Code Section Group

Financial Code - FIN

DIVISION 5. CREDIT UNIONS [14000 - 16906]

  ( Division 5 repealed and added by Stats. 1979, Ch. 112. )

CHAPTER 12. Foreign (Other Nation) Credit Unions [16500 - 16906]

  ( Heading of Chapter 12 renumbered from Chapter 11 by Stats. 2002, Ch. 734, Sec. 43. )

ARTICLE 6. Conduct of Credit Union Business [16600 - 16607]
  ( Article 6 added by Stats. 2000, Ch. 612, Sec. 4. )

16600.
  

(a) A foreign (other nation) credit union that has a license to establish and maintain an office may engage in activities at the office as may be authorized under applicable laws of its home country and the laws of this state.

(b) Nothing in subdivision (a) authorizes a foreign (other nation) credit union to engage in any activity at an office that it is not authorized to engage in or is prohibited from engaging in under the law of its home country, or that credit unions organized under the laws of this state are not authorized to engage in or are prohibited from engaging in under the laws of this state.

(Added by Stats. 2000, Ch. 612, Sec. 4. Effective January 1, 2001.)

16601.
  

(a) A foreign (other nation) credit union may not expand its field of membership in this state without first obtaining the commissioner’s approval.

(b) An application for the commissioner’s approval of an expansion of the field of membership in this state by a foreign (other nation) credit union shall be in the form and contain the information as may be specified, by order or regulation, by the commissioner.

(Added by Stats. 2000, Ch. 612, Sec. 4. Effective January 1, 2001.)

16602.
  

(a) The following provisions of this code apply to a foreign (other nation) credit union that maintains a branch office or agency with respect to its business in this state as if the foreign (other nation) credit union were a credit union organized under the laws of this state:

(1) Section 14203.

(2) Section 14204.

(3) Section 14208.

(4) Section 14210.

(5) Section 14256.

(6) Section 14409.

(7) Section 14409.2.

(8) Section 14602.

(9) Section 14652.5.

(10) Section 14655, to the extent promissory notes of the type described in this section are carried on the books of a branch office of a foreign (other nation) credit union.

(11) Section 14656, to the extent promissory notes of the type described in this section are carried on the books of a branch office of a foreign (other nation) credit union.

(12) Article 8 (commencing with Section 14750) of Chapter 4.

(13) Section 14800.

(14) Section 14802.

(15) Section 14803.

(16) Section 14807.

(17) Section 14808.

(18) Section 14809.

(19) Article 1 (commencing with Section 14850) of Chapter 6.

(20) Article 1 (commencing with Section 14950) of Chapter 7.

(21) Article 2 (commencing with Section 15001) of Chapter 7.

(22) Article 3 (commencing with Section 15050) of Chapter 7, to the extent loans of the type described in that article are carried on the books of a branch office of a foreign (other nation) credit union.

(23) Section 15102.

(b) In addition to the laws specified in subdivision (a), the laws of this state applicable to transactions between a credit union organized under the laws of this state and its members and creditors shall similarly apply to the transactions of a foreign (other nation) credit union in this state. These laws include, but are not limited to, consumer protection laws and laws relating to creditor rights and remedies, commercial transactions, mortgages and deeds of trust, bank deposits and collections, and negotiable instruments.

(Added by Stats. 2000, Ch. 612, Sec. 4. Effective January 1, 2001.)

16603.
  

(a) Any foreign (other nation) credit union that is authorized to and does maintain a branch office or agency is exempted from the restrictions of Section 1 of Article XV of the California Constitution relating to rates of interest upon the loan or forbearance of any money, goods, or things in action or on accounts after demand.

(b) This section does not exempt a foreign (other nation) credit union or any subsidiary from complying with all other laws and regulations governing the business in which the foreign (other nation) credit union or subsidiary is engaged.

(c) This section creates and authorizes an exempt class of persons pursuant to Section 1 of Article XV of the California Constitution.

(Added by Stats. 2000, Ch. 612, Sec. 4. Effective January 1, 2001.)

16604.
  

(a) A foreign (other nation) credit union which is licensed to establish and maintain an office or offices shall keep the assets of the offices separate and apart from the assets of its business outside this state.

(b) Persons who are creditors of a foreign (other nation) credit union as a result of the business of an office of the foreign (other nation) credit union in this state shall be entitled to priority over other creditors with respect to the assets of the business in this state of the foreign (other nation) credit union.

(Added by Stats. 2000, Ch. 612, Sec. 4. Effective January 1, 2001.)

16605.
  

(a) In this section:

(1) “Adjusted liabilities,” when used with respect to a foreign (other nation) credit union, means the liabilities of the foreign (other nation) credit union’s business in this state, determined in accordance with generally accepted accounting principles, but excluding (A) accrued expenses, (B) any liability to an office (whether in or outside of this state) or majority-owned subsidiary of the foreign (other nation) credit union, and (C) other liabilities as the commissioner may by regulation or order exclude.

(2) “Applicable minimum,” when used with respect to eligible assets deposited or to be deposited with an approved depository by a foreign (other nation) credit union, means the amount as the commissioner may from time to time by regulation or order determine to be necessary for the maintenance of sound financial condition, for the protection of the interests of creditors of the foreign (other nation) credit union’s business in this state, or for the protection of the public interest. However, in the case of a foreign (other nation) credit union which is licensed to maintain a branch office, the applicable minimum shall not be less than 5 percent of the adjusted liabilities of the foreign (other nation) credit union.

(3) “Approved depository,” when used with respect to a foreign (other nation) credit union, means a bank or credit union organized under the laws of this state or a national bank headquartered in this state that has been selected by the foreign (other nation) credit union and approved by the commissioner for the purpose of acting as the approved depository of the foreign (other nation) credit union and that has filed with the commissioner, in the form as the commissioner may by regulation or order prescribe, an agreement to comply with all applicable provisions of this section and of any regulation or order issued under this section.

(4) “Eligible assets” when used with respect to a foreign (other nation) credit union, means any of the following:

(A) Cash.

(B) Any negotiable certificate of deposit that (i) has a maturity of not more than one year, (ii) is payable in the United States, and (iii) is issued by a bank organized under the laws of a state of the United States, by a national bank, or by a branch office of a foreign (other nation) bank that is located in the United States.

(C) Any banker’s acceptance that is payable in the United States and that is eligible for discount with a federal reserve bank.

(D) Any other asset that the commissioner by regulation or order determines to be eligible.

Notwithstanding the foregoing provisions of this paragraph, “eligible asset,” when used with respect to a foreign (other nation) credit union, does not include any instrument the issuer of which (i) is, or is affiliated with, the foreign (other nation) credit union, (ii) is domiciled in, or controlled by a person domiciled in, the same foreign nation as the foreign (other nation) credit union, or (iii) is, or is controlled by, the foreign nation. For purposes of the foregoing provision, to be “affiliated” means to control, to be controlled by, or to be under common control with; and to “control” has the meaning set forth in subdivision (b) of Section 700.

(b) For purposes of this section:

(1) The amount of adjusted liabilities of a foreign (other nation) credit union’s business in this state shall be computed for the period of time and in the manner as the commissioner may by regulation or order prescribe.

(2) An eligible asset shall be valued at the lesser of market or par.

(c) (1) Before a foreign (other nation) credit union is authorized to transact business in this state, the foreign (other nation) credit union shall deposit, and each foreign (other nation) credit union that is licensed to transact business in this state shall maintain on deposit, with an approved depository eligible assets having a value in an amount not less than the applicable minimum.

(2) Whenever a foreign (other nation) credit union that is licensed to transact business in this state ceases to be so licensed, the foreign (other nation) credit union shall thereafter maintain on deposit with an approved depository eligible assets having a value in an amount not less than the applicable minimum for the period of time as the commissioner may determine to be necessary for the protection of creditors of the foreign (other nation) credit union’s business in this state or for the protection of the public interest.

(d) (1) No foreign (other nation) credit union that maintains eligible assets on deposit with an approved depository pursuant to this section shall withdraw any eligible asset except with the prior approval of the commissioner.

(2) No approved depository that holds eligible assets on deposit from a foreign (other nation) credit union pursuant to this section shall release any eligible asset except with the prior approval of the commissioner or as otherwise provided in subdivision (h).

(e) Any foreign (other nation) credit union that maintains eligible assets on deposit with an approved depository pursuant to this section shall, unless the commissioner shall have suspended or revoked its authorization to transact business in this state or taken possession of its property and business in this state, be entitled to receive any income paid on eligible assets.

(f) (1) Whenever a foreign (other nation) credit union deposits eligible assets with, or withdraws eligible assets from, an approved depository pursuant to this section, the foreign (other nation) credit union shall do so in accordance with the procedures and requirements as the commissioner may by regulation or order prescribe.

(2) Whenever an approved depository receives, holds, or releases eligible assets pursuant to this section, the approved depository shall do so in accordance with the procedures and requirements as the commissioner may by regulation or order prescribe and shall file with the commissioner reports as and when the commissioner may by regulation or order require.

(g) Whenever a foreign (other nation) credit union maintains eligible assets on deposit with an approved depository pursuant to this section:

(1) The eligible assets shall be deemed to be pledged to the commissioner for the benefit of the creditors of the foreign (other nation) credit union’s business in the state; and, notwithstanding any provision of the Uniform Commercial Code to the contrary, the commissioner, for the benefit of these creditors, shall be deemed to have a security interest in the eligible assets.

(2) The eligible assets shall be free from any lien, charge, right of setoff, credit, or preference in connection with any claim of the approved depository against the foreign (other nation) credit union.

(h) (1) In case the commissioner takes possession of the property and business of a foreign (other nation) credit union that maintains eligible assets on deposit with an approved depository pursuant to this section, the approved depository shall, upon order of the commissioner, release the eligible assets to the commissioner, as liquidator of the property and business of the foreign (other nation) credit union.

(2) In case a foreign (other nation) credit union that maintains eligible assets on deposit with an approved depository pursuant to this section fails to pay any judgment creditor of its business in this state and the commissioner has not taken possession of the property and business of the foreign (other nation) credit union, the approved depository shall release the eligible assets to the commissioner, and the commissioner shall dispose of the eligible assets, as a court of competent jurisdiction of this state or of the United States may order for the benefit of the judgment creditor. For purposes of this paragraph, “judgment creditor of its business in this state” means a person to whom the foreign (other nation) credit union is required to pay money under a judgment that (A) arose out of the foreign (other nation) credit union’s business in this state, (B) has been entered by a court of this state or of the United States, (C) has become final, in that all possibility of direct attack on the judgment by way of appeal, motion for new trial, motion to vacate, or petition for extraordinary writ has been exhausted, and (D) has remained unpaid for a period of not less than 60 days after becoming final.

(Added by Stats. 2000, Ch. 612, Sec. 4. Effective January 1, 2001.)

16607.
  

(a) In this section:

(1) “Adjusted liabilities,” when used with respect to a foreign (other nation) credit union that is licensed to maintain a branch office, means the liabilities of the foreign (other nation) credit union’s business in this state, excluding (A) accrued expenses, (B) any liability to an office (whether in or outside of this state) or majority-owned subsidiary of the foreign (other nation) credit union, and (C) other liabilities as the commissioner may by regulation or order exclude.

(2) “Eligible assets” means any asset which the commissioner by regulation or order determines to be eligible for purposes of this section. However, “eligible asset,” when used with respect to a foreign (other nation) credit union that is licensed to maintain a branch office, includes any asset which the foreign (other nation) credit union maintains on deposit pursuant to Section 16606.

(b) For purposes of this section, the amount of eligible assets and the amount of adjusted liabilities of a foreign (other nation) credit union that is licensed to maintain a branch office each be computed for the period of time and in the manner as the commissioner may by regulation or order prescribe.

(c) A foreign (other nation) credit union licensed to maintain a branch office shall hold at its branch offices in this state or at any other place as the commissioner may approve, eligible assets in the amount, if any, as the commissioner may from time to time by regulation or order determine to be necessary for the maintenance of sound financial condition, for the protection of the interests of creditors of the foreign (other nation) credit union’s business in this state, or for the protection of the public interest. However, in no event shall the amount exceed 108 percent of the adjusted liabilities of the foreign (other nation) credit union’s business in this state.

(d) If the commissioner finds, with respect to a foreign (other nation) credit union licensed to maintain a branch office in this state, that the action is necessary for the maintenance of sound financial condition, for the protection of the interests of creditors of the foreign (other nation) credit union’s business in this state, or for the protection of the public interest, the commissioner may order the foreign (other nation) credit union to place all or part of the eligible assets which the foreign (other nation) credit union is required to hold under subdivision (c) in the custody of a bank organized under the laws of this state or a national bank headquartered in this state as the commissioner may designate, and such assets shall be subject to the order of the commissioner.

(Added by Stats. 2000, Ch. 612, Sec. 4. Effective January 1, 2001.)

FINFinancial Code - FIN6.