| (a) General. Every liability, contingent or otherwise, shall be disclosed in accordance with sound accounting practice in each financial statement of the condition of the company or association. (b) Contingent liabilities. Whenever funds, as authorized by the board of directors, are borrowed from any source for the purpose of association or company business, as for example, to acquire new business by merger, and the repayment of such funds is contingent upon the availability of funds in the expense fund over and above all other obligations of the expense fund, the contingent obligation to repay shall be considered as a nonstatement liability if the agreement for the repayment of the obligation contains a clause substantially as follows: "The obligation herein provided for shall be repayable, both as to principal and interest, from the expense fund of __________ Company, only after ample provision has been made for the payment of all other obligations
of the expense fund of __________ Company, and shall not under any circumstances be either due or payable unless sufficient funds of the expense fund are available with which to pay the sum free from any other expense fund obligation as provided by the laws of the State of Texas and the rules and regulations of the State Board of Insurance." (c) Releases. Any obligations of a company or association which might otherwise be considered as a general liability may be treated as a nonstatement liability provided that the holder of such obligation releases all right of repayment from the mortuary fund and all rights of repayment from the expense fund except upon a contingent basis and accepts in lieu of all other rights, contracted or otherwise, an agreement for repayment containing a clause substantially similar to the clause quoted in subsection (b) of this section.
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