Code Section Group

Financial Code - FIN

DIVISION 7. INDUSTRIAL LOAN COMPANIES [18000 - 18707]

  ( Division 7 repealed and added by Stats. 1976, Ch. 964. )

CHAPTER 1. General Provisions [18000 - 18063]

  ( Chapter 1 added by Stats. 1976, Ch. 964. )

ARTICLE 1. Definitions [18000 - 18019]
  ( Article 1 added by Stats. 1976, Ch. 964. )

18000.
  

This division shall be known and may be cited as the “Industrial Loan Law,” the “Industrial Banking Law,” or the “Thrift and Loan Law.”

(Amended by Stats. 1998, Ch. 827, Sec. 2. Effective January 1, 1999.)

18001.
  

The definitions given in this article govern the construction of this division unless the context otherwise requires.

(Repealed and added by Stats. 1976, Ch. 964.)

18002.
  

“Commissioner” means the Commissioner of Business Oversight.

(Amended by Stats. 2013, Ch. 353, Sec. 64. Effective September 26, 2013. Operative July 1, 2013, by Sec. 129 of Ch. 353.)

18002.5.
  

“Department” means the Department of Business Oversight.

(Amended by Stats. 2014, Ch. 401, Sec. 32. Effective January 1, 2015.)

18003.
  

“Industrial loan company,” “thrift and loan company,” or “company” as used in this division means a premium finance agency as defined in Section 18560. Notwithstanding any other provision of this chapter, these terms and this division do not apply to an industrial bank subject to, and governed by, Chapter 15 (commencing with Section 1530) of Division 1.1.

(Amended by Stats. 2013, Ch. 334, Sec. 66. Effective January 1, 2014.)

18003.1.
  

“Investment and loan” means an industrial loan company.

(Added by Stats. 1990, Ch. 623, Sec. 2.)

18003.2.
  

(a)Any reference in a provision of any statute or regulation of this state to an industrial loan company or a thrift and loan company means an insurance premium finance agency as defined in Section 18560.

(b) Subdivision (a) does not apply in any of the following cases:

(1) In case the provision or a related provision expressly provides otherwise.

(2) In the case of any provision of Division 1 (commencing with Section 99) or Division 1.5 (commencing with Section 4800).

(Added by Stats. 2000, Ch. 1015, Sec. 52. Effective September 30, 2000.)

18003.5.
  

(a) When used with respect to an industrial loan company, “insured” means an industrial loan company that is insured by the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.).

(b) When used with respect to an investment certificate, “insured” means an investment certificate that is insured by the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.).

(Repealed and added by Stats. 1998, Ch. 827, Sec. 4. Effective January 1, 1999.)

18003.6.
  

“Certificate of deposit” as that term is used by an industrial loan company licensed under this division means an investment certificate representing the obligation of an industrial loan company to repay a nondemand deposit as deposit is defined in Section 3(1) of the Federal Deposit Insurance Act.

(Added by Stats. 1994, Ch. 129, Sec. 1. Effective January 1, 1995.)

18003.7.
  

“Demand deposit” means investment or thrift certificates in account, passbook, or certificate form which are redeemable and payable upon demand to the owner.

(Added by Stats. 1999, Ch. 345, Sec. 1. Effective January 1, 2000.)

18004.
  

“Borrower” means the person receiving the proceeds or benefits of a loan.

(Repealed and added by Stats. 1976, Ch. 964.)

18005.
  

“Consumer loan or consumer obligation” means a loan made to, or an obligation incurred by, a natural person in which the money loaned, or the property delivered or service rendered under the obligation is primarily for personal, family, or household purposes.

(Added by Stats. 1976, Ch. 964.)

18006.
  

“Primarily secured by real property”, as used in this division, means the fair market value of the real property less prior encumbrances, at the time the loan is made or other obligation is acquired, is more than 50 percent of the principal amount owing on the loan or obligation.

(Added by Stats. 1976, Ch. 964.)

18007.
  

“Charges”, as used in this division, include the aggregate interest, fees, bonuses, commissions, brokerage, discounts, expenses, and other forms of costs charged, contracted for, or received by an industrial loan company or any other person in connection with the investigating, arranging, negotiating, procuring, guaranteeing, making, servicing, collecting, or enforcing of a loan, or for forbearance of money, credit, goods, things in action, or any other service or services rendered.

(Added by Stats. 1976, Ch. 964.)

18008.
  

“Charges” also include any profit or advantage of any kind that any person may contract for, collect, receive, or in any manner obtain by a collateral sale, purchase, or agreement, in connection with the negotiating, arranging, making, or otherwise in connection with any loan, except commissions received on insurance sold as provided in this division.

(Added by Stats. 1976, Ch. 964.)

18009.
  

“Principal amount”, as used in this division, means the net amount of money, credit, goods, or things in action received by the debtor or borrower or disbursed on the borrower’s instructions at the time of entering into the transaction.

(Added by Stats. 1976, Ch. 964.)

18010.
  

“Principal balance”, and “face amount” as used in this division, means the unpaid balance of a loan or other obligation.

(Amended by Stats. 1979, Ch. 270.)

18011.
  

“Affiliated company”, as used in this division, is a company under substantially the same management or control, directly or indirectly, as the industrial loan company.

(Added by Stats. 1976, Ch. 964.)

18011.1.
  

“Affiliate” means an affiliated company or a person who, directly or indirectly, controls over 10 percent of the voting stock of an industrial loan company.

(Added by Stats. 1996, Ch. 467, Sec. 1. Effective January 1, 1997.)

18012.
  

“Corporate Securities Law” means the Corporate Securities Law of 1968, Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code.

(Added by Stats. 1976, Ch. 964.)

18013.
  

“Outstanding loans and obligations,” as used in this division, means total outstanding loans and obligations, including lease obligations, less unearned interest or charges, unearned discount, reserve or allowance for losses, and other applicable allowances or deductions as determined by regulation of the commissioner.

(Amended by Stats. 1979, Ch. 911.)

18014.
  

“Obligation” as used in Sections 18265, 18271, 18272, and 18343 includes lease obligations as authorized by Section 18310.

(Added by Stats. 1979, Ch. 911.)

18015.
  

“Lease obligation” as used in this division, means a lease contract entered into by an industrial loan company as lessor.

(Added by Stats. 1979, Ch. 911.)

18016.
  

“Investment certificates ratio”, as used in this division, means the ratio of the aggregate sum of all of the outstanding investment certificates, exclusive of those hypothecated with the company issuing them, of a company to the aggregate amount of its paid-up and unimpaired capital and unimpaired surplus declared not available for dividends pursuant to Section 18319.

(Added by renumbering Section 18373 by Stats. 1985, Ch. 142, Sec. 7. Effective July 1, 1985.)

18016.5.
  

“Premium finance agency” has the meaning set forth in Section 18560.

(Added by Stats. 1998, Ch. 827, Sec. 5. Effective January 1, 1999.)

18017.
  

“Assets,” as used in this division, means all assets excluding intangibles.

(Added by Stats. 1986, Ch. 680, Sec. 1.)

18018.
  

“Capital,” as used in this division, consists of all of the following:

(a) Capital stock.

(b) Primary capital to the extent not included in capital stock.

(c) Secondary capital.

(Added by Stats. 1989, Ch. 663, Sec. 1. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

18018.1.
  

“Primary capital,” as used in this division, means the sum of common stock, perpetual preferred stock, capital surplus, undivided profits, capital reserves, and mandatory convertible debt (to the extent of 20 percent of primary capital exclusive of that debt).

(Added by Stats. 1989, Ch. 663, Sec. 1.1. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

18018.2.
  

“Secondary capital,” as used in this division, means the sum of mandatory convertible debt that is not included in primary capital, limited life preferred stock, and subordinated notes and debentures, all in an amount up to 50 percent of primary capital. Issues of limited life preferred stock and subordinated notes and debentures, except mandatory convertible debt, shall have original weighted average maturities of at least seven years to be included within capital surplus under primary capital.

(Added by Stats. 1989, Ch. 663, Sec. 1.2. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

18018.3.
  

“Perpetual preferred stock,” as used in this division, means a preferred stock that does not have a stated maturity date or that can not be redeemed at the option of the holder. It includes those issues of preferred stock that automatically convert into common stock at a stated date. It excludes those issues, the rate on which increases, or can increase, in such a manner that would effectively require the issuer to redeem the issue.

(Added by Stats. 1989, Ch. 663, Sec. 1.3. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

18018.4.
  

“Mandatory convertible debt,” as used in this division, means a subordinated debt instrument which requires the issuer to convert that instrument into common or perpetual preferred stock by a date at or before the maturity of the debt instrument. The maturity of those instruments shall be 12 years or less.

(Added by Stats. 1989, Ch. 663, Sec. 1.4. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

18018.5.
  

“Limited life preferred,” as used in this division, means preferred stock which has a maturity or which may be redeemed at the option of the holder.

(Added by Stats. 1989, Ch. 663, Sec. 1.5. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

18018.6.
  

“Subordinated notes and debentures,” as used in this division, means an obligation other than an investment certificate obligation that:

(a) Bears on its face, in boldface type no smaller than the largest size type used in the obligation, the following: “this obligation is not a deposit and is not insured by the Federal Deposit Insurance Corporation.”

(b) (1) Has a maturity of at least seven years, or (2) in the case of an obligation or issue that provides for scheduled repayments of principal, has an average maturity of at least seven years; however, the commissioner may permit the issuance of an obligation or issue with a shorter maturity or average maturity if the commissioner has determined that exigent circumstances require the issuance of that obligation or issue. This subdivision shall not apply to mandatory convertible obligations or issues.

(c) States expressly that the obligation is subordinated and junior in right of payment to the issuing industrial loan company’s obligations to its investment certificate holders and to the industrial loan company’s other obligations to its general and secured creditors, and is ineligible as collateral for a loan by the issuing industrial loan company.

(d) Is unsecured.

(e) States expressly that the issuing industrial loan company may not retire any part of its obligation without the prior written consent of the commissioner.

(f) Includes, if the obligation is issued to a depository institution, a specific waiver of the right of offset by the lending depository institution.

(Added by Stats. 1989, Ch. 663, Sec. 1.6. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

18019.
  

“Capital Stock,” as used in this division, means one-class voting common stock.

(Added by Stats. 1989, Ch. 663, Sec. 2. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

FINFinancial Code - FIN1.