203.3 - LICENSE REQUIRED -- FINANCIAL RESPONSIBILITY.
203.3 LICENSE REQUIRED -- FINANCIAL RESPONSIBILITY.
1. A person shall not engage in the business of a grain dealer in
this state without having obtained a license issued by the
department.
2. The type of license required shall be determined as follows:
a. A class 1 license is required if the grain dealer
purchases any grain by credit-sale contract, or if the value of grain
purchased by the grain dealer from producers during the grain
dealer's previous fiscal year exceeds five hundred thousand dollars.
Any other grain dealer may elect to be licensed as a class 1 grain
dealer.
b. A class 2 license is required for any grain dealer not
holding a class 1 license. A class 2 licensee whose purchases from
producers during a fiscal year exceed a limit of five hundred
thousand dollars in value shall file within thirty days of the date
the limit is reached a complete application for a class 1 license.
If a class 1 license is denied, the person immediately shall cease
doing business as a grain dealer.
3. An application for a license to engage in business as a grain
dealer shall be filed with the department and shall be in a form
prescribed by the department. The application shall include the name
of the applicant, its principal officers if the applicant is a
corporation or the active members of a partnership if the applicant
is a partnership and the location of the principal office or place of
business of the applicant. A separate license shall be required for
each location at which records are maintained for transactions of the
grain dealer. The application shall be accompanied by a complete
financial statement of the applicant setting forth the assets,
liabilities and the net worth of the applicant. The financial
statement must be prepared according to generally accepted accounting
principles. Assets shall be shown at original cost less
depreciation. Upon a written request filed with the department, the
department or a designated employee may allow asset valuations in
accordance with a competent appraisal. Unpriced contracts shall be
shown as a liability and valued at the applicable current market
price of grain as of the date the financial statement is prepared.
4. In order to receive and retain a class 1 license the following
conditions must be satisfied:
a. The grain dealer shall have and maintain a net worth of at
least seventy-five thousand dollars, or maintain a deficiency bond or
an irrevocable letter of credit in the amount of two thousand dollars
for each one thousand dollars or fraction thereof of net worth
deficiency. However, a person shall not be licensed as a class 1
grain dealer if the person has a net worth of less than thirty-seven
thousand five hundred dollars.
b. The grain dealer shall submit, as required by the
department, a financial statement that is accompanied by an
unqualified opinion based upon an audit performed by a certified
public accountant licensed in this state. However, the department
may accept a qualification in an opinion that is unavoidable by any
audit procedure that is permitted under generally accepted accounting
principles. An opinion that is qualified because of a limited audit
procedure or because the scope of an audit is limited shall not be
accepted by the department. The department shall not require that a
grain dealer submit more than one such unqualified opinion per year.
The grain dealer, except as provided in section 203.15, may elect to
submit a financial statement that is accompanied by the report of a
certified public accountant licensed in this state that is based upon
a review performed by the certified public accountant in lieu of the
audited financial statement specified in this paragraph. However, at
any time the department may require a financial statement that is
accompanied by the report of a certified public accountant licensed
in this state that is based upon a review performed by a certified
public accountant if the department has good cause. A grain dealer
shall submit financial statements to the department in addition to
those required in this paragraph if the department determines that it
is necessary to verify the grain dealer's financial status or
compliance with this subsection.
c. A grain dealer shall submit a report to the department
according to procedures required by the department, if the grain
dealer provides a bond based in part on the number of bushels of
unpaid grain purchased by the grain dealer, as provided in rules
adopted by the department, in order to satisfy the current assets to
current liabilities ratio requirement of this section. The report
shall contain information required by the department, including the
number of bushels of unpaid grain purchased by the grain dealer. The
grain dealer shall submit the report not more than once each month.
However, the department may require that a grain dealer submit a
report on a more frequent basis, if the department has good cause.
d. The grain dealer shall have and maintain current assets
equal to at least one hundred percent of current liabilities or
provide a bond under the following conditions:
(1) A grain dealer with current assets equal to at least fifty
percent of current liabilities shall provide a bond of two thousand
dollars for each one thousand dollars or fraction of one thousand
dollars of current assets that the grain dealer is lacking to meet
the minimum requirement. After the amount of the bond equals one
million dollars, the grain dealer may elect to base the remainder of
the amount of the bond on the number of bushels of unpaid grain being
purchased by the grain dealer, as provided for by rules which shall
be adopted by the department. The remaining amount shall equal two
thousand dollars for each one thousand dollars of the highest amount
of bushels of unpaid grain purchased by the grain dealer during each
month.
(2) A grain dealer with current assets equal to less than fifty
percent of current liabilities shall provide a bond of two thousand
dollars for each one thousand dollars or fraction of one thousand
dollars of current assets that the grain dealer is lacking to meet
the minimum requirement. However, the bond shall not be used for
longer than thirty consecutive days in a twelve-month period.
5. In order to receive and retain a class 2 license the following
conditions must be satisfied:
a. The grain dealer shall have and maintain a net worth of at
least thirty-seven thousand five hundred dollars, or maintain a
deficiency bond or an irrevocable letter of credit in the amount of
two thousand dollars for each one thousand dollars or fraction
thereof of net deficiency. However, a person shall not be licensed
as a class 2 grain dealer if the person has a net worth of less than
seventeen thousand five hundred dollars.
b. The grain dealer shall submit, as required by the
department, a financial statement that is accompanied by an
unqualified opinion based upon an audit performed by a certified
public accountant licensed in this state. However, the department
may accept a qualification in an opinion that is unavoidable by any
audit procedure that is permitted under generally accepted accounting
principles. An opinion that is qualified because of a limited audit
procedure or because the scope of an audit is limited shall not be
accepted by the department. The department shall not require that a
grain dealer submit more than one such unqualified opinion per year.
The grain dealer may elect, however, to submit a financial statement
that is accompanied by the report of a certified public accountant
licensed in this state that is based upon a review performed by the
certified public accountant in lieu of the audited financial
statement specified in this paragraph. However, at any time the
department may require a financial statement that is accompanied by
the report of a certified public accountant licensed in this state
that is based upon a review performed by a certified public
accountant if the department has good cause. A grain dealer shall
submit financial statements to the department in addition to those
required in this paragraph if the department determines that it is
necessary to verify the grain dealer's financial status or compliance
with this section.
c. A grain dealer shall submit a report to the department
according to procedures required by the department, if the grain
dealer provides a bond based in part on the number of bushels of
unpaid grain purchased by the grain dealer, as provided in rules
adopted by the department, in order to satisfy the current assets to
current liabilities ratio requirement of this section. The report
shall contain information required by the department, including the
number of bushels of unpaid grain purchased by the grain dealer. The
grain dealer shall submit the report not more than once each month.
However, the department may require that a grain dealer submit a
report on a more frequent basis, if the department has good cause.
d. The grain dealer shall have and maintain current assets
equal to at least one hundred percent of current liabilities or
provide a bond under the following conditions:
(1) A grain dealer with current assets equal to at least fifty
percent of current liabilities shall provide a bond of two thousand
dollars for each one thousand dollars or fraction of one thousand
dollars of current assets that the grain dealer is lacking to meet
the minimum requirement. After the amount of the bond equals one
million dollars, the grain dealer may elect to base the remainder of
the amount of the bond on the number of bushels of unpaid grain being
purchased by the grain dealer, as provided for by rules which shall
be adopted by the department. The remaining amount shall equal two
thousand dollars for each one thousand dollars of the highest amount
of bushels of unpaid grain purchased by the grain dealer during each
month.
(2) A grain dealer with current assets equal to less than fifty
percent of current liabilities shall provide a bond of two thousand
dollars for each one thousand dollars or fraction of one thousand
dollars of current assets that the grain dealer is lacking to meet
the minimum requirement. However, the bond shall not be used for
longer than thirty consecutive days in a twelve-month period.
6. The department shall adopt rules relating to the form and time
of filing of financial statements. The department may require
additional information or verification with respect to the financial
resources of the applicant and the applicant's ability to pay
producers for grain purchased from them.
7. a. When the net worth or current ratio of a licensee in
good standing is less than that required by this section, the grain
dealer shall correct the deficiency or file a deficiency bond or an
irrevocable letter of credit within thirty days of written notice by
the department. Unless the deficiency is corrected or the deficiency
bond or irrevocable letter of credit is filed within thirty days, the
grain dealer license shall be suspended.
b. If the department finds that the welfare of grain
producers requires emergency action, and incorporates a finding to
that effect in its order, immediate suspension of a license may be
ordered notwithstanding the thirty-day period otherwise allowed by
paragraph "a".
8. A deficiency bond or irrevocable letter of credit filed with
the department pursuant to this section shall not be canceled by the
issuer on less than ninety days' notice by certified mail to the
secretary of agriculture and the principal. Section History: Early Form
[C75, 77, 79, 81, § 542.3; 81 Acts, ch 180, § 4; 82 Acts, ch 1093,
§ 1] Section History: Recent Form
83 Acts, ch 18, § 1; 83 Acts, ch 54, § 1; 83 Acts, ch 175, § 1, 2;
84 Acts, ch 1224, § 1; 85 Acts, ch 234, § 1, 2; 86 Acts, ch 1152, §
3, 4; 87 Acts, ch 147, §2, 3; 89 Acts, ch 143, §201, 202, 301, 302,
401, 402; 92 Acts, ch 1239, §56, 57
C93, § 203.3
94 Acts, ch 1086, §1--4; 2008 Acts, ch 1083, §3, 4
Referred to in § 203.2A, 203.4, 203.6, 203.8, 203.9, 203.11,
203.11B, 203.12B, 203.15, 203D.1