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Bulletin C-05-1

 

STATE SEAL

 

TO: ALL INDUSTRIAL LOAN AND THRIFT COMPANIES

ALL MONEY TRANSMITTER LICENSEES

ALL DEFERRED PRESENTMENT SERVICES LICENSEES

ALL CHECK CASHING LICENSEES

SUBJECT: Minimum Net Worth Requirements

DATE: July 28, 2005

The purposes of this Bulletin are (i) to clarify the minimum net worth requirements contained in the following Acts: the Tennessee Industrial Loan and Thrift Companies Act ("TILTA") (Tenn. Code Ann. §§ 45-5-101 et seq.); the Tennessee Money Transmitter Act ("TMTA") (Tenn. Code Ann. §§ 45-7-101, et seq.); the Deferred Presentment Services Act ("DPSA") (Tenn. Code Ann. §§ 45-17-101, et seq.); and the Check Cashing Act of 1997 ("CCA") (Tenn. Cod Ann. §§ 45-18-101, et seq.), and (ii) to clarify their interpretation and application by this Department.

The TILTA, at Tenn. Code Ann. § 45-5-201(a)(2)-(3), provides that an industrial loan and thrift company, if organized as a natural person or a partnership, must have a net worth of at least twenty-five thousand dollars ($25,000) for each office or place of business to be registered, or, if organized as either a foreign or domestic corporation, must have a total stated capital and surplus of at least twenty-five thousand dollars ($25,000) for each certificate of registration for which application is made. Tenn. Code Ann. § 45-5-203 requires a showing of continued compliance with the foregoing requirements in order to obtain renewal of previously obtained certificates of registration.

The TMTA, at Tenn. Cod Ann. § 45-7-205(a), provides that each applicant and licensee must demonstrate and maintain a net worth of not less than one hundred thousand dollars ($100,000) computed according to generally accepted accounting principles, and that persons transmitting or proposing to transmit money shall have an additional net worth of twenty-five thousand dollars ($25,000) per additional location or agent located in Tennessee, as applicable, to a maximum of five hundred thousand dollars ($500,000).

The DSPA, at Tenn. Code Ann. § 45-17-104(a)(1), provides that applicants and licensees must satisfy certain requirements, among which is a requirement that the applicant shall have a minimum net worth determined in accordance with generally accepted accounting principles of at least twenty-five thousand dollars ($25,000) available for the operation of each location. Pursuant to Tenn. Code Ann. § 45-17-104 (b), this requirement is continuing in nature.

The CCA, at Tenn. Code Ann. § 45-18-105(a), provides that each applicant and licensee must demonstrate and maintain a minimum net worth of at least twenty-five thousand dollars ($25,000) for each location.

In general, all the above Acts require that, with respect to any licensee operating more than one type of business at a single location, each such applicant and licensee must demonstrate the applicable minimum net worth requirements for each location for each type of business. The Department will begin enforcing these requirements effective January 1, 2006.

Any questions regarding this Bulletin may be directed to Steve Henley, Director of Licensing for the Department's Compliance Division, at 615/741-3186.

Kevin P. Lavender
Commissioner