Code Section Group

Financial Code - FIN

DIVISION 1.6. DEPOSITORY CORPORATIONS—SALE, MERGER, AND CONVERSION [4800 - 4966]

  ( Heading of Division 1.6 renumbered from Division 1.5 by Stats. 2011, Ch. 243, Sec. 8. )

CHAPTER 1. General Provisions [4800 - 4828.7]

  ( Chapter 1 added by Stats. 1982, Ch. 1411, Sec. 3. )

ARTICLE 3. Other General Provisions [4820 - 4828.7]
  ( Article 3 added by Stats. 1982, Ch. 1411, Sec. 3. )

4820.
  

For purposes of this division, a national banking association or federal savings association is deemed to be a corporation.

(Amended by Stats. 1995, Ch. 480, Sec. 98. Effective October 2, 1995.)

4820.5.
  

For purposes of this division, depository corporations are divided into the following classes:

(a) Banks.

(b) Savings associations.

(c) Industrial loan companies.

(Added by Stats. 1995, Ch. 480, Sec. 99. Effective October 2, 1995.)

4821.
  

The provisions of the General Corporation Law (Division 1 (commencing with Section 100) of Title 1 of the Corporations Code) shall apply to any transaction which is subject to this division. However, whenever any provision of this division or of any regulation or order issued under this division is inconsistent with any provision of the General Corporation Law, the provision of this division or of the regulation or order shall apply and the provision of the General Corporation Law shall not apply.

(Added by Stats. 1982, Ch. 1411, Sec. 3.)

4821.5.
  

Any certificate of authority, license, or other authorization issued under subdivision (b) of Section 4858, subdivision (b) of Section 4879.12, subdivision (b) of Section 4888, subdivision (b) of Section 4928, or Section 4948 or 4949 is deemed to have been issued under the provisions of Division 1.1 (commencing with Section 1000) or Division 2 (commencing with Section 5000) that would otherwise apply to the issuance of the certificate of authority, license, or other authorization.

(Amended by Stats. 2013, Ch. 334, Sec. 50. Effective January 1, 2014.)

4822.
  

(a) References in this division to the voting of the shares of a California state depository corporation shall be construed in accordance with Section 111 of the Corporations Code.

(b) If the articles of a California state depository corporation provide for more or less than one vote for any share on any matter that is subject to this division, the references in Sections 139 and 141 (which are made applicable to this division by Section 4805.01) to a majority or other proportion of shares mean, as to the matter, a majority or other proportion of the votes entitled to be cast.

(c) Whenever shares of a California state depository corporation are disqualified under any applicable law from voting on any matter that is subject to this division, the shares shall not be considered outstanding for the determination of a quorum at any meeting to act upon, or the required vote to approve action upon, the matter.

(Amended by Stats. 2013, Ch. 334, Sec. 51. Effective January 1, 2014.)

4823.
  

References in this division to shareholders’ equity mean shareholders’ equity determined in accordance with generally accepted accounting principles, subject (a) in the case of California state banks or California industrial loan companies, to the provisions of Section 463, and (b) in the case of California state savings associations, to the provisions of Division 2 (commencing with Section 5000).

(Amended by Stats. 2013, Ch. 334, Sec. 52. Effective January 1, 2014.)

4824.
  

In determining for purposes of this division whether the shareholders’ equity of a California state depository corporation will be adequate:

(a) In case the corporation is, or is to convert into, a California state bank, the commissioner shall consider the factors specified in Section 1150.

(b) In case the corporation is, or is to convert into, a California state savings association or a California industrial loan company, the commissioner shall consider factors equivalent to those specified in Section 1150.

(Amended by Stats. 2013, Ch. 334, Sec. 53. Effective January 1, 2014.)

4825.
  

A California state depository corporation may merge with a corporation or other business entity that is not a depository corporation if the California state depository corporation is the surviving corporation of that merger. The merger of a corporation or other business entity with and into a California state depository corporation shall be effected in accordance with Division 1 (commencing with Section 100) of the Corporations Code.

(Repealed and added by Stats. 2008, Ch. 501, Sec. 22. Effective January 1, 2009.)

4826.
  

Notwithstanding any other provision of law, no savings association or industrial loan company may convert into a bank if the ownership of the savings association or industrial loan company is such that the establishment or acquisition of control of a new state bank or national banking association by the same ownership would not be permitted by Section 3(d) of the Bank Holding Company Act of 1956 (12 U.S.C. Sec. 1842 (d)).

(Amended by Stats. 1995, Ch. 480, Sec. 106. Effective October 2, 1995.)

4826.5.
  

Notwithstanding any other provision of this division:

(a) The provisions of Chapter 19 (commencing with Section 1670) of Division 1.1 apply to any transaction that is subject to this division. Whenever any provision of Chapter 19 (commencing with Section 1670) of Division 1.1 or of any regulation or order issued under Chapter 19 (commencing with Section 1670) of Division 1.1 is inconsistent with any provision of this division or of any regulation or order issued under this division, the provision of Chapter 19 (commencing with Section 1670) of Division 1.1 or of the regulation or order issued under Chapter 19 (commencing with Section 1670) of Division 1.1 applies, and the provision or this division or of the regulation or order issued under this division does not apply.

(b) Nothing in this division authorizes any sale or merger in a case where the purchasing or surviving depository corporation is a foreign depository corporation if the sale or merger is prohibited by Chapter 19 (commencing with Section 1670) of Division 1.1.

(c) Nothing in this division constitutes an election by this state under federal law to prohibit or permit interstate sales or mergers between banks or industrial loan companies.

(Amended by Stats. 2013, Ch. 334, Sec. 54. Effective January 1, 2014.)

4827.
  

Except as expressly provided otherwise in this division:

(a) (1) No sale of a whole business unit (as defined in Section 4840) or merger in which the selling or disappearing depository corporation is a California state savings association, in which the purchasing or surviving depository corporation is a California state bank, a California industrial loan company, or a California state-licensed foreign (other nation) bank, and which may be effected with the approval of the commissioner pursuant to this division is prohibited or restricted by any provision of Division 2 (commencing with Section 5000) or requires any approval, consent, or other authorization of the commissioner pursuant to Division 2 (commencing with Section 5000).

(2) No conversion in which the converting depository corporation is a California state savings association in which the resulting depository corporation is a California state bank or a California industrial loan company, and which may be effected with the approval of the commissioner pursuant to this division is prohibited or restricted by any provision of Division 2 (commencing with Section 5000) or requires any approval, consent, or other authorization of the commissioner pursuant to Division 2 (commencing with Section 5000).

(b) (1) No sale of a whole business unit (as defined in Section 4840) or merger in which the selling or disappearing depository corporation is a California state bank, a California state-licensed foreign (other nation) bank, or a California industrial loan company, in which the purchasing or surviving depository corporation is a California state savings association, and which may be effected with the approval of the commissioner pursuant to this division is prohibited or restricted by any provision of Division 1.1 (commencing with Section 1000), except the provisions of Chapter 19 (commencing with Section 1670) of Division 1.1, or requires any approval, consent, or other authorization of the commissioner pursuant to Division 1.1 (commencing with Section 1000), except as may be required under the provisions of Chapter 19 (commencing with Section 1670) of Division 1.1.

(2) No conversion in which the converting depository corporation is a California state bank or a California industrial loan company, in which the resulting depository corporation is a California state savings association, and which may be effected with the approval of the commissioner pursuant to this division is prohibited or restricted by any provision of Division 1.1 (commencing with Section 1000), except the provisions of Chapter 19 (commencing with Section 1670) of Division 1.1, or requires any approval, consent, or other authorization of the commissioner pursuant to Division 1.1 (commencing with Section 1000), except as may be required under the provisions of Chapter 19 (commencing with Section 1670) of Division 1.1.

(Amended by Stats. 2013, Ch. 334, Sec. 55. Effective January 1, 2014.)

4827.3.
  

Except as otherwise provided in paragraph (2) of subdivision (a) of Section 4827.7 in the case of a California state-licensed foreign (other nation) bank or in federal law in the case of a federally licensed foreign (other nation) bank, nothing in this division except subdivision (c) of Section 4879.02 authorizes any sale or merger in a case where the purchasing or surviving corporation is a foreign (other nation) bank unless the foreign (other nation) bank is at the effective time of the sale or merger licensed under Article 3 (commencing with Section 1800) of Chapter 20 of Division 1.1 or authorized under federal law to transact in this state the business to be acquired in the sale or merger.

(Amended by Stats. 2013, Ch. 334, Sec. 56. Effective January 1, 2014.)

4827.7.
  

(a) (1) Except as otherwise provided in paragraph (2):

(A) No California state depository corporation may, as the selling or disappearing depository corporation, make a sale or merger pursuant to this division in which it would transfer to a California state-licensed or federally licensed foreign (other nation) bank any deposit or fiduciary account that the foreign bank is not authorized to accept.

(B) No California state-licensed foreign (other nation) bank may, as the purchasing or surviving depository corporation, make a sale or merger pursuant to this division in which it would acquire any deposit or fiduciary account that it is not authorized to accept.

(2) Notwithstanding paragraph (1) and Section 1805, a California state depository corporation may, as the selling or disappearing depository corporation, make a sale or merger pursuant to this division in which it transfers to a California state-licensed or federally licensed foreign (other nation) bank deposits or fiduciary accounts that the foreign bank is not authorized to accept, and a California state-licensed foreign (other nation) bank may, as the purchasing or surviving depository corporation, make a sale or merger pursuant to this division in which it acquires deposits or fiduciary accounts that it is not authorized to accept, if, concurrently with the effective time of the sale or merger, the foreign bank, pursuant to Article 5 (commencing with Section 4879.01) of Chapter 3 or other applicable law, sells all those deposits and fiduciary accounts to a depository corporation that is authorized to accept them.

(b) (1) Except as otherwise provided in paragraph (2):

(A) No California state bank or industrial loan company may, as the selling, disappearing, or converting depository corporation, make a sale, merger, or conversion pursuant to this division in which it would transfer to a savings association any deposit or fiduciary account that the savings association is not authorized to accept.

(B) No California state savings association may, as the purchasing, surviving, or resulting depository corporation, make a sale, merger, or conversion pursuant to this division in which it would acquire any deposit or fiduciary account that it is not authorized to accept.

(2) Notwithstanding paragraph (1) and Division 2 (commencing with Section 5000), a California state bank or industrial loan company may, as the selling, disappearing, or converting depository corporation, make a sale, merger, or conversion pursuant to this division in which it transfers to a savings association deposits or fiduciary accounts that the savings association is not authorized to accept, and a California state savings association may, as the purchasing, surviving, or resulting depository corporation, make a sale, merger, or conversion pursuant to this division in which it acquires deposits or fiduciary accounts that it is not authorized to accept, if, concurrently with the effective time of the sale, merger, or conversion, the savings association, pursuant to Article 5 (commencing with Section 4879.01) of Chapter 3 or other applicable law, sells all those deposits and fiduciary accounts to a depository corporation that is authorized to accept them.

(c) (1) Except as otherwise provided in paragraph (2):

(A) No California state bank or savings association may, as the selling, disappearing, or converting depository corporation, make a sale, merger, or conversion pursuant to this division in which it would transfer to an industrial loan company any deposit or fiduciary account that the industrial loan company is not authorized to accept.

(B) No California industrial loan company may, as the purchasing, surviving, or resulting depository corporation, make a sale, merger, or conversion pursuant to this division in which it would acquire any deposit or fiduciary account that it is not authorized to accept.

(2) Notwithstanding paragraph (1) and Division 1.1 (commencing with Section 1000), a California state bank or savings and loan association may, as the selling, disappearing, or converting depository corporation, make a sale, merger, or conversion pursuant to this division in which it transfers to an industrial loan company deposits or fiduciary accounts that the industrial loan company is not authorized to accept, and a California industrial loan company may, as the purchasing, surviving, or resulting depository corporation, make a sale, merger, or conversion pursuant to this division in which it acquires deposits or fiduciary accounts that it is not authorized to accept, if, concurrently with the effective time of the sale, merger, or conversion, the industrial loan company, pursuant to Article 5 (commencing with Section 4879.01) of Chapter 3 or other applicable law, sells all those deposit accounts and fiduciary accounts to a depository corporation that is authorized to accept them.

(Amended by Stats. 2013, Ch. 334, Sec. 57. Effective January 1, 2014.)

4828.
  

Subject to the provisions of Sections 4827.3 and 4827.7 but notwithstanding any other provision of law:

(a) (1) If, as a result of any sale, merger, or conversion effected pursuant to the provisions of this division, a California state bank acquires any asset or liability, or becomes engaged in any activity, which was permitted to the selling, disappearing, or converting depository corporation but which is prohibited to California state banks, the commissioner may permit the California state bank a reasonable period of time, not to exceed 12 months, within which to divest itself of the asset, liability, or activity or to conform it to law. On a case-by-case basis, the commissioner may permit the California state bank a reasonable period of time in excess of 12 months if the commissioner finds that the bank cannot reasonably accomplish the divestment or conformity within the 12-month period.

(2) If, as a result of any sale or merger effected pursuant to the provisions of this division, a California state-licensed foreign (other nation) bank acquires any asset or liability, or becomes engaged in any activity, which was permitted to the selling or disappearing depository corporation but which is prohibited to California state-licensed foreign (other nation) banks, the commissioner may permit the California state-licensed foreign (other nation) bank a reasonable period of time, not to exceed 12 months, within which to divest itself of the asset, liability, or activity or to conform it to law. On a case-by-case basis, the commissioner may permit the California state-licensed foreign (other nation) bank a reasonable period of time in excess of 12 months if the commissioner finds that the bank cannot reasonably accomplish the divestment or conformity within the 12-month period.

(b) If, as a result of a sale, merger, or conversion effected pursuant to the provisions of this division, a California state savings association acquires any asset or liability, or becomes engaged in any activity, which was permitted to the selling, disappearing, or converting depository corporation but which is prohibited to California state savings associations, the commissioner may permit the California state savings association a reasonable period of time, not to exceed 12 months, within which to divest itself of the asset, liability, or activity or to conform it to law. On a case-by-case basis, the commissioner may permit the California state savings association a reasonable period of time in excess of 12 months if the commissioner finds that the savings association cannot reasonably accomplish the divestment or conformity within the 12-month period.

(c) If, as a result of a sale, merger, or conversion effected pursuant to the provisions of this division, a California industrial loan company acquires any asset or liability, or becomes engaged in any activity, which was permitted to the selling, disappearing, or converting depository corporation but which is prohibited to California industrial loan companies, the commissioner may permit the California industrial loan company a reasonable period of time, not to exceed 12 months, within which to divest itself of the asset, liability, or activity or to conform it to law. On a case-by-case basis, the commissioner may permit the California industrial loan company a reasonable period of time in excess of 12 months if the commissioner finds that the industrial loan company cannot reasonably accomplish the divestment or conformity within the 12-month period.

(Amended by Stats. 1996, Ch. 1064, Sec. 475.1. Effective January 1, 1997. Operative July 1, 1997.)

4828.3.
  

A California state bank or an industrial loan company may, with the approval of the commissioner and its board and, if the transaction constitutes a reorganization as defined in Section 181 of the Corporations Code, subject to the provisions of Chapter 12 (commencing with Section 1200) of Division 1 of Title 1 of the Corporations Code, acquire in a single transaction all (except directors’ qualifying shares, if any) of the outstanding shares of another depository corporation in accordance with a plan that provides either of the following:

(a) That the other depository corporation shall (1) immediately sell its whole business unit (as defined in Section 4840) to the California state bank or industrial loan company and (2) shall thereafter wind up and dissolve or, if the other depository corporation is a California state bank or an industrial loan company and if the commissioner so approves, change into a nonbank corporation by amending its articles and changing its name.

(b) That the other depository corporation shall immediately merge into the California state bank or industrial loan company.

(Amended by Stats. 1998, Ch. 827, Sec. 1. Effective January 1, 1999.)

4828.7.
  

(a) The definitions in Section 4840 apply to this section.

(b) In case a California state-licensed foreign (other nation) bank sells all or substantially all of its business in this state to another California state-licensed or federally licensed foreign (other nation) bank as part of the sale of a larger partial business unit or the whole business unit of the seller:

(1) No provision of Chapter 3 (commencing with Section 4840) applies except as follows:

(A) If the sale is of a partial business unit of the seller, Section 4879.14 applies with respect to the part of the seller’s business in this state that is sold as if the sale were a sale of the type defined in Section 4879.01.

(B) If the sale is of the whole business unit of the seller, Section 4859 applies with respect to the seller’s business in this state as if the sale were a sale of the type defined in Section 4845.

(2) Promptly after the sale becomes effective, the seller shall:

(A) Surrender to the commissioner for cancellation the licenses issued to it by the commissioner for its business in this state.

(B) File with the commissioner any report regarding the sale that the commissioner may require.

(c) In case a California state-licensed foreign (other nation) bank merges into another California state-licensed or federally licensed foreign (other nation) bank:

(1) No provision of Chapter 4 (commencing with Section 4880) applies except that the merger has the same effect with respect to the disappearing bank’s business in this state as provided in Section 1107 of the Corporations Code and Section 4889 in the case of a merger of the type defined in Section 4880.

(2) Promptly after the merger becomes effective, the surviving bank shall:

(A) Surrender to the commissioner for cancellation the licenses issued to the disappearing bank by the commissioner for its business in this state.

(B) File with the commissioner any report regarding the merger that the commissioner may require.

(Amended by Stats. 1996, Ch. 1064, Sec. 477.1. Effective January 1, 1997. Operative July 1, 1997.)

FINFinancial Code - FIN3.