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 3. Sale [4840 - 4879.17]

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

ARTICLE 2. Sale of Whole Business Unit to California State Depository Corporation or California State-Licensed Foreign (Other Nation) Bank [4845 - 4862]
  ( Heading of Article 2 amended by Stats. 1995, Ch. 480, Sec. 128. )

4845.
  

In this article, unless the context otherwise requires, “sale” means any of the sales described in Section 4846.

(Amended by Stats. 1996, Ch. 1064, Sec. 487. Effective January 1, 1997. Operative July 1, 1997.)

4846.
  

With the approval of the commissioner:

(a) A bank may sell its whole business unit to a California state bank or a California state-licensed foreign (other nation) bank pursuant to (1) this article, (2) in case the seller is a national banking association or a California federally licensed foreign (other nation) bank, federal law, and (3) in case the seller or purchaser is a foreign bank, the law of the foreign bank’s domicile.

(b) An industrial loan company may sell its whole business unit to a California industrial loan company pursuant to (1) this article and (2) in case the seller is a foreign (other state) industrial loan company, the law of the foreign industrial loan company’s domicile.

(c) A depository corporation of any class may sell its whole business unit to a California state depository corporation of another class or a California state-licensed foreign (other nation) bank pursuant to (1) this article, (2) in case the seller is a federal depository corporation or a California federally licensed foreign (other nation) bank, federal law, (3) in case the seller is a foreign depository corporation, the law of the foreign depository corporation’s domicile, and (4) in case the purchaser is a California state-licensed foreign (other nation) bank, the law of the foreign bank’s domicile.

(Amended by Stats. 1996, Ch. 1064, Sec. 488. Effective January 1, 1997. Operative July 1, 1997.)

4847.
  

A seller and purchaser shall make an agreement of sale, providing:

(a) That the seller shall sell to the purchaser, and the purchaser shall purchase from the seller, the seller’s whole business unit.

(b) That the purchaser will assume and be subject to all the debts and liabilities of the seller in the same manner as if the purchaser had itself incurred them.

(c) Other provisions as may be appropriate.

(Amended by Stats. 1995, Ch. 480, Sec. 132. Effective October 2, 1995.)

4848.
  

The agreement of sale shall be approved by the seller and purchaser, as follows:

(a) In the case of a California state depository corporation:

(1) If the sale constitutes a reorganization, as defined in Section 181 of the Corporations Code, the agreement of sale shall be approved as required by Chapter 12 (commencing with Section 1200) of Division 1 of Title 1 of the Corporations Code.

(2) If the sale does not constitute a reorganization, as defined in Section 181 of the Corporations Code, and if the California state depository corporation is the seller, the agreement of sale shall be approved by the board of the seller, and the principal terms of the agreement of sale shall be approved by the outstanding shares of the seller.

(3) If the sale does not constitute a reorganization, as defined in Section 181 of the Corporations Code, and if the California state depository corporation is the purchaser:

(A) If, as of the time when the agreement of sale is made, the deposits, if any, of the business unit are less than 10 percent of the total deposits of the purchaser and the fiduciary assets, if any, of the business unit are less than 10 percent of the total fiduciary assets of the purchaser, the agreement of sale shall be approved by the board of the purchaser.

(B) Otherwise, the agreement of sale shall be approved by the board of the purchaser, and the principal terms of the agreement of sale shall be approved by the outstanding shares of the purchaser.

(4) For purposes of paragraph (3):

(A) The amount of deposits shall be determined as of the end of the calendar quarter immediately preceding the making of the agreement of sale.

(B) The value of fiduciary assets shall be the net carrying value, as determined in conformity with generally accepted accounting principles, as of the end of the calendar quarter immediately preceding the making of the agreement of sale.

(b) In the case of a depository corporation other than a California state depository corporation, the agreement of sale shall be approved as required by the law of the depository corporation’s domicile.

(Amended by Stats. 1995, Ch. 480, Sec. 133. Effective October 2, 1995.)

4849.
  

(a) Any amendment to an agreement of sale shall be approved by the seller and purchaser, as follows:

(1) In the case of a California state depository corporation, by the board of the corporation, and, if the principal terms of the agreement of sale were required to be approved by the outstanding shares of the corporation under Section 4848 and if the amendment changes any of the principal terms of the agreement of sale, by the outstanding shares of the corporation.

(2) In the case of a depository corporation other than a California state depository corporation, as required by the law of the depository corporation’s domicile.

(b) If an agreement of sale is amended and if the amendment is approved as required by subdivision (a), the agreement of sale, as thus amended, constitutes the agreement of sale.

(Amended by Stats. 1996, Ch. 887, Sec. 27. Effective September 25, 1996.)

4850.
  

In the case of a seller or purchaser which is a California state depository corporation, any approval of the outstanding shares of the corporation required by Section 4848 or 4849 may be given before or after the approval of the board of the corporation.

(Amended by Stats. 1995, Ch. 480, Sec. 135. Effective October 2, 1995.)

4851.
  

In obtaining any approval of outstanding shares required for an agreement of sale, in case the purchaser is a California state depository corporation, the purchaser, and, in case the seller is a California state depository corporation or in case the purchaser is a California state depository corporation that is to issue securities in consideration of the sale, the seller, shall each provide to its shareholders information as the commissioner may require. In determining the information to be required, the commissioner shall give due consideration to regulations relating to proxy statements issued under Section 14 of the Securities Exchange Act of 1934 (15 U.S.C. Sec. 78n) by (a) the Securities and Exchange Commission, (b) in the case of a depository corporation that is a bank, the federal bank regulatory agencies, and (c) in the case of a depository corporation that is a savings association, the Office of Thrift Supervision.

(Amended by Stats. 1996, Ch. 1064, Sec. 489. Effective January 1, 1997. Operative July 1, 1997.)

4852.
  

A purchaser or seller that is a California state depository corporation, with the approval of its board and without further approval of the outstanding shares, may, and any other purchaser or seller, with approval as may be required under the law of its domicile, may, abandon the sale at any time before the sale becomes effective, subject to the contractual rights, if any, of other parties, including the seller or purchaser, as the case may be.

(Amended by Stats. 1995, Ch. 480, Sec. 137. Effective October 2, 1995.)

4853.
  

In case a purchaser is a California state depository corporation, the provisions of Chapter 13 (commencing with Section 1300) of Division 1 of Title 1 of the Corporations Code do not apply to the shareholders of the purchaser in a sale.

(Amended by Stats. 1995, Ch. 480, Sec. 138. Effective October 2, 1995.)

4854.
  

A purchaser shall file the following with the commissioner:

(a) A copy of the agreement of sale.

(b) An officers’ certificate of the purchaser, certifying that the agreement of sale has been approved by the purchaser as required by Sections 4848 and 4849.

(c) An officers’ certificate of the seller, certifying that the agreement of sale has been approved by the seller as required by Sections 4848 and 4849.

(d) An application for approval of the sale.

(Amended by Stats. 1996, Ch. 1064, Sec. 490. Effective January 1, 1997. Operative July 1, 1997.)

4855.
  

If the commissioner finds all of the following with respect to an application for approval of a sale, the commissioner shall approve the application:

(a) That the sale will not result in a monopoly and will not be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize the banking, savings association, or industrial loan business in any part of this state.

(b) That the sale will not have the effect in any section of this state of substantially lessening competition, tending to create a monopoly, or otherwise being in restraint of trade, or that the anticompetitive effect is clearly outweighed in the public interest by the probable effect of the sale in meeting the convenience and needs of the community to be served.

(c) That the shareholders’ equity of the purchaser will be adequate and that the financial condition of the purchaser will be satisfactory.

(d) That the directors and executive officers of the purchaser will be satisfactory.

(e) That the purchaser will afford reasonable promise of successful operation and that it is reasonable to believe that the purchaser will be operated in a safe and sound manner and in compliance with all applicable laws.

(f) That the sale will be fair, just, and equitable. For purposes of this subdivision, in the case of any term of the sale that has been determined by agreement between the seller and the purchaser in an arm’s length transaction, the commissioner shall find that the term is fair, just, and equitable to the seller and the purchaser.

(g) In the case of a sale where the seller is a California savings association, that the sale will not have a seriously adverse effect on the total availability of financing for housing in the market area of the seller in this state or that any effect of that type is clearly outweighed in the public interest by the probable effect of the sale in meeting the convenience and needs of the community to be served. Nothing in this subdivision authorizes the commissioner to require the purchaser to make financing for housing available.

If the commissioner finds otherwise, the commissioner shall deny the application for approval of the sale.

(Amended by Stats. 1996, Ch. 1064, Sec. 491. Effective January 1, 1997. Operative July 1, 1997.)

4857.
  

After an application for approval of a sale has been approved and all conditions precedent to the sale have been fulfilled, the commissioner shall approve the agreement of sale and endorse the approval on the original or a copy of the agreement of sale, and at that time the sale shall become effective for all purposes.

(Amended by Stats. 1996, Ch. 1064, Sec. 493.1. Effective January 1, 1997. Operative July 1, 1997.)

4858.
  

When a sale becomes effective:

(a) Unless the purchaser provided otherwise in the application for approval of the sale or unless the commissioner provided otherwise in the approval of the application:

(1) The purchaser may establish and maintain a branch office at the head office of the seller and establish and maintain equivalent offices at the branch offices, places of business, extensions of offices, and other facilities, if any, of the seller.

(2) If the seller was authorized to transact and was transacting trust business, the purchaser, if it is a California state bank or savings association, may transact trust business.

(b) The commissioner shall issue to the purchaser certificates of authority, licenses, and other authorizations as may be necessary to carry out the provisions of subdivision (a).

(Amended by Stats. 1996, Ch. 1064, Sec. 494. Effective January 1, 1997. Operative July 1, 1997.)

4859.
  

When a sale becomes effective:

(a) The purchaser shall succeed, without other transfer, to all the rights and property of the seller except any rights and property of the seller which are specifically not sold to the purchasing corporation under the agreement of sale.

(b) The purchaser shall assume and be subject to all the debts and liabilities of the seller in the same manner as if the purchaser had itself incurred them.

(c) All rights of creditors of the seller and all liens upon the property of the seller shall be preserved unimpaired, provided that such liens upon the property of the seller shall be limited to the property affected thereby immediately prior to the time when the sale becomes effective.

(d) Any action or proceeding pending by or against the seller may be prosecuted to judgment, which shall bind the purchaser, or the purchaser may be proceeded against or substituted in place of the seller.

(e) Any reference to the seller in any writing, whether executed or taking effect before or after the sale, shall be deemed a reference to the purchaser, if not inconsistent with the other provisions of the writing.

(f) In case the seller was transacting trust business, the purchaser shall succeed, without further transfer, to the rights, obligations, properties, assets, investments, deposits, demands, agreements, and trusts of the seller under all trusts, executorships, administrations, guardianships, agencies, and all other fiduciary or representative capacities to the same extent as if the purchaser had originally assumed the fiduciary or representative capacities, and the purchaser shall be entitled to take and execute the appointment to all executorships, trusteeships, guardianships, and other fiduciary or representative capacities to which the seller is or may be named in wills, whenever probated, or to which the seller is or may be named or appointed by any other instrument.

(Amended by Stats. 1995, Ch. 480, Sec. 142. Effective October 2, 1995.)

4860.
  

No action on account of any debt or liability assumed by a purchaser in a sale may be commenced against the seller more than one year after the time when the sale becomes effective.

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

4861.
  

Promptly after a sale becomes effective:

(a) The seller shall:

(1) Surrender to the commissioner for cancellation the certificates of authority or licenses issued to it by the commissioner.

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

(b) In case the seller is a California state depository corporation, the seller shall wind up and dissolve. However, if the seller is a California state bank, the seller may, in the alternative and with the approval of the commissioner, change into a nonbank corporation by amending its articles and changing its name.

(Amended by Stats. 1996, Ch. 1064, Sec. 495. Effective January 1, 1997. Operative July 1, 1997.)

4862.
  

(a) After a sale becomes effective, the commissioner shall issue, upon application, a certificate under his or her official seal, stating that the seller sold its whole business unit to the purchaser and specifying the time at which the sale became effective.

(b) Any certificate pursuant to subdivision (a) shall be prima facie evidence of the fact of the sale and of the regularity of the proceedings taken for the sale and shall be conclusive evidence of the matters in favor of any innocent purchaser or encumbrancer for value.

(Amended by Stats. 1996, Ch. 1064, Sec. 496. Effective January 1, 1997. Operative July 1, 1997.)

FINFinancial Code - FIN2.