Cemeteries that are limited liability companies (LLCs) in California will need to comply with the Cemetery and Funeral Bureau’s new regulations as of July 1, 2016. The Bureau’s changes to the California Code of Regulations were passed in May and contain a surety bond provision for LLC cemeteries.
The new regulations require LLCs to submit additional information with their cemetery licensing application. The companies can submit one or a combination of the new provisions.
LLC cemeteries can maintain a surety bond of no less than $1,000,000 for up to five licensed employees, with an additional $100,000 per additional employee, not to exceed $5,000,000. Cemeteries can also choose to maintain the security in trust or bank escrow, bank certificates of deposit, U.S. Treasury obligations or bank letters of credit in the same amounts. LLC cemeteries can hold an insurance policy of no less than $1,000,000 for up to five licensed employees, with an additional $100,000 per additional employee. Insurance coverage should not exceed $5,000,000. If an LLC cemetery posts any of these forms of security, they must also submit form 23-INS, found on page 11 of the Certificate of Authority application.
LLC cemeteries also have the option of proving a net worth of at least $10,000,000 for the last fiscal year. In that case, LLCs should submit form 23-NW, found on page 13 of the application.
In addition to proof of financial security, LLC cemeteries must submit form 23-LE—page 10 of the Certificate of Authority application—for each licensed employee. All members of the LLC must fill out form 16-CA and submit the form along with their names and addresses. The LLC must also submit its Operating Agreement to the Bureau.
The new regulations also slightly modified application procedures for cemetery Certificates of Authority and crematory licenses. Applicants for a cemetery Certificate of Authority must submit some of the following information:
- Articles of incorporation, if the applicant is a corporation, or articles of organization, if an LLC
- Statement of Information filed with the Secretary of State
- Permit to sell and issue securities; if not applicable, a statement certifying that securities will not be sold or issued
- Land use or zoning permit certified by the county or city for cemetery use
- Declaration of dedication to cemetery purposes certified by the county recorder
- Deed to the property certified by the county recorder or contract of purchase
- Endowment care trust agreement executed by the board of directors or LLC members of the cemetery authority
Further required documents and information are detailed in Section 2326 of the statutes. Applicants must also map the proposed cemetery site and the surrounding area—this map is not to be submitted with the application, but maintained and provided to the Bureau on request.