KRS 286.12-030: Application for license -- Requirements -- Denial -- Abandoned

application -- License not transferable.

(1) As used in this section, "substantial stockholder" means a person owning or

controlling, directly or indirectly, ten percent (10%) or more of the total outstanding

stock of a corporation.

(2) A person applying for a license as a student education loan servicer under this

subtitle shall:

(a) Submit a completed application to, and in a form prescribed by, the

commissioner, which shall include:

1. The name of the applicant and each of the applicant's affiliates and

operating subsidiaries engaged in business as a student education loan

company or a student education loan broker;

2. The name under which the applicant will conduct business in Kentucky;

3. The physical address of the applicant's principal office and branch or

branches;

4. The name, residence, and business address of each person having an

interest in the business as a managing officer, director, general partner,

or managing member, as may be applicable, specifying the capacity and

title of each;

5. A description of the activities of the applicant, in such detail and for

such periods as the commissioner may require;

6. An affirmation of financial solvency, noting any capitalizat ion and

access to credit as the commissioner may require;

7. A financial statement prepared by a certified public accountant, the

accuracy of which is sworn to under oath before a notary public by an

officer or other representative of the applicant who is authorized to

execute such documents;

8. An affirmation that the applicant, or its managing officers, directors,

general partners, and managing members, as may be applicable, are at

least twenty-one (21) years of age;

9. Information as to the character, fi tness, financial and business

responsibility, background, and experience of the applicant, and its

managing officers, directors, general partners, and managing members,

as may be applicable;

10. The name of at least one (1) of the applicant's managing officers who

has a minimum of at least two (2) years' experience in the student

education loan servicing industry; and

11. Any additional detail or information as the commissioner deems

necessary;

(b) Maintain the minimum net worth requirements prescribed by the

commissioner in administrative regulation or order, which may include the

following:

1. Applicable reserves consisting of high-quality investments; and

2. A surety bond;

(c) 1. Submit an inves tigation fee prescribed by the commissioner in

administrative regulation which shall be adjusted by order five (5) years

from July 14, 2002, and every five (5) years thereafter.

2. An adjustment made pursuant to subparagraph 1. of this paragraph may

be bas ed on the nonseasonally adjusted Consumer Price Index for All

Urban Consumers (CPI -U), U.S. City Average, All Items, as published

by the United States Bureau of Labor Statistics; and

(d) 1. Submit the name, address, telephone number, and electronic mail

address of an agent for service of process.

2. The commissioner shall be notified in writing at least five (5) days prior

to any change in the status of the agent for service of process.

(3) The commissioner may deny an application for a license as a student education loan

servicer if:

(a) A false statement of material fact has been made on the application;

(b) A material requirement for issuance of the license has not been met;

(c) The commissioner determines that the applicant has not submitted a

completed application;

(d) The applicant or any managing officer, director, general partner, or managing

member, or substantial stockholder, as may be applicable, of the applicant:

1. Within the last ten (10) years:

a. To the extent permitted under KRS 335B.020, has a felony

conviction; or

b. Has committed any act involving dishonesty, fraud, or deceit, but

only if the act is substantially related to the qualifications,

functions, or duties of a person engaged in business in accordance

with this subtitle;

2. Has violated or is not in material compliance with:

a. Any provision of this subtitle;

b. An administrative regulation promulgated pursuant to this subtitle;

c. An order of the commissioner; or

d. Any similar regulatory scheme of this or a foreign jurisdiction;

3. Has been held liable within the past seven (7) years by final judgment in

any civil action or by administrative judgment by any public agency

related to a financial matter;

4. Has had, or has been, a managing officer, director, partner, managing

member, or substantial stockholder of an entity which had a license or

registration revoked by the commissioner or any other regulator or

jurisdiction; or

5. Has otherwise been an agent or employee of an entity which has had a

license or registration revoked by the commissioner and the person was

found by the commissioner to bear responsibility in connection with the

revocation; or

(e) The commissioner is unable to find that the financial responsibility,

experience, character, and general fitness of the applicant, together with its

managing officers, directors, general partners, managing members, and

substantial stockholders, as may be a pplicable, command the confidence of

the community and warrant belief that the business will be operated fairly,

honestly, and efficiently within the purposes of this subtitle.

(4) The commissioner may deem an application abandoned if an applicant fails to

provide or respond to a request for additional information within sixty (60) days of

the request.

(5) Except as provided in KRS 286.12-040, a license issued under this subtitle shall not

be transferable.