KRS 165A.350: Requirements for agent's permit -- Bond or other collateral --

Conditional license -- Renewal -- Owner's liability for actions of agents.

(1) No person shall solicit or perform the services of an agent in this state for a

proprietary school, located either within or without this state, unless the school shall

have been issued by the commission a license pursuant to KRS 165A.310 to

165A.410 and the person shall have been issued an agent's permit for said

proprietary school.

(2) No person shall be issued an agent's permit unless he is an individual of good moral

character as determined by the commission.

(3) Except as otherwise provided, no person shall be issued an agent's permit unless he

shall make application upon forms to be provided by the c ommission, and unless

the application shall be accompanied by a fee as established by the commission and

a good and sufficient surety bond or other collateral in a form as required by the

commission but not less than five thousand dollars ($5,000).

(4) (a) The surety bond or other collateral shall be conditioned by the commission to

recover all necessary administrative costs, including but not limited to costs

for the acquisition, permanent filing, and maintenance of student records of

the proprietary school or to provide indemnification to any student or enrollee

or the student's or enrollee's parent or guardian suffering loss or damage as a

result of any fraud or misrepresentation used in procuring his enrollment in a

course or courses of instruction or st udy offered or maintained by the

proprietary school, or as a result of the student being unable to complete the

course or courses because the proprietary school ceased operations. The

amount of liability on the surety bond or other collateral shall cover e ach

agent each school year, as the term "school year" is defined in KRS 165A.310.

Regardless of the number of years that an agent's bond is in force, the

aggregate liability of the surety bond shall not exceed the penal sum of the

bond. The surety bond or other collateral may be continuous.

(b) Any claimant may file with the commission a duly verified claim against an

agent. The commission shall consider claims in a timely manner after ten (10)

days' written notice by certified mail, return receipt requeste d, to the licensee

of the claim giving time and place of hearing thereon and if the claim is found

to be correct and due to the claimant, and if the commission cannot effect a

settlement by persuasion and conciliation, the commission shall make a

demand up on the principal on the bond and the surety or other collateral

thereon, and if not paid shall bring an action on the bond in Franklin Circuit

Court.

(5) The surety bond or other collateral may be of blanket form to cover more than one

(1) agent for a prop rietary school, but it shall provide the required minimum

coverage for each agent.

(6) A surety on the bond or other collateral may be released therefrom after the surety

shall make a written notice thereof directed to the commission at least thirty (30)

days prior to release.

(7) The surety bond or other collateral shall cover the period of the agent's permit,

except when a surety shall be released in the manner provided herein.

(8) Notwithstanding the provisions of other sections, the commission may issue an

agent's permit to each person who is an owner of more than ten percent (10%) legal

interest in a proprietary school located in this state and who is a resident of this

state, and no owner shall be required to pay the agent's permit fee or execute an

agent's surety bond or other collateral as otherwise required by this section, if the

proprietary school shall have been issued a license pursuant to the provisions of

KRS 165A.310 to 165A.410.

(9) The commission may issue a conditional license on a monthly basis for up to a nine

(9) month period of time.

(10) An agent's permit shall be suspended by operation of law when the agent is no

longer covered by a surety bond or other collateral is withdrawn as required by KRS

165A.310 to 165A.410; but the commission shall cause the agent to receive at least

ten (10) days' written notice prior to the release of his surety to the effect that the

permit shall be suspended by operation of law until another surety bond or other

collateral shall be filed in the same manner and like amount as required by the

commission.

(11) An agent's permit shall be valid for a period of one (1) school year as herein

defined, except when suspended or canceled pursuant to these provisions. An

agent's permit may be renewed in the same manner and under the same conditions

prescribed for the issuance of an initial agent's permit.

(12) The owner or owners of the proprietary school shall be held responsible for all

actions of their agents when performing their duties as agents.