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 5. Other Sales of Partial Business Units [4879.01 - 4879.17]
  ( Article 5 added by Stats. 1995, Ch. 480, Sec. 155. )

4879.01.
  

In this article, unless the context otherwise requires, “sale” means any of the sales described in Section 4879.02.

(Amended by Stats. 1996, Ch. 1064, Sec. 500. Effective January 1, 1997. Operative July 1, 1997.)

4879.02.
  

With the approval of the commissioner:

(a) A bank may sell a partial business unit to a California state 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, (3) in case the seller is a foreign bank, the law of the foreign bank’s domicile, and (4) in case the partial business unit is located outside this state, the law of the place where the partial business unit is located.

(b) A California state bank may sell a partial business unit to another California state bank, a national banking association, or an insured foreign (other state) state bank, pursuant to (1) this article, (2) in case the purchaser is a national banking association, federal law, (3) in case the purchaser is an insured foreign (other state) state bank, the law of the foreign bank’s domicile, and (4) in case the partial business unit is located outside this state, the law of the place where the partial business unit is located. However, this subdivision does not apply to any sale of the type defined in Section 4877.01.

(c) A California state bank may sell a partial business unit located outside this state to a foreign (other nation) bank pursuant to (1) this article, (2) the law of the foreign bank’s domicile, and (3) the law of the place where the partial business unit is located.

(d) An industrial loan company may sell a partial business unit to a California industrial loan company pursuant to (1) this article, (2) in case the seller is a foreign (other state) industrial loan company, the law of the foreign industrial loan company’s domicile, and (3) in case the partial business unit is located outside this state, the law of the place where the partial business unit is located.

(e) A California industrial loan company may sell a partial business unit to an insured industrial loan company pursuant to (1) this article, (2) in case the purchaser is an insured foreign (other state) industrial loan company, the law of the foreign industrial loan company’s domicile, and (3) in case the partial business unit is located outside this state, the law of the place where the partial business unit is located. However, this subdivision does not apply to any sale of the type defined in Section 4877.01.

(f) A depository corporation of any class may sell a partial business unit to a California state depository corporation of another class pursuant to (1) this article, (2) in case the seller is a federal depository corporation, federal law, (3) in case the seller is a foreign (other state) state depository corporation or foreign (other nation) depository corporation, the law of the foreign depository corporation’s domicile, and (4) in case the partial business unit is located outside this state, the law of the place where the partial business unit is located.

(g) A California state depository corporation of any class may sell a partial business unit to a federal depository corporation of another class or an insured foreign (other state) state depository corporation of another class pursuant to (1) this article, (2) in case the purchaser is a federal depository corporation, federal law, (3) in case the purchaser is an insured foreign (other state) state depository corporation, the law of the foreign depository corporation’s domicile, and (4) in case the partial business unit is located outside this state, the law of the place where the partial business unit is located. However, this subdivision does not apply to any sale of the type defined in Section 4877.01.

(h) A depository corporation may sell a partial business unit located in this state to 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) the law of the purchaser’s domicile.

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

(j) A California state depository corporation may sell a partial business unit located in this state to a California federally licensed foreign (other nation) bank pursuant to (1) this article, (2) federal law, and (3) the law of the purchaser’s domicile.

(k) A California federally licensed foreign (other nation) bank may sell a partial business unit located in this state to a California state depository corporation pursuant to (1) this article, (2) federal law, and (3) the law of the seller’s domicile.

(Amended by Stats. 1996, Ch. 1064, Sec. 501. Effective January 1, 1997. Operative July 1, 1997.)

4879.03.
  

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, a partial business unit, describing it.

(b) Other provisions as may be appropriate.

(Added by Stats. 1995, Ch. 480, Sec. 155. Effective October 2, 1995.)

4879.04.
  

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, as of the time when the agreement of sale is made, the deposits, if any, of the partial business unit are less than 10 percent of the total deposits of the state depository corporation and the fiduciary assets, if any, of the partial business unit are less than 10 percent of the total fiduciary assets of the state depository corporation, the agreement of sale shall be approved by the board of the state depository corporation.

(2) Otherwise, the agreement of sale shall be approved by the board of the state depository corporation, and the principal terms of the agreement of sale shall be approved by the outstanding shares of the state depository corporation.

(3) For purposes of paragraphs (1) and (2):

(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.

(Added by Stats. 1995, Ch. 480, Sec. 155. Effective October 2, 1995.)

4879.05.
  

(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 4879.04 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.

(Added by Stats. 1995, Ch. 480, Sec. 155. Effective October 2, 1995.)

4879.06.
  

In the case of a seller or purchaser that is a California state depository corporation, any approval of the outstanding shares of the corporation required by Section 4879.04 or 4879.05 may be given before or after the approval of the board of the depository corporation.

(Added by Stats. 1995, Ch. 480, Sec. 155. Effective October 2, 1995.)

4879.07.
  

In obtaining any approval of outstanding shares required for an agreement of sale, a purchaser or seller that is a California state depository corporation and, in any case where 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. 502. Effective January 1, 1997. Operative July 1, 1997.)

4879.08.
  

A purchaser or seller that is a California state depository corporation, with the approval or 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, in its discretion, 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.

(Added by Stats. 1995, Ch. 480, Sec. 155. Effective October 2, 1995.)

4879.09.
  

A purchaser or seller that is a California state depository corporation or California state-licensed foreign (other nation) bank, 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 4879.04 and 4879.05.

(c) An officers’ certificate of the seller, certifying that the agreement of sale has been approved by the seller as required by Sections 4879.04 and 4879.05.

(d) An application for approval of the sale.

(Amended by Stats. 1996, Ch. 1064, Sec. 503. Effective January 1, 1997. Operative July 1, 1997.)

4879.10.
  

(a) In case the purchaser is either, and the seller is not either, a California state depository corporation or California state-licensed foreign (other nation) bank, if the commissioner finds all of the following with respect to an application for approval of a sale, he or she shall approve the application:

(1) 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.

(2) 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.

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

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

(5) 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.

(6) That the sale will be fair, just, and equitable. For purposes of this paragraph, 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.

(7) 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 any 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, he or she shall deny the application for approval of the sale.

(b) In case the seller is either, and the purchaser is not either, a California state depository corporation or a California state-licensed foreign (other nation) bank, if the commissioner finds all of the following with respect to an application for approval of a sale, he or she shall approve the application:

(1) That the sale will not have a seriously adverse effect on the safety or soundness of the seller.

(2) 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.

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

(c) In case the seller and the purchaser are each either a California state depository corporation or a California state depository corporation or a California state-licensed foreign (other nation) bank, if the commissioner finds all of the factors set forth in subdivisions (a) and (b) with respect to an application for approval of a sale, the commissioner shall approve the application. If the commissioner finds otherwise, the commissioner shall deny the application.

(Amended by Stats. 1996, Ch. 1064, Sec. 504.1. Effective January 1, 1997. Operative July 1, 1997.)

4879.11.
  

After an application for approval of a sale has been approved by the commissioner 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.

(Added by renumbering Section 4879.12 by Stats. 2003, Ch. 404, Sec. 10. Effective January 1, 2004.)

4879.12.
  

When a sale becomes effective, in case the purchaser is a California state depository corporation or California state-licensed foreign (other nation) bank:

(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 equivalent offices at any branch offices, places of business, extensions of offices, and other facilities of the seller transferred in the sale.

(2) If the seller was authorized to transact trust business and if the partial business unit sold includes any 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).

(Added by renumbering Section 4879.13 by Stats. 2003, Ch. 404, Sec. 11. Effective January 1, 2004.)

4879.13.
  

In case a seller is a California state commercial bank and sells all of its trust business in a sale:

(a) As of the time when the sale becomes effective, the commissioner shall issue to the seller certificates of authority authorizing it to transact commercial banking business in replacement of the certificates of authority that the seller is required to surrender pursuant to subdivision (b).

(b) Promptly after the sale becomes effective, the seller shall surrender to the commissioner for cancellation its certificates of authority authorizing it to transact commercial banking business and trust business.

(Added by renumbering Section 4879.135 by Stats. 2003, Ch. 404, Sec. 12. Effective January 1, 2004.)

4879.14.
  

When a sale becomes effective:

(a) The purchaser shall succeed, without other transfer, to all rights and property of the seller which are sold to the purchaser under the agreement of sale.

(b) The purchaser shall assume in the same manner as if the purchaser had itself incurred such debts and liabilities, and shall be subject to, all debts and liabilities of the seller transferred to the purchaser under the agreement of sale.

(c) All rights of creditors of the seller and all liens upon the property of the seller shall be preserved unimpaired.

(d) Any action or proceeding pending by or against the seller which was sold or transferred to the purchaser under the agreement of sale 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) (1) In case the partial business unit sold includes 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 sold to the purchaser under the agreement of sale, to the same extent as if the purchaser had originally assumed the fiduciary or representative capacities.

(2) In case the partial business unit sold constitutes all or substantially all the trust business of the seller, the purchaser shall, in addition, 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.

(Added by Stats. 1995, Ch. 480, Sec. 155. Effective October 2, 1995.)

4879.15.
  

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. 1995, Ch. 480, Sec. 155. Effective October 2, 1995.)

4879.16.
  

Promptly after a sale becomes effective, the seller shall:

(a) Surrender to its regulator for cancellation the certificates of authority or licenses issued to it by the regulator that relate to the partial business unit sold.

(b) File with its regulator any report regarding the sale that the regulator may require.

(Added by Stats. 1995, Ch. 480, Sec. 155. Effective October 2, 1995.)

4879.17.
  

(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 a partial business unit to the purchaser, describing the business unit, 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. 508. Effective January 1, 1997. Operative July 1, 1997.)

FINFinancial Code - FIN5.