Surety Bond News

On 03/27/2008, the state of Virginia passed SB 545. The new law requires “newly qualified nonparticipating tobacco manufacturers” to post a bond to be listed on the Virginia Tobacco Directory. The “newly qualified nonparticipating manufacturers” are defined as those who have not been previously listed in the Virginia Tobacco Directory. The manufacturers that fall under the above mentioned category may be required to post a bond in accordance with the new law for the first five years of their listing, or longer if they have a higher risk for noncompliance. The manufacturers that are not partaking in the Master Settlement Agreement as provided under existing law have chosen to escrow funds according to the schedule provided in the law; these manufacturers are referred to as “nonparticipatingâ€?. The bond can also be required under the new law’s requirements if the Attorney General finds that nonparticipating manufacturers are a higher risk for not fulfilling financial responsibilities. When it comes to foreign nonparticipating manufacturers, the U.S. importer of the product has to post a bond; they must post a bond in the amount of $50,000. If the amount of escrow the manufacturer must deposit as a result of its prior calendar year’s sales in the state is larger than the $50,000 requirement, that amount must be posted. If the bond is required from the manufacturer, it must be payable to the Commonwealth and is conditioned on the dependable performance of the escrow requirements.