Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Rule 6-06 -- Special Provisions Applicable to the Balance Sheets of Issuers of Face-Amount Certificates

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1. Investments. State separately each major category: such as, real estate owned, first mortgage loans on real estate, other mortgage loans on real estate, investments in securities of unaffiliated issuers, and investments in and advances to affiliates.


2. Cash. Include under this caption cash on hand and demand deposits. Provide in a note to the financial statements the information required under Rule 5-02.1 regarding restrictions and compensating balances.


3. Receivables.



(a) State separately amounts receivable from



(1) sales of investments;


(2) dividends and interest;


(3) directors and officers; and


(4) others.



(b) If the aggregate amount of notes receivable exceeds 10 percent of the aggregate amount of receivables, the above information shall be set forth separately, in the balance sheet or in a note thereto, for accounts receivable and notes receivable.



4. Total qualified assets. State in a note to the financial statements the amount of qualified assets on deposit classified as to general categories of assets and as to general types of depositories, such as banks and states, together with a statement as to the purpose of the deposits.


5. Other assets. State separately


(a) investments in securities of unaffiliated issuers not included in qualifying assets in item 1 above;

(b) investments in and advances to affiliates not included in qualifying assets in item 1 above; and

(c) any other significant item not properly classified in another asset caption.



6. Total assets.


Liabilities


7. Certificate reserves. Issuers of face-amount certificates shall state separately reserves for



(a) certificates of the installment type;


(b) certificates of the fully-paid type;


(c) advance payments;


(d) additional amounts accrued for or credited to the account of certificate holders in the form of any credit, dividend, or interest in addition to the minimum amount specified in the certificate; and


(e) other certificate reserves. State in an appropriate manner the basis used in determining the reserves, including the rates of interest of accumulation.



8. Notes payable, bonds and similar debt.



(a) State separately amounts payable to



(1) banks or other financial institutions for borrowings;


(2) controlled companies;


(3) other affiliates; and


(4) others,



showing for each category amounts payable within one year and amounts payable after one year.


(b) Provide in a note the information required under Rule 5-02.19(b) regarding unused lines of credit for short-term financing and Rule 5-02.22(b) regarding unused commitments for long-term financing arrangements.



9. Accounts payable and accrued liabilities. State separately



(a) amounts payable for investment advisory, management and service fees; and


(b) the total amount payable to



(1) officers and directors;


(2) controlled companies; and


(3) other affiliates,



excluding any amounts owing to noncontrolled affiliates which arose in the ordinary course of business and which are subject to usual trade terms. State separately the amount of any other liabilities which are material.



10. Total liabilities.


11. Commitments and contingent liabilities.


Stockholders' Equity


12. Capital shares. Disclose the title of each class of capital shares or other capital units, the number authorized, the number outstanding and the dollar amount thereof. Show also the dollar amount of any capital shares subscribed but unissued, and show the deduction for subscriptions receivable therefrom.


13. Other elements of capital.



(a) Disclose any other elements of capital or residual interests appropriate to the capital structure of the reporting entity.


(b) A summary of each account under this caption setting forth the information prescribed in Rule 3-04 shall be given in a note or separate statement for each period in which a statement of operations is presented.



14. Total liabilities and stockholders' equity.

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