§ 17-25-304. Financial statement — Surety bond. [Effective July 1, 2020.]

(a)

1. (1) All persons and entities required by this chapter to be licensed by the Contractors Licensing Board shall transmit to the board with their original and renewal applications a financial statement of the applicant reviewed by a licensed certified public accountant or licensed public accountant in accordance with the American Institute of Certified Public Accountants Statements on Standards for Accounting and Review Services.

2. (2) However, if the total cost of the work to be completed by the applicant, including without limitation labor and materials, is less than seven hundred fifty thousand dollars ($750,000) for a single project, the applicant shall transmit to the board with his or her original and renewal applications a compiled financial statement of the applicant prepared by a licensed certified public accountant or licensed public accountant in accordance with the American Institute of Certified Public Accountants Statements on Standards for Accounting and Review Services.

(b)

1. (1) The financial statement shall not be made public information and shall not be made available for inspection by any person, except pursuant to an order of a court of competent jurisdiction.

2. (2) After the contractor is licensed, the board has the option of:

   1. (A) Destroying the financial statement by the process of shredding; or

   2. (B) Returning the financial statement to the contractor.

(c)

1. (1) In lieu of providing a financial statement for a person or entity required to be licensed or registered by the board as required by subsections (a) and (b) of this section, an applicant may provide a surety bond from:

   1. (A) A surety authorized to transact surety business in the State of Arkansas; and

   2. (B) A surety listed on the current United States Department of the Treasury’s List of Approved Sureties.

2. (2) The surety bond shall be in an amount ten (10) times the required net worth for the applicant’s license or registration classification with his or her initial or renewal application.

3. (3) The surety bond provided under this subsection shall:

   1. (A) Be continuous in form;

   2. (B)

      1. (i) Be maintained in effect for as long as the applicant maintains the license or registration issued by the board.

      2. (ii) If an applicant submits a financial statement acceptable to the board, the surety bond may be canceled;

   3. (C)

      1. (i) List the State of Arkansas as obligee for the bond.

      2. (ii) The state shall have priority over all other claims to recover against the bond;

   4. (D) Be for the benefit of any person who is damaged by:

      1. (i) An act or omission of the applicant constituting a breach of a construction contract or a contract for the furnishing of labor, materials, or professional services for construction undertaken by the applicant; or

      2. (ii) An unlawful act or omission of the applicant in performing the services of a contractor as defined under § 17-25-101; and

   5. (E) Be in addition to, and not in lieu of, any other surety bond required of the applicant by law or rule, or by any party to a contract with the applicant.

4. (4)

   1. (A) The surety bond provided in this subsection may only be canceled by notification to the board by the surety and the applicant sixty (60) days before cancellation.

   2. (B) When the surety bond is canceled, the licensee or registrant shall provide a replacement bond or submit a financial statement as required by this section before the effective date of the cancellation or the license or registration of the licensee or registrant shall be suspended.

5. (5) The board may adopt rules necessary to enforce this subsection.