CSLB Law & Business ExamBusiness Organization and LicensingMedium
An RME is found to own only 5% of the shares of the corporation she qualifies. Because her ownership is less than 10%, what additional bond must the corporation obtain covering her role as qualifier?
- AA $100,000 LLC bond
- BA $12,500 Bond of Qualifying Individual (BQI)
- CNo additional bond is required
- DAn additional $25,000 contractor's bond
Show answer & explanationAnswer & explanation
Correct answer: B. A $12,500 Bond of Qualifying Individual (BQI)
When a qualifying individual (RME or RMO) owns less than 10% of the licensed entity, the CSLB requires an additional Bond of Qualifying Individual (BQI) in the amount of $12,500 to protect against harm caused by that individual's actions.
Why the other options are wrong
- A. The LLC bond applies to LLC entities generally, not to low-ownership qualifiers specifically.
- C. A bond is required precisely because ownership is below the 10% threshold.
- D. A second standard bond is not the mechanism used; the BQI is a distinct, smaller bond.
Bond of Qualifying Individual (BQI)
A $12,500 bond required when an RME/RMO owns less than 10% of the licensed business, to protect against the qualifier's misconduct.
- Triggered by ownership under 10%
- Amount is $12,500
- Separate from the standard $25,000 license bond
Memory trick: 'Under ten, bond again.'