{"data":{"id":"us-ky/krs-251.365","jurisdiction":"us-ky","citation":"KRS 251.365","heading":"Evidence of financial responsibility to be filed by applicant or licensee --","body":"Security required.\n(1) The department shall not issue or renew a grain dealer or grain warehouse operator\nlicense under this chapter until the applicant or licensee ha s filed with the\ndepartment satisfactory evidence of financial responsibility.\n(2) Evidence of financial responsibility shall:\n(a) Consist of:\n1. A surety bond, executed by the applicant as principal, and issued by a\ncorporate surety authorized to conduct business in this state;\n2. A certificate of deposit issued by a federally insured financial institution\nin this state;\n3. An irrevocable letter of credit issued by a federally insured financial\ninstitution in this state;\n4. Other security, as deemed acceptable by the department; or\n5. Any combination of subparagraphs 1. to 4. of this paragraph, so long as\nthe aggregate value of the evidence meets the requirements of this\nsection;\n(b) Be made payable to the board;\n(c) Be in an amount meeting the requirements of this section;\n(d) In the case of a bond, be conditioned upon the faithful performance of:\n1. All obligations of a licensee under the terms of this chapter and any\nadministrative regulations promulgated under it, from the effective date\nof the bond unti l the license is revoked, denied, or suspended or the\nbond is canceled, whichever comes first; and\n2. Any obligations the applicant or licensee may contract for with\nproducers, depositors, or other persons placing grains in the applicant's\nor licensee's facilities, from the effective date of the bond and thereafter,\nregardless of whether or not the applica nt's or licensee's facility remains\nthe subject of a valid license;\n(e) Be filed with and remain in possession of the department until it is released,\ncanceled, or discharged as provided for by the terms of this chapter and any\nadministrative regulations promulgated under it;\n(f) Be kept in force at all times while the licensee is operating as a grain\nwarehouse operator or grain dealer. Failure to keep the bond or other security\nin force shall be cause for revocation of the license, and shall subject the\nlicensee to criminal penalties set forth in KRS 251.990; and\n(g) Contain a provision stating that it may not be canceled by any party, except\nupon ninety (90) days' notice in writing to the department. A notice of\ncancellation shall not affect any liability accrued before the expiration of the\nnotice period.\n(3) Separate proof of financial responsibility shall be required for each facility that is\nlicensed by the department.\n(4) For any security used as evidence under subsection (2) of this section that bears\ninterest, the interest shall be made payable to the purchaser of the security.\n(5) No person may release, cancel, or discharge security filed with the department\nunder subsection (1) of this section without prior approval of the department and its\napproval of a substitute bond or other security.\n(6) If the department questions a licensee's ability to pay producers and depositors for\ngrain, or if the department determines that the licensee does not have a sufficient net\nworth to meet the licensee's financia l obligations, the department shall require the\nlicensee to file additional security with the department in an amount equal to the\ninsufficiency. Failure to post the additional security shall constitute grounds for\nsuspension or revocation of a license.\n(7) The amount of the security required by subsection (1) of this section shall be in a\nprincipal amount, to the nearest one thousand dollars ($1,000), that is equal to ten\npercent (10%) of:\n(a) For a licensed grain dealer, the aggregate dollar amount:\n1. That was paid by the dealer for grain purchased in the dealer's most\nrecently completed fiscal year; or\n2. That the department estimates will be paid by the grain dealer for grain\npurchased in the grain dealer's current fiscal year, if records for the grain\ndealer's most recently completed fiscal year do not exist or are not\navailable; and\n(b) For a licensed grain warehouse operator, the aggregate dollar value of:\n1. The grain deposited in the grain warehouse operator's most recently\ncompleted fiscal year; or\n2. The grain the department estimates will be deposited in the operator's\nwarehouse during the current fiscal year, if records for the warehouse\noperator's most recently completed fiscal year do not exist or are not\navailable.\n(8) In no event shall the re quired security for a licensee be less than twenty -five\nthousand dollars ($25,000) nor more than one million dollars ($1,000,000).","path":["KRS Chapter 251"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=49415","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:53:04Z","sha256":"91ae08e3d4713a7acd1c19d25cfd43de567d2ef3da59c36caea2b2a95563ec79","source_id":"us-ky","stale":false,"prev":"us-ky/krs-251.360","next":"us-ky/krs-251.370"},"notice":"GroundRules: Original legal text. Not legal advice."}