| (a) A person applying for an original license or a renewal license must demonstrate the person's positive working capital according to the schedule set out in Texas Labor Code §91.014(a). Positive Working Capital must be demonstrated by the financial statement of the applicant that: (1) is prepared in accordance with generally accepted accounting principles; (2) is audited by an independent certified public accountant, and is without qualification as to the going concern status of the applicant; (3) reflects positive working capital on a date not earlier than 15 months before the date of the application; and (4) is based on adequate reserves for taxes, insurance, and incurred claims that are not paid. (b) An applicant that has not had sufficient operating history to have audited financial statements based on at least 12 months of operations must meet the financial capacity requirements required by the schedule in Texas Labor Code §91.014(a) and must provide the department with financial statements that have been reviewed by a certified public accountant. (c) An applicant may satisfy any deficiencies in the working capital requirement as set forth in subsection (a) or (b), with one or more of the following: (1) A guaranty with the most recent audited financial statement of the guarantor, demonstrating positive working capital according to the schedule set out in Texas Labor Code §91.014(a); (2) A surety bond that: (A) is issued by a surety authorized to do business in the State of Texas; (B) conforms to the Texas Insurance Code; (C) is on a department-approved form; (D) is payable to the executive director on behalf of persons who are injured because of a licensee's violation of Texas Labor Code, Chapter 91 or this chapter; and (E) states that the surety will provide the department 60 days prior written notice of its intent to cancel the bond; (3) An original letter of credit that: (A) is irrevocable; (B) is issued by a qualified financial institution which is financially responsible in the amount of the letter of credit; (C) does not require examination of the performance of the underlying transaction between the department and the licensee; (D) is payable to the department on sight or within a reasonably brief period of time after presentation of all required documents; and (E) does not include any condition that makes payment to the department contingent upon the consent of or other action by the licensee or other party; or (4) Another form of security acceptable to the executive director. (d) Any form of financial security used to satisfy a deficiency in applicant's positive working capital under subsection (a) or (b) that is issued or written for a specified term must be replaced or renewed in accordance with this chapter. (e) Any form of financial security used to satisfy a deficiency in applicant's positive working capital under subsection (a) or (b) must be maintained by the licensee for the entire time the licensee continues to do business in this state. (f) Any form of financial security used to satisfy a deficiency in applicant's positive working capital under subsection (a) or (b) must be kept in effect until the later of: (1) two years after the licensee ceases to do business in this state; (2) two years after the licensee's license expires; or (3) the executive director receives satisfactory proof from the licensee and determines that the licensee has discharged or otherwise adequately met all its obligations under Texas Labor Code, Chapter 91 and this chapter. (g) If any form of financial security under subsection (c) is canceled or lapses during the term of the licensee's license, the licensee may not continue operations after the effective date of the cancellation or lapse, unless and until the licensee files with the executive director a valid form of financial security that meets the requirements provided by Texas Labor Code, Chapter 91, and this chapter and that provides coverage after that date. (h) Cancellation or lapse of the financial security under subsection (c) does not affect the licensee's liability before or after the effective date of the cancellation or lapse. |
