(215 ILCS 5/268) (from Ch. 73, par. 880)
Sec. 268.
Guarantee
fund.
(1) Any domestic company subject to the provisions of this article may
provide for a guarantee fund in the minimum sum of $10,000 and the maximum
sum of $300,000, for the purpose of its business or to enable it to comply
with any requirements of the law. Such guarantee fund and such interest
thereon as may have been agreed upon, not exceeding 7% per annum, shall not
be a liability or claim against the company or any of its assets except as
herein provided and such interest shall be paid and such principal shall be
retired only out of the earned surplus of the company. No part of such
principal shall be retired unless the earned surplus derived from contracts
permitted to be written by this Code is at least equal to the amount of
such guarantee fund retired. No promotion or commission expense of any kind
shall be paid or allowed in connection with the raising of such guarantee
fund and the amount of such guarantee fund together with interest thereon
and any portion thereof retired during the year shall be reported in each
annual statement.
(2) Nothing in this section shall be construed to mean that a company
may not borrow money; but the amount so borrowed with accrued interest
thereon shall be carried by the company as a liability.
(Source: Laws 1959, p. 1147.)
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