that any company is exceeding its powers, or violating the law, or that its condition or methods of business are such as to render the continuance of its operations hazardous to the public or its creditors, or that the assets of the company are less than its liabilities including capital and all reserve funds required by the provisions of this chapter, the commissioner may institute an action in the Superior Court to enjoin the company from the transaction of any further business, or the transfer or disposal of its property in any manner whatsoever, and the court may appoint a receiver, with power to sue for, collect, receive and take into his possession all the goods and chattels, rights, and credits, moneys and effects, lands and tenement, books, papers, choses in action, bills, notes and property of every description belonging to such company, and sell and convey and assign the same, and hold and dispose of the proceeds thereof under the directions of the court. The court may proceed in the action in a summary manner or otherwise. L.1938, c. 322, p. 832, s. 19. Amended by L.1953, c. 17, p. 232, s. 102.

N.J. Stat. § 17:16A-20 Offenses and penalties

If any investment company itself or by its agents, attorneys, solicitors, surveyors, canvassers, collectors or other representatives of whatsoever designation shall solicit, negotiate, or in anywise transact any business in this State except in the enforcement of contracts by legal process, without having complied with the requirements of this chapter, the investment company so offending shall be liable to a penalty of one thousand dollars ($1,000.00) and costs of suit, to be sued for and collected in a civil action by the commissioner in the name and for the benefit of the State. Any officer, agent, employee or other representative of any investment company doing business in this State who shall have failed or neglected to procure a certificate of authority as agent for such company as required by this act; or who shall issue, circulate or cause or permit to be circulated any estimate, illustration or circular misrepresenting the terms of any investment contract or security issued by such company; and any such representative of any company who shall solicit, negotiate or effect the sale of any investment contract or otherwise transact business on behalf of any company which shall have neglected, failed or refused to procure a certificate of authority as provided for by the provisions of this chapter; or who shall accept any deposit, dues, premiums or other contributions or things of value on behalf of such unauthorized company shall be guilty of a misdemeanor. L.1938, c. 322, p. 832, s. 20. Amended by L.1953, c. 17, p. 233, s. 103.
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