text:
(a) For the purposes of this section, the following definitions are applicable:

(1) “Account holder” includes, in the case of an investment certificate account, an investment certificate holder; in the case of a trust account, each trustor and beneficiary of the trust account; and, in the case of any other fiduciary account, each person who occupies, with respect to the account, a position which is similar to the position that a trustor or beneficiary occupies with respect to a trust account.

(2) “Industrial loan company” means any corporation which falls within the definitions of Sections 18003 and 18003.5.

(3) “Order” means any approval, consent, authorization, permit, exemption, denial, prohibition, or requirement applicable to a specific case issued by the commissioner, including without limitation, any condition thereof. “Order” does not include any certificate of authority or license issued by the commissioner, but does include any condition of a license and any written agreement made by any person with the commissioner under this division.

(4) “Subject person of an industrial loan company” means any director, officer, or employee of the industrial loan company, or any person who participates in the conduct of the business of the industrial loan company. However, “subject person of an industrial loan company” does not include an individual who is a director, officer, or employee of a controlling person of an industrial loan company unless the individual is a director, officer, or employee of the industrial loan company or participates in the conduct of the industrial loan company.

(5) “Controlling person” means a person who, directly or indirectly, controls an industrial loan company.

(6) “Violation” includes, without limitation, any act done, alone or with one or more persons, for or toward causing, bringing about, participation in, counseling, aiding or abetting a violation.

(b) If, after notice and opportunity for hearing, the commissioner finds the following, the commissioner may issue an order suspending or removing a subject person of an industrial loan company from his or her office with the industrial loan company and prohibiting the subject person from further participating in any manner in the conduct of the business of the industrial loan company, except with the prior consent of the commissioner:

(1) (A) That the subject person has violated any provision of this division or of any regulation or order issued under this division, or any provision of any other applicable law relating to the business of the industrial loan company; or

(B) That the subject person has engaged or participated in any unsafe or unsound act with respect to the business of the industrial loan company; or

(C) That the subject person has committed or engaged in any act which constitutes a breach of his or her fiduciary duty as a subject person; and

(2) (A) That the industrial loan company has suffered or will probably suffer substantial financial loss or other damage by reason of that violation, act, or breach of fiduciary duty; or

(B) That the interests of the industrial loan company’s accountholders have been or are likely to be seriously prejudiced by reason of the violation, act, or breach of fiduciary duty; or

(C) That the subject person has received financial gain by reason of that violation, act, or breach of fiduciary duty; and

(3) That the violation, act, or breach of fiduciary duty is one involving personal dishonesty on the part of the subject person, or one which demonstrates a willful or continuing disregard for the safety or soundness of the industrial loan company.

(c) If, after notice and opportunity for hearing, the commissioner finds the following, the commissioner may issue an order suspending or removing a subject person of an industrial loan company from his or her office with the industrial loan company and prohibiting the subject person from further participating in any manner in the conduct of the business of the industrial loan company, except with the prior consent of the commissioner:

(1) That the subject person’s conduct or practice with respect to another industrial loan company or business institution has resulted in substantial financial loss or other damage; and

(2) That the conduct or practice has evidenced personal dishonesty or willful or continuing disregard for the safety and soundness of the other industrial loan company or business institution; and

(3) That the conduct or practice is relevant in that it demonstrates unfitness to continue as a subject person of the industrial loan company.

(d) If the commissioner finds the following, the commissioner may immediately issue an order suspending or removing a subject person of an industrial loan company from his or her office with the industrial loan company and prohibiting the subject person from further participating in any manner in the conduct of the business of the industrial loan company, except with the prior consent of the commissioner:

(1) That it is necessary for the protection of the industrial loan company or the interests of the industrial loan company’s account holders that the commissioner issue the order immediately, and

(2) (A) That any of the factors set forth in paragraphs (1) and (2) of subdivision (b) and any of the factors set forth in paragraph (3) of subdivision (c) are true with respect to the subject person; or

(B) That any of the factors set forth in paragraphs (1), (2), and (3) of subdivision (c), and the factor set forth in paragraph (3) of subdivision (c) are true with respect to the subject person.

(e) (1) If the commissioner finds the following, the commissioner may immediately issue an order suspending or removing a subject person of an industrial loan company from his or her office with the industrial loan company and prohibiting the subject person from further participating in any manner in the conduct of the business of the industrial loan company, except with the prior consent of the commissioner.

(A) That the subject person has been charged in an indictment issued by a grand jury or in an information, complaint, or similar pleading issued by a United States attorney, district attorney, or other governmental official or agency authorized to prosecute crimes, with a crime which is punishable by imprisonment for a term exceeding one year and which involves dishonesty or breach of trust; and

(B) That the person’s continuing to serve as a subject person of the industrial loan company may pose a material threat to the interest of the industrial loan company’s account holders or may threaten to materially impair public confidence in the industrial loan company. In case the criminal proceedings are terminated other than by a judgment of conviction the order shall be deemed rescinded.

(2) If the commissioner finds the following, the commissioner may immediately issue an order suspending or removing a subject person of an industrial loan company or a former subject of an industrial loan company, from his or her office, if any, with the industrial loan company and prohibiting the person from further participating in any manner in the conduct of the business of the industrial loan company, except with the prior consent of the industrial loan company:

(A) That the person has been finally convicted of a crime which is punishable by imprisonment for a term exceeding one year and which involves dishonesty or breach of trust; and

(B) That the person’s continuing to serve or resumption of service as a subject person of the industrial loan company may pose a material threat to the interests of the industrial loan company’s account holders or may threaten to materially impair public confidence in the industrial loan company.

(3) The fact that any subject person of an industrial loan company charged with a crime involving dishonesty or breach of trust is not finally convicted of that crime shall not preclude the commissioner from issuing an order regarding the subject person pursuant to other provisions of this division.

(f) Within 30 days after an order is issued pursuant to subdivision (d) or (e), the person to whom the order is issued may file an application for a hearing.

(g) Any person to whom an order is issued under subdivision (b), (c), (d), or (e) may apply to the commissioner to modify or rescind that order. The commissioner shall not grant that application unless the commissioner finds that it is in the public interest to do so and that it is reasonable to believe that the person will, if and when he or she becomes a subject person of an industrial loan company, comply with all applicable provisions of this division and of any regulation or order issued thereunder.

(h) A hearing held pursuant to this section shall be private unless the commissioner, in his or her discretion, after fully considering the views of the parties, determines that a public hearing is necessary to protect the public interest.

(i) (1) It is unlawful for any subject person of an industrial loan company or former subject person of an industrial loan company to whom an order is issued under subdivision (b), (c), (d), or (e) to do any of the following, except with the prior consent of the commissioner, so long as the order is effective:

(A) To serve or act as a director, officer, employee, or agent of any industrial loan company.

(B) To vote any shares or other securities of an industrial loan company having voting rights, for the election of any person as a director of an industrial loan company.

(C) Directly or indirectly, to solicit, procure, or transfer or attempt to transfer, or vote any proxy, consent, or authorization with respect to any shares or other securities of any industrial loan company having voting rights.

(D) Otherwise to participate in any manner in the conduct of the business of any industrial loan company.

(2) Any person who violates paragraph (1) shall, upon conviction, be punished by a fine of not more than ten thousand dollars ($10,000) or imprisoned pursuant to subdivision (h) of Section 1170 of the Penal Code, or in a county jail not to exceed one year, or by both that fine and imprisonment.

(3) If the commissioner believes that any person has violated paragraph (1), the commissioner may bring an action in a court of competent jurisdiction petitioning the court to assess that person a civil penalty in an amount as the commissioner may specify; provided, however, that the amount of the civil penalty shall not exceed two thousand five hundred dollars ($2,500) for each violation or, in the case of a continuing violation, two thousand five hundred dollars ($2,500) for each day for which the violation continues.

In determining the amount of a civil penalty to be assessed under this paragraph, the court shall consider the financial resources and good faith of the person charged, the gravity of the violation, the history of previous violations by the person, and such other factors as in the opinion of the court may be relevant.

history: (History: Amended by Stats. 2011, Ch. 15, Sec. 110. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)

article: 1. General


kind: section

code: FIN

text: Each industrial loan company shall pay to the commissioner its pro rata share of all costs and expenses of the department in administering this division and other laws relating to industrial loan companies or the industrial loan business, as estimated by the commissioner for the ensuing year and of any deficit actually incurred or anticipated in the year in which the assessment is made. The pro rata share shall be the proportion which a company’s assets bear to the aggregate assets of all companies as shown by the latest annual reports of the companies to the commissioner. The pro rata share shall not include the costs of any examinations provided for in Section 18392, unless they cannot be collected from the company examined.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 592.5. Effective January 1, 1997. Operative July 1, 1997.)

division: 7. INDUSTRIAL LOAN COMPANIES

article: 1. General

path: 7. INDUSTRIAL LOAN COMPANIES > 5. Administration and Powers of the Commissioner > 1. General


text: On or before the 30th day of November in each year, the commissioner shall notify each industrial loan company by mail of the amount assessed and levied against it and that amount shall be paid within 20 days thereafter. If payment is not made within 20 days, the commissioner shall assess and collect a penalty in addition to the assessment, of 1 percent of the assessment for each month or part of a month that the payment is delayed or withheld.

history: (History: Added by Stats. 1976, Ch. 964.)

chapter: 5. Administration and Powers of the Commissioner

article: 1. General


text: In the levying and collection of an assessment pursuant to Section 18350, an industrial loan company shall not be assessed for nor be permitted to pay less than two hundred fifty dollars ($250) per year, or not less than twenty-five dollars ($25) per month or fraction of a month for the unexpired year ending December 31st following its incorporation.

article: 1. General


text:
If an industrial loan company fails to pay the assessment provided in Section 18350 on or before the 30th day of December following the day upon which payment is due, the commissioner may by order summarily suspend or revoke the certificate issued to that company. If, after such an order is made, a request for hearing is filed in writing within 15 days from the date of service of the order and a hearing is not held within 60 days thereafter, the order is deemed rescinded as of its effective date. During any period when its certificate is revoked or suspended, a company shall not issue thrift certificates or make loans or otherwise conduct business pursuant to this division except as may be permitted by order of the commissioner; provided, however, that neither the revocation, suspension or surrender of a certificate shall affect the powers of the commissioner as provided in this division.

This section shall become operative January 1, 1969. For the purpose of making its provisions operative, the commissioner shall issue to all industrial loan companies authorized to conduct business under this division on said date a certificate of authorization to conduct business pursuant to this division in such form as the commissioner may prescribe and as provided in Section 18101 and thereafter all such companies shall be conclusively presumed to be conducting business under this division pursuant to such certificate of authorization.

history: (History: Amended by Stats. 1989, Ch. 172, Sec. 1.)

article: 1. General


text: The commissioner may require the attendance of witnesses and examine under oath all persons whose testimony he requires relative to the affairs of an industrial loan company or to the subject matter of any examination, investigation, or hearing.

article: 1. General


text: Whenever, after an examination, investigation or hearing under this division, the commissioner deems it of public interest or advantage, he may certify a record to the proper prosecuting official of the county or city in which the act complained of, examined, or investigated, occurred.

article: 1. General


text: The commissioner may order any industrial loan company to desist from any conduct which the commissioner finds in violation of this division or any rule or order of the commissioner made pursuant to this division.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 593. Effective January 1, 1997. Operative July 1, 1997.)

article: 1. General


text:
(a) If it appears to the commissioner that an industrial loan company has violated or failed to comply with the provisions of its articles of incorporation, or with any law of this state, the commissioner may by written order addressed to the company, direct that company to discontinue the violation and to comply with the law.

(b) Whenever it appears from the report of an industrial loan company or the commissioner has reason to conclude, that the capital stock of an industrial loan company is impaired or reduced below the amount required by this division, the commissioner shall by written order addressed to the company, direct that company to make good the alleged deficiency or impairment of capital. If the company fails to make good the alleged deficiency or impairment of capital, the commissioner may forthwith take possession of the property and business of the industrial loan company pursuant to Section 18415. If the company fails to make good the alleged deficiency or impairment of capital within 60 days of the date of the order, the commissioner shall take possession of the industrial loan company pursuant to Section 18415. The capital of an industrial loan company is impaired when the minimum amount of capital required by Sections 18130 and 18131 is reduced by a net deficit balance in the company’s surplus account.

history: (History: Amended by Stats. 1989, Ch. 172, Sec. 2.)

article: 1. General


text: If it appears to the commissioner that an industrial loan company is conducting business in an unsafe, unsound, or injurious manner, the commissioner may, by written order, direct the discontinuance of any such unsafe or injurious practices.

history: (History: Amended by Stats. 1989, Ch. 663, Sec. 15. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. General


text: Whenever the commissioner is authorized to issue an order pursuant to Section 18357 or Section 18358 of this division, the commissioner may issue an order directing an industrial loan company to discontinue or limit the sale of its investment certificates or to impound the proceeds from the sale of its investment certificates in such manner as the commissioner may specify in such order.

history: (History: Amended by Stats. 1989, Ch. 663, Sec. 16. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. General


text: The company named in any order issued pursuant to this division for which no express hearing right is provided, including Sections 18356, 18357, 18358, 18359, 18363, and 18415.3 may, within 15 days after receipt thereof, file with the commissioner its written request for hearing. The filing of that request shall not operate to postpone or suspend the effectiveness of any order issued by the commissioner unless otherwise directed by the commissioner. The order may be amended or set aside by the commissioner at any time. The commissioner shall, within 30 business days after the receipt of that written request or at a later time as may be mutually agreed with the company, cause that matter to be heard.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 594. Effective January 1, 1997. Operative July 1, 1997.)

article: 1. General


text: After any order is made final, the industrial loan company shall have 10 days in which suit may be commenced to restrain enforcement of such order and unless such action is commenced and enforcement of the final order is enjoined within 10 days by the court in which such suit is brought, the company shall comply with the final order.

article: 1. General


text:
(a) If the commissioner believes that an industrial loan company or its directors, officers, agents, or employees have violated or are about to violate any of the provisions of this division, or any provision of an order, license, permit, decision, demand, or requirement of the commissioner, the commissioner may bring an action against such persons to enjoin those persons from continuing the violation or the attempt to violate this division, or doing any act in furtherance thereof. The commissioner shall bring such action in the name of the people in the superior court, and the court may enter an order or judgment awarding a preliminary or final injunction as is proper.

(b) If the commissioner determines it is in the public interest, the commissioner may include in any action authorized by subdivision (a) a claim for ancillary relief, including, but not limited to, a claim for restitution or disgorgement or damages on behalf of the persons injured by the act or practice constituting the subject matter of the action, and the court shall have jurisdiction to award the additional relief.

(c) Any person who violates any provision of this division, or who violates any rule or order adopted pursuant to this division, shall be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the commissioner in any court of competent jurisdiction.

(d) As applied to civil and criminal penalties for acts in violation of this division, the remedies provided by this section and by other sections of this division are not exclusive, and may be sought and employed in any combination to enforce the provisions of this division.

history: (History: Amended by Stats. 1990, Ch. 1202, Sec. 5.)

article: 1. General


text: The commissioner may order an industrial loan company to suspend the redemption of investment certificates or the payment of the liabilities of the company or limit the payment of the liabilities in such manner as he prescribes, if it appears to the commissioner that such action is necessary for the protection of the company, its investors or creditors, or in the public interest. The order is effective upon receipt of notice by the company and continues in effect until rescinded or modified by the commissioner in a writing delivered to the manager or executive officer of the company. Nothing in this section shall affect the right of any company to pay its current operating expenses and liabilities incurred during the period of suspension or limitation.

article: 1. General


text: After an order of suspending or limiting the payment of liabilities is effective and until that order is rescinded, the industrial loan company shall make no assignment or hypothecation of any indebtedness due to it from an investor without first crediting thereon the investment liability of the company to such investor-borrower.

article: 1. General


text: The authority granted to the commissioner by Section 18363, may be exercised by him in conjunction with all other powers granted by this chapter, or independently from them.

article: 1. General


text: Every order, decision, license, or other official act of the commissioner is subject to review in accordance with law. Upon review, the burden of proof lies upon the appellant, and the court shall receive and consider any pertinent evidence which was introduced in the formal hearing before the commissioner, whether oral or documentary, concerning the action of the commissioner under review. The review is limited to a consideration and determination of the question of whether there has been an abuse of discretion on the part of the commissioner in making such order, decision, finding, requirement, or rule.

article: 1. General


text:
(a) If at any time the commissioner is of the opinion that the further sale of investment certificates by an industrial loan company would be unfair, unjust or inequitable to the purchasers of its investment certificates, the commissioner may, notwithstanding any other provision of this division, order the company to desist and refrain from the further sale of its investment certificates.

(b) The company named in any order issued pursuant to subdivision (a) of this section may, within 15 days after receipt thereof, file with the commissioner its written request for hearing. The filing of such request shall not operate to postpone or suspend the effectiveness of any order issued by the commissioner unless otherwise directed by the commissioner. The commissioner shall, within 15 days after the receipt of such written request or at such later time as may be mutually agreed with the company, cause such matter to be heard and shall thereafter issue his final decision. Such decision may be amended or set aside by the commissioner at any time.

(c) Every order or decision of the commissioner made pursuant to this section is subject to judicial review in accordance with law.

article: 1. General


text:
(a) The commissioner may make the agreements that he or she deems necessary or appropriate in exercising his or her powers.

(b) (1) The agreements authorized under subdivision (a) may include, but are not limited to, agreements with agencies of this state, of other states of the United States, or of the United States that regulate financial institutions, relating to examinations of industrial loan companies and other matters.

(2) Any agreement with a government agency that regulates financial institutions is exempt from the advertising and competitive bidding requirements of the Public Contract Code.

history: (History: Amended by Stats. 1996, Ch. 887, Sec. 52. Effective September 25, 1996.)

article: 1. General


text: For the purpose of discovering violations of this division or securing information required, the commissioner may at any time investigate the affairs and examine the books, accounts, records, and files of every corporation engaged in the business of an industrial loan company or broker, or its holding company or affiliates, whether such corporation acts or claims to act as principal or agent, or under or without the authority of this division. For the purposes of examination and investigation, the commissioner and the commissioner’s duly designated representatives shall have free access to the offices and places of business, books, accounts, papers, records, files, safes and vaults of all such corporations and their holding companies or affiliates.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 3.)

article: 2. Examinations

path: 7. INDUSTRIAL LOAN COMPANIES > 5. Administration and Powers of the Commissioner > 2. Examinations


text: Whenever in the judgment of the commissioner the condition of any industrial loan company renders it necessary or expedient to devote any extraordinary attention to its affairs, the commissioner may make any extra examination or investigation and perform any necessary services in connection with its affairs.

article: 2. Examinations


text: The industrial loan company examined shall pay to the commissioner the cost of any examination, investigation or services, including the salary or other compensation paid to the persons making the examination or investigation or rendering services, and overhead costs in connection therewith as fixed by the commissioner. In determining the cost of examination, investigation, or services, the commissioner may use the estimated average hourly cost for all persons performing examinations, investigations, or services for industrial loan companies for the fiscal year.

history: (History: Amended by Stats. 1981, Ch. 946, Sec. 4.)

article: 2. Examinations


text: The commissioner shall, upon receipt of written notification by an industrial loan company that it intends to engage in or is engaging in transactions permitted under Section 18209, make an examination of the affairs and records of each such industrial loan company at least once each year. Such examination shall be made or performed unless such company notifies the commissioner of its election to discontinue such activity and gives evidence that it has disposed of all evidences of indebtedness arising from any such transactions.

article: 2. Examinations


text: Investigation and examination reports prepared by the commissioner’s duly designated representatives shall not be public records. Those reports may be disclosed to the officers and directors of a company that is the subject of a report for the purpose of corrective action by those officers or directors. That type of disclosure shall not operate as a waiver of the exemption specified in Section 7929.000 of the Government Code.

history: (History: Amended by Stats. 2021, Ch. 615, Sec. 110. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Sec. 463 of Stats. 2021, Ch. 615.)

article: 2. Examinations


text:
(a) In this section, “governmental agency” includes, without limitation, any agency of this state, of any other state of the United States, of the United States, or of any foreign nation.

(b) The commissioner may furnish information to a governmental agency that regulates financial institutions.

(c) The commissioner may furnish to a governmental agency that administers a loan guarantee or similar program, information relating to a person who participates in the program.

(d) The commissioner may furnish to a governmental agency that regulates business activities, other than the type described in subdivision (b), information relating to:

(1) A suspected violation of a law administered by the agency.

(2) A person involved in an application to the agency for a license, approval, or other authorization.

(e) The commissioner may furnish to a governmental agency that is a law enforcement agency, information relating to a suspected crime.

(f) This section does not prescribe the only circumstances under which the commissioner may furnish information.

history: (History: Added by Stats. 1995, Ch. 479, Sec. 5. Effective October 2, 1995.)

article: 2. Examinations


text:
(a) On or before the 15th day of March of every year, each industrial loan company shall file with the commissioner an audit report containing audited financial statements together with such other relevant information as the commissioner may require relating to the company and to each place of business of the company. The audited financial statements shall include a balance sheet of the company prepared as of the last day of the preceding calendar year and statements of income and of surplus for such calendar year.

(b) The reports and financial statements referred to in subdivision (a) shall be prepared in accordance with generally accepted accounting principles and shall be accompanied by a report, certificate, or opinion of an independent certified public accountant or independent public accountant, and shall contain such relevant information as the commissioner may require. The audits shall be conducted in accordance with generally accepted auditing standards and the rules and regulations of the commissioner.

(c) For good cause and upon written request, the commissioner may extend the time for compliance with subdivision (a).

(d) If the report, certificate, or opinion of the independent accountant referred to in subdivision (b) hereof is in any way qualified, the commissioner may require the company to take such action as he or she deems appropriate to permit an independent accountant to remove such qualification from the report, certificate, or opinion.

(e) The commissioner may reject any financial statement, report, certificate, or opinion filed pursuant to this section by notifying the company required to make such filing of its rejection and the cause thereof. Within 30 days after the receipt of such notice, the company shall correct such deficiency, and the failure so to do shall be deemed a violation of this division. The commissioner shall retain a copy of all filings so rejected.

history: (History: Amended by Stats. 2015, Ch. 190, Sec. 42. (AB 1517) Effective January 1, 2016.)

article: 3. Reports and Financial Statements

path: 7. INDUSTRIAL LOAN COMPANIES > 5. Administration and Powers of the Commissioner > 3. Reports and Financial Statements


text:
Each industrial loan company which has issued and which has outstanding investment certificates shall:

(a) Post in a conspicuous and prominent place in each business location a condensed statement of its financial condition, and

(b) Furnish to a person prior to such person’s investment in an investment certificate a copy of its latest condensed statement of its financial condition. Each year a copy of the condensed statement shall be furnished by mail or hand-delivered to each investment certificate holder.

(c) Maintain and have available for public inspection a copy of its latest audited financial statement required by subdivision (a) of Section 18405 in each of its business locations. Any person shall, upon request, be permitted to inspect the statement during regular business hours.

(d) The statement required by subdivisions (a) and (b) shall set forth such information and be in such form as may be required by the commissioner.

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

article: 3. Reports and Financial Statements


text: An industrial loan company shall, when requested by the commissioner, submit its unaudited financial statements, prepared in accordance with generally accepted accounting principles and consisting of at least a balance sheet and a statement of income as of the date and for the period specified by the commissioner. The commissioner may require the submission of such reports on a monthly or other periodic basis.

article: 3. Reports and Financial Statements


text: An industrial loan company shall make other special reports to the commissioner as the commissioner may from time to time require.

article: 3. Reports and Financial Statements


text: The commissioner shall make and file annually with the department as a public record a composite of reports filed by industrial loan companies, and any comments thereon that he or she deems in the public interest.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 596. Effective January 1, 1997. Operative July 1, 1997.)

article: 3. Reports and Financial Statements


text: For the purposes of the composite report provided for by Section 18409, an industrial loan company shall furnish statistical information as is reasonably required by the commissioner, including information for each place of business of the company and as to any parent, subsidiary or affiliated company.

article: 3. Reports and Financial Statements


text: The commissioner may by rule or regulation specify the form and contents of the financial statements, reports, certificates and opinions required to be filed pursuant to this article, and may require that such reports and financial statements be verified in such manner as he may prescribe.

article: 3. Reports and Financial Statements


text: Each report required under this article shall be filed with the commissioner at the time that the commissioner by regulation or order may require. If any industrial loan company fails to make any report required by this article at the time specified by the commissioner, or fails to include in that report any matter required by this article or by the commissioner, the commissioner shall assess and collect a penalty of one hundred dollars ($100) for each day which that report is delayed or withheld by the failure or neglect of that industrial loan company.

history: (History: Added by Stats. 1990, Ch. 679, Sec. 1.)

article: 3. Reports and Financial Statements


text:
The commissioner may take possession of the property and business of any industrial loan company and retain possession until the company resumes business or its affairs are liquidated if any of the following grounds exist:

(a) The capital of an industrial loan company is impaired.

(b) An industrial loan company has violated its articles of incorporation or any law of this state.

(c) An industrial loan company is conducting its business in an unsafe or unauthorized manner.

(d) An industrial loan company refuses to submit its books, papers and affairs to the inspection of any examiner.

(e) An officer of any industrial loan company refuses to be examined upon oath touching the concerns of such industrial loan company.

(f) An industrial loan company has suspended payment of its obligations.

(g) An industrial loan company is in such condition that it is unsound or unsafe for it to transact business.

(h) An industrial loan company neglects or refuses to observe any order of the commissioner made pursuant to this division, unless the enforcement of that order is restrained in a proceeding brought by the industrial loan company.

(i) An industrial loan company (1) fails to become and continue as either a member of the Federal Deposit Insurance Corporation or a member of the Thrift Guaranty Corporation of California in accordance with Chapter 7 (commencing with Section 18475), (2) has its right to participate in the Thrift Guaranty Corporation of California suspended or revoked pursuant to subdivision (a) of Section 18496 and it is not a member of the Federal Deposit Insurance Corporation, or (3) fails to pay any assessment levied pursuant thereto within the time specified.

(j) A member industrial loan company of Guaranty Corporation refuses to permit Guaranty Corporation, its appointed certified public accountant or public accountant, or specialized committees or employees to fulfill their duties under Section 18496.

(k) An industrial loan company has sold or issued investment certificates in violation of the provisions of this division.

(l) An industrial loan company has failed to maintain in effect a bond required under the provisions of this division.

(m) Any fact or condition exists which, if it had existed at the time of the original application for authority to organize and establish a corporation to engage in the industrial loan business reasonably would have warranted the commissioner in disapproving the application.

(n) An application for membership in the Federal Deposit Insurance Corporation has not been filed with and accepted by the Federal Deposit Insurance Corporation on or before January 15, 1990.

If the commissioner takes possession of the business and property of an industrial loan company, the company, with the consent of the commissioner, may resume business upon prescribed conditions.

history: (History: Amended by Stats. 1989, Ch. 583, Sec. 2.5.)

path: 7. INDUSTRIAL LOAN COMPANIES > 5. Administration and Powers of the Commissioner > 4. Possession, Conservatorship, and Liquidation by the Commissioner


text: Whenever the commissioner has taken possession of the property and business of an industrial loan company, that industrial loan company, within 10 days after the taking, if it deems itself aggrieved thereby, may apply to the superior court in the county in which the head office of the industrial loan company is located to enjoin further proceedings. The commissioner may exercise all powers granted by this article during the 10-day period after taking possession of the property and business of the industrial loan company. The court, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing and a determination of the facts upon the merits may dismiss the application or enjoin the commissioner from further proceedings and direct the commissioner to surrender the property and business to the industrial loan company, or make such further order as may be just.

history: (History: Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

article: 4. Possession, Conservatorship, and Liquidation by the Commissioner


text: An appeal may be taken from the judgment of the court by the commissioner or by the industrial loan company in the manner provided by law for appeals from the judgment of a superior court to the court of appeal.

history: (History: Amended by Stats. 1998, Ch. 931, Sec. 149. Effective September 28, 1998.)


text:
(a) Whenever the net worth of an industrial loan company, exclusive of its good will, is less than 90 percent of the aggregate sum of its outstanding investment certificates, exclusive of those hypothecated with the company issuing them, divided by the fraction that is its investment certificates ratio permitted by the commissioner, the commissioner shall by written order direct the company to make good the alleged deficiency of net worth. Pursuant to the commissioner’s orders, the company’s net worth shall be at least 100 percent of the aggregate sum of its outstanding investment certificates, exclusive of those hypothecated with the company issuing them, divided by the fraction that is its investment certificates ratio permitted by the commissioner.

(b) If the company fails to cure the alleged deficiency of net worth within the commissioner’s specified time, not to exceed 120 days, the commissioner may take possession of the company’s property and business. If the alleged deficiency is not cured within 120 days of the order, the commissioner shall take possession of the company’s property and business.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 174. Effective January 1, 2007.)


text: The commissioner may also, upon the request of the board of directors of a company, take possession of the property and business of a company and as conservator, take such action as the commissioner deems proper.


text:
Upon taking possession of the property and business of any industrial loan company, the commissioner shall give notice of that fact to all persons holding or having in their possession any assets of the company. The notice required by this section shall not be deemed to be a prerequisite to the taking of possession of the property and business of the industrial loan company. No person knowing of the taking, or who has been notified thereof, shall have a lien or charge upon any assets of the company for any payment, advance or clearance thereafter made, or for any liability thereafter incurred.

Notice is deemed given when the commissioner has either made personal service of the notice, or mailed the notice to the person by certified mail.


text: Any officer, agent, employee, director, or stockholder of a company who refuses to comply with the demand for possession issued under Section 18415 shall be guilty of a misdemeanor punishable by a fine of not more than one thousand dollars ($1,000) or imprisonment not exceeding one year or by both such fine and imprisonment.


text: On demand of the commissioner, it shall be the duty of the sheriff of any county of the state, and of the police department of any municipal corporation therein, to furnish the commissioner with deputies, patrolmen, or officers as may be necessary to assist the commissioner in making and enforcing any seizure under Section 18415.


text: Upon taking possession of the property and business of any company, the superior court for the county in which the head office of the company is located shall have exclusive original jurisdiction of all proceedings relating thereto and of any action or other proceedings brought under the provisions of this chapter. All papers relating to the taking of possession, including copies of the certificate of appointment of any special deputy, shall be filed and be made a part of the record of the proceeding within 45 days of the date of taking possession. All papers filed with the superior court, including inventories required to be filed, shall be made a part of the record of the proceeding without the payment of any additional fees therefor.


text: At any time after the order taking possession issued under Section 18415 has been filed with the court, the commissioner may remove the principal office of the person proceeded against to the City and County of San Francisco or to the City of Los Angeles. In the event of removal, the court where the proceeding was commenced shall, upon the application of the commissioner, direct the superior court clerk to transmit all of the papers filed therein with that clerk to the Superior Court Clerk of the City and County of San Francisco or of the County of Los Angeles as the case may require. The proceeding shall thereafter be conducted in the same manner as though it had been commenced in the county to which it had been transferred.


text: The commissioner may, at any time, examine under oath any officer, director, agent, employee or stockholder of a company to determine whether or not all property and assets have been transferred or delivered to the commissioner’s possession.


text: Upon taking possession of the property and business of any company, the commissioner has authority and the duty to collect all moneys due to the company and to do such other acts as are necessary or expedient to collect, conserve, or protect its assets, property and business. The commissioner shall also proceed to conserve or liquidate the affairs thereof as provided in this chapter.


text:
The commissioner may file a petition with the court and the court shall issue such injunctions or orders, as may be deemed necessary, to prevent any of the following occurrences:

(a) Interference with the commissioner or the proceeding.

(b) The institution of any actions or proceedings, or the prosecution of any actions or proceedings already commenced.

(c) Waste of assets of the entity.

(d) The obtaining of preferences, judgments, attachments or other liens against the company or its assets.

(e) The making of any levy against the company or its assets.

(f) The sale or deed for nonpayment of taxes or assessments levied by any taxing agency of any of the following:

(1) Property owned by the company.

(2) Property upon which the company holds an encumbrance.

(3) Property upon which the company has prior thereto commenced an action to foreclose any deed of trust or mortgage or has exercised the power of sale under any trust deed or mortgage which sale or foreclosure proceedings have not yet been completed or upon which no trustee’s deed or judgment of court or sheriff’s certificate of sale has been issued.

“Taxing agency,” as used in this section, has the same meaning as defined in Section 121 of the Revenue and Taxation Code. The injunctions or orders authorized by this subdivision may be modified, dissolved, or rescinded by the court on motion of the commissioner, the Controller, or the person charged with the collection of taxes or assessments on such property. The recording in the office of the county recorder of any county in the state of an order or injunction issued pursuant to this section, shall constitute service of the order or injunction upon any taxing agency with respect to property or interest therein located in such county.


text: After the taking of possession of the property and business of any company, the commissioner may terminate or adopt any executory contract to which the company may be a party, including leases of real or personal property. The termination or adoption shall be made within six months after obtaining knowledge of the existence of the contract or lease. Any provision in the contract or lease which provides for damages or cancellation fees upon termination shall not be binding on the commissioner or the company seized. The commissioner and the company shall only be liable for actual damages and in no event in excess of one thousand dollars ($1,000). Any claim must be filed within 30 days of the date of the termination.


text: The commissioner may proceed against any debtor or alleged debtor by way of summary procedure or by order to show cause issued by the court upon application by the commissioner.


text: The commissioner may make examinations of the seized company and review the activities of any conservator or liquidator.


text: The actual cost of any examination, investigation or services, including the actual amount of salary or other compensation paid to the persons making the examination, investigation or rendering services and the overhead costs in connection therewith, as fixed by the commissioner, shall be paid out of the assets of the company.


text: The determination by the commissioner to liquidate a company, evidenced by filing written notice of the determination with the court, operates to stay or dissolve all actions or attachments instituted or levied within 90 days next preceding the taking of possession of the company by the commissioner, and pending the process of liquidation, no attachment or execution shall be levied or lien created upon any of the property of the company.


text:
Upon taking possession of the property, and business of a company in any proceeding under this article, the commissioner shall have the power to do all of the following:

(a) Appoint one or more special deputy commissioners as his or her agent or agents with the powers specified in the certificate of appointment to assist in the duty of conservation or of liquidation and distribution.

(b) Employ the Attorney General as counsel or employ private counsel as may be deemed necessary to assist the commissioner in the performance of his or her duties under this chapter. Appointment of private counsel shall be made only with the consent of the Attorney General. The compensation of that counsel shall be fixed by the commissioner, subject to the approval of the court.

(c) Set the compensation of a special deputy commissioner.

(d) Require from each special deputy commissioner and from each assistant such security for the faithful performance of their duties as the commissioner may deem proper.


text: All expenses of taking possession of, conserving, conducting, liquidating, disposing of or otherwise dealing with the business and property of any company under this article shall be paid out of the assets of that company. Those expenses shall include, among other things, the compensation of special deputy commissioners, clerks and assistants and the actual cost of any services attributable to the conservatorship or liquidation performed by the commissioner and staff, including the actual amount of salary or compensation paid to the person performing the services and overhead costs in connection therewith as fixed by the commissioner.


text: Any transaction occurring within six months of the date of taking possession shall be voidable by the conservator or liquidator if the transaction has the effect of giving to, or enabling any creditor of, the company, any affiliate of the company, any officer, director, stockholder, employee or any relative thereof, to obtain a preference over any other creditor of the company.


text:
No obligation may be purchased or discounted under any agreement between the company and any person involving the purchase or discount of obligation from the person, with or without recourse, from the moment of taking possession pursuant to Section 18415. Any guarantees, recourse or repurchase agreements given at the time of purchase, or discount of any obligation prior to the date of taking possession, shall continue to be binding on the person. Any reserves, withholds or other security held by the company under the terms of the agreement shall be considered liabilities of the company in the general creditor classification and may not be used as offset against any obligation purchased or discounted under the agreement. No distribution of assets shall be made on these liabilities until the obligations purchased or discounted under the agreement have been satisfied.

In case of sale of the obligations by the liquidator, the reserves, withholds or other security shall remain as a liability to be paid off in the normal course of liquidation.


text: No attachment or execution shall be issued against the property of any company before final judgment in any action or proceeding in any court.


text:
The commissioner, as conservator or liquidator, after taking possession of the company, shall, in his or her name, in the name of the company, in the name of both, or otherwise, have authority to do all of the following:

(a) Collect all obligations and money due the company.

(b) Exercise and possess all the rights, powers and privileges of the company, its officers and directors.

(c) Institute, prosecute, maintain, defend, intervene, and otherwise participate in any and all actions, suits, or other legal proceedings by and against the conservator or liquidator or company, or in which the conservator, the company or its creditors or debtors, or any of them, have an interest, and in every way to represent the company, its creditors, and debtors.

(d) Execute, acknowledge, and deliver any and all deeds, contracts, leases, assignments, bills of sale, releases, extensions, satisfactions, and other instruments necessary or proper for any purposes.

(e) Be the custodian of all moneys collected by the commissioner or coming into his or her possession in the course of any proceeding under this chapter, but he or she may deposit those moneys, or any part thereof, in a bank insured by the Federal Deposit Insurance Corporation.

(f) Invest or reinvest such portions of funds and assets of the company, in a manner as he or she may deem suitable for the best interests of the creditors of the company.

(g) To revise, refinance, extend, or settle any loan or obligation upon those terms and conditions as he or she may deem to be most advantageous to the company.

(h) To sell, compound, compromise or assign for the purpose of collection upon those terms and conditions he or she deems best, any bad or doubtful debts due the company.

(i) To compound, compromise, or in any manner negotiate settlements of claims against the company upon those terms and conditions as he or she shall deem to be most advantageous to the company.

(j) To sell, acquire, hypothecate, encumber, lease, improve, abandon, or otherwise dispose of or deal with any real or personal property which has come into ownership of the company by way of repossession, foreclosure, execution, suit or by other such means on a basis of reasonable market value, without notice, for cash, on terms, or upon such other terms and conditions as he or she may deem proper.

(k) To settle, compromise, or obtain the release of, for cash or other consideration, claims and demands against the company or the conservator.

(l) To sell for cash or on terms, exchange, or otherwise dispose of, in whole or in part, any or all the assets and property of the company, real, personal, and mixed, tangible and intangible, of any nature.

(m) Execute, acknowledge, and deliver any and all deeds, contracts, leases, assignments, bills of sale, releases, extensions, satisfactions, and any other instruments necessary or proper for any purposes, including, but not limited to, the effectuation, termination, or modification of any sale, lease, or transfer of real, personal, or mixed property, or that shall be necessary or proper to liquidate or carry on the business of the company. Any deed or other instrument executed pursuant to the authority hereby given shall be as valid and effectual for all purposes as if it had been executed as the act and deed of the company.

(n) Pay out and expend such sums as the commissioner deems necessary or advisable including the following:

(1) To pay off or discharge any taxes, assessments, liens, claims, or charges of any nature against the company, the conservator or liquidator, any asset or property of any nature of the company, or upon any asset or property on which the company or conservator or liquidator has an interest of a value of any nature.

(2) For or in connection with the preservation, maintenance, conservation, protection, remodeling, repair, rehabilitation, or improvement of any asset or property of any nature of the company.

(3) To pay all costs and expenses of the conservatorship or liquidation and all costs of carrying out or exercising the commissioner’s rights, powers, privileges, and duties as conservator.

(4) To pay valid creditor obligations, interest owed on debts, debts incurred during conservatorship or liquidation and all other debts of the company or conservatorship or liquidation of any nature.

(5) To pay all costs and expenses in the operation of the conservatorship or liquidation of the company.

(o) Do such things, and have such rights, powers, privileges, immunities and duties, whether or not otherwise granted in this chapter, as shall be authorized, directed, conferred, or imposed from time to time in specific cases by order of the court.


text:
No transaction involving real or personal property, investment or reinvestment of funds or assets, or settlement or compromise of pending lawsuits shall be made without first obtaining permission of the court, and then only in accordance with such terms as the court may prescribe, when either of the following exist:

(a) The principal sum of any obligation due the company or settlement or compromise of a pending lawsuit exceeds the sum of fifteen thousand dollars ($15,000).

(b) The market value of any real or personal property, except obligations due the company, exceeds the sum of ten thousand dollars ($10,000).


text: The commissioner may, with ex parte approval of the court, sell all or any part of the company’s assets to another industrial loan company, to a bank, to a savings and loan association, to Guaranty Corporation, or to an instrumentality of the United States government. In like manner, the commissioner may borrow from Guaranty Corporation, an instrumentality of the United States government, or a private insurer which insures or guarantees the company’s investment certificates, any amount necessary to facilitate the assumption of investment certificate liabilities by a newly chartered or existing industrial loan company, assigning any part or all of the assets of the company as security for that loan.


text: The commissioner may appoint a person to act as conservator or liquidator of the company. The person appointed may be Thrift Guaranty Corporation of California. If the company’s outstanding thrift obligations are insured by an instrumentality of the United States government, the commissioner may appoint that instrumentality to act as conservator or liquidator of the company. Subject to the other provisions of this division, a conservator or liquidator, while in possession of the property and business of a company, has the same powers and rights and is subject to the same duties and obligations as the commissioner while in possession of the property and business of a company. During such time, the rights of the company and of all persons with respect thereto, subject to the other provisions of this chapter, are the same as if the commissioner had taken possession of such properties and business, except that the commissioner may limit those powers and rights as he or she may deem necessary.


text: The commissioner shall have the authority to terminate the appointment of a conservator or liquidator whenever the commissioner deems it in the best interest of the company, its creditors, and investors. The commissioner shall file a copy of the notice of termination with the court.


text: The commissioner may require a conservator or liquidator to provide such bond as the commissioner deems proper. The conservator or liquidator shall receive a salary, fixed by the commissioner, in an amount no greater than that which would be paid by the commissioner to a special deputy commissioner in charge of the liquidation of the company.


text: If at any time after taking possession of the property and business of a company it shall appear to the commissioner that it would be futile to proceed as conservator with the conduct of the business of the company, the commissioner may order the company to be liquidated. A copy of the liquidation order shall be filed with the clerk of the superior court.


text: The liquidator shall cause notice to be given by publication for four successive weeks in a newspaper of general circulation at or near the principal place of business in the state of the company, to all persons having claims against the company, other than investment certificate holders, whether or not an action is pending to enforce any claim for demand, requiring them to present and file their claims and make legal proof thereof at a place and within a time designated in the notice. The time shall not be less than 90 days after the first publication of the notice. The notice shall also state that all claims other than those of investment certificate holders appearing upon the books or records of the company and any claims, whether or not an action is pending to enforce any such claim or demand, shall be forever barred if not filed within the time designated. The liquidator shall also mail a similar notice to all persons whose names appear as creditors upon the books of the company and any person who has an action pending to enforce a claim or demand whose address appears upon the books or records of the company and shall enclose therewith a printed form or notice of claim.


text: All claims, demands, or causes of action of creditors, and persons other than investors against any property owned or held by it in trust, or otherwise, must be presented to the liquidator in writing, verified by the claimant, or someone on his or her behalf, within the period specified in the notice for the presentation of claims, whether or not an action is pending to enforce any such claim or demand. The liquidator shall not approve any claim not so presented, and any such claim, demand, or cause of action not so presented is forever barred.


text: If the liquidator doubts the validity of any claim, the liquidator may reject the claim and serve notice of rejection upon the claimant either by certified mail or personally. A notice of rejection given by mail, addressed to the claimant at the address set forth in the claim, shall constitute sufficient notice of the rejection. Any action upon a claim so rejected must be brought within 30 days after the mailing of the notice or personal service of the notice in the court in which the liquidation proceeding is pending for an order to show cause why the claim should not be allowed. Failure to bring such action within 30 days to enforce the payment of or establish any rejected claim shall forever bar any such action.


text:
A claim shall set forth, under oath, on the form prescribed by the commissioner, all of the following:

(a) The particulars of the claim, and the consideration for the claim.

(b) Whether the claim is secured or unsecured, and, if secured, the nature and amount of the security.

(c) The payments, if any, made thereon.

(d) That the sum claimed is justly owing from such person to the claimant.

(e) That there is no offset to the claim.

(f) Such other data or supporting documents as the liquidator requires.


text: When an investment certificate holder is also a debtor, the liquidator may offset any balance due the investment certificate holder against the debt and the interest due on that debt up to the date of offset, in an amount not to exceed the amount of the debt or the amount of the thrift obligation guaranteed by the Thrift Guaranty Corporation of California, whichever is less.


text:
The amount of a claim of an investment certificate holder shall be the amount which the investment certificate holder would have been entitled to withdraw as of the date of taking possession, pursuant to Section 18415, plus interest thereon accrued to that date, without regard to whether the account is subject to any pledge. In the case of an account with a fixed or minimum term or a qualifying or notice period that has not expired as of the date of taking possession, interest shall be computed as if the account had been withdrawn on that date without penalty or reduction in interest.

The liquidator shall give notice to each investment certificate holder of the amount of his or her claim and the investment certificate holder shall not be required to file a claim unless he or she disputes the amount of the liquidator’s determination.


text: When the time fixed for the presentation of claims has expired, the liquidator shall make in duplicate a full and complete list of all claims presented, including and specifying those claims that have been rejected by the liquidator, and a list of all claims of investment certificate holders as shown by the books or records of the company, and shall file one copy of the list in the commissioner’s office and one with the clerk of the superior court in which the liquidation proceedings are being held. Before each application to the court for leave to declare a dividend, the liquidator shall file a supplemental list of claims presented since the last preceding list was filed, including and specifying the claims as have been rejected by the liquidator. The list of claims and of claims of investment certificate holders as shown by the books or records of the company shall be open for inspection at all reasonable times.


text: Objections to any claim not rejected by the liquidator may be made by any person interested by filing his or her objections, in writing, with the liquidator, who shall present the objections to the court. The court shall dispose of the objections or may order reference for that purpose, and should the objections to any claim be sustained by the court or by the referee, that claim shall not be allowed by the liquidator until the claimant has established his or her claim by judgment. Any objections to a claim shall be filed within 60 days from the date of filing of the schedule of claims as required by this article with the court or be forever barred.


text: The liquidator, with the approval of the court, may pay one or more dividends to investment certificate holders prior to the expiration of the time for filing claims. After the time for filing of claims has elapsed, the liquidator, after obtaining approval of the court, may pay one or more dividends upon all approved claims out of the funds remaining in the liquidator’s possession after the payment of expenses and after setting aside an amount to pay creditors whose claims have been rejected and whose time for filing an application to show cause under this article has not yet elapsed or whose application is still pending. At any time after the expiration of one year from the date of the first publication of notice of creditors, and with court approval, the liquidator may pay a final distribution which shall consist of the remaining funds available for distribution, being distributed pro rata to all approved creditor claims.


text:
(a) Claims allowed in a proceeding under this article shall be given preference in the following order:

(1) All costs and expenses of administration of conservatorship and liquidation.

(2) Taxes due to the State of California.

(3) Claims having preference by the laws of the United States and by laws of this state.

(4) All claims of creditors, including contractual claims for interest to the date of payment, whose claims are fully secured.

(5) Claims of investment certificate holders.

(6) Claims of general creditors.

(7) Claims on obligations subordinated to the claims of investment certificate holders and general creditors.

Paragraphs (5) and (6) apply only in liquidation proceedings, where the commissioner has taken possession of the property and business of the company on or after the effective date of this section, and paragraph (6) shall apply only with respect to persons who become general creditors on or after that date. It is the intent of the Legislature that no change in the law contained in this section shall be construed to affect the rights and obligations of parties with regard to transactions occurring prior to the effective date of this section. It is the intent of the Legislature that the rights and obligations of parties existing prior to the effective date of this section shall be determined by the law in effect prior to the effective date of this section and without application of changes in the law effected by this section.

(b) All approved claims shall bear interest at the rate provided by law or judgments from the date that the commissioner takes possession of the property and business of the company, to the extent funds are available to pay such interest, otherwise interest shall be prorated.

Interest shall be given the same preference as the claim on which it is based, but no interest on any claim shall be paid until all claims within the same class have received the full principal amount of the claim.

(c) Any funds remaining shall be returned to the stockholders of the company pursuant to the provisions of this article.


text: Whenever the commissioner determines to liquidate a company, the commissioner shall cause an inventory of all the assets of the company to be made in duplicate, file the original with the court, and file the duplicate in the commissioner’s office.


text: If it appears improbable that anything can be realized from any property of the company and that the cost of maintaining, preserving, or protecting the property would probably be lost, the court may direct the liquidator to abandon the property.


text: If a purchaser of any property or any bad or doubtful debt or claim of a company cannot be obtained and it appears improbable that recovery thereon can be had, and that the cost of action to enforce collection of the same would probably be lost, the superior court may direct that suit on the debt or claim need not be brought.


text: When the liquidator has fully liquidated all claims other than claims of stockholders, made due provision for any and all known but unclaimed liabilities, excepting claims of stockholders, and paid all expenses of liquidation, the liquidator may file an application for an order for the liquidation of a domestic corporation, or at any time thereafter, the commissioner may apply for, and the court shall make, an order dissolving the corporation.


text: Upon the payment of a final dividend in liquidation, the commissioner shall prepare and file with the court a full and final statement of the liquidation, including a summary of the receipts and disbursements, and a duplicate of the statement shall be filed in the office of the commissioner. After hearing and approval by the court, the liquidation shall be closed.


text: In making its order approving the commissioner’s final statement of the liquidation of the company, the court shall determine the amounts of the liquidating dividends to which claimants are entitled but which then remain unpaid or unclaimed in the hands of the commissioner. The order of the court shall direct the commissioner to deposit those amounts with the Treasurer. All amounts so deposited shall be deemed to be deposited in the State Treasury under the provisions of Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure, and shall be subject to claim or disposition as provided in that chapter.


text: The order of the court approving the final statement on liquidation shall provide for the destruction or other disposition of the books and records of the company or pertaining to the liquidation of the company, and the court may declare the company dissolved as a corporation. The liquidator shall file a copy of the order of dissolution with the Secretary of State.


text:
Unless the context otherwise requires, in this article:

(a) “Offer” or “offer to sell” includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security for value.

(b) “Sale” or “sell” includes every contract of sale of, contract to sell, or disposition of, a security for value. “Sale” or “sell” includes any exchange of securities and any change in the rights, preferences, privileges, or restrictions of or on outstanding securities.

(c) “Security” means any stock or debenture, or any warrant, right, or option to subscribe to or purchase any of the foregoing.

(d) The terms defined in subdivisions (a) and (b) of this section do not include any stock dividend payable with respect to common stock of an industrial loan company solely (except for any cash or script paid for fractional shares) in shares of such common stock, if such industrial loan company has no other class of voting stock outstanding; provided, that shares issued in any such dividend shall be subject to any conditions previously imposed by the commissioner applicable to the shares with respect to which they are issued.

history: (History: Repealed and added by Stats. 1996, Ch. 1064, Sec. 598. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Securities Transactions

path: 7. INDUSTRIAL LOAN COMPANIES > 5. Administration and Powers of the Commissioner > 5. Securities Transactions


text: No industrial loan company organized under the laws of this state shall offer or sell any security issued by it unless the commissioner has issued a permit authorizing such sale.

history: (History: Repealed and added by Stats. 1996, Ch. 1064, Sec. 600. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Securities Transactions


text: An application for a permit shall be in such form and contain such information as the commissioner may prescribe.

history: (History: Repealed and added by Stats. 1996, Ch. 1064, Sec. 602. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Securities Transactions


text:
The commissioner shall charge and collect fees for applications filed under this article as fixed in this section.

(a) The fee for a negotiating permit shall be fifty dollars ($50).

(b) The fee for a permit to exchange a security or to make any change in the rights, preferences, privileges, or restrictions of or on outstanding securities shall be fifty dollars ($50).

(c) The fee for any permit to sell securities other than as specified in subdivision (b) shall be one hundred dollars ($100) plus one-tenth of one percent of the aggregate value of the securities sought to be sold, up to a maximum aggregate fee of one thousand seven hundred fifty dollars ($1,750).

history: (History: Repealed and added by Stats. 1996, Ch. 1064, Sec. 604. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Securities Transactions


text: If the commissioner finds that the proposed sale of securities is fair, just, and equitable, he or she shall issue to the applicant a permit authorizing it to offer and sell the securities in such amount and upon such terms and conditions as he or she may provide in the permit. If the commissioner finds otherwise, he or she shall deny the application.

history: (History: Repealed and added by Stats. 1996, Ch. 1064, Sec. 606. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Securities Transactions


text: The commissioner may impose conditions in any permit issued under Section 18427.4, requiring the deposit in escrow of securities, imposing a legend condition restricting the transferability thereof, impounding the proceeds from the sale thereof, limiting the expense in connection with the sale thereof, or such other conditions as he or she deems reasonable and necessary or advisable in the public interest.

history: (History: Added by Stats. 1996, Ch. 1064, Sec. 607. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Securities Transactions


text: Every permit issued pursuant to Section 18427.4 shall recite that it is permissive only and does not constitute a recommendation or endorsement of the securities permitted to be sold.

history: (History: Added by Stats. 1996, Ch. 1064, Sec. 608. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Securities Transactions


text: The commissioner may amend, alter, suspend, or revoke any permit issued pursuant to Section 18427.4.

history: (History: Added by Stats. 1996, Ch. 1064, Sec. 609. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Securities Transactions


text: Whenever an industrial loan company applies for a permit to issue any security or to deliver any other consideration (whether or not such security or such transaction is exempt from, or not subject to, the provisions of Section 18427.1) in exchange for one or more bona fide outstanding securities (as defined in Section 25019 of the Corporations Code), claims, or property interests, or partly in such exchange and partly for cash, the commissioner is authorized to approve the terms and conditions of such issuance and exchange or such delivery and exchange and the fairness of such terms and conditions and is authorized to hold a hearing on the fairness of such terms and conditions, at which all persons to whom it is proposed to issue any security or to deliver any other consideration in such exchange shall have the right to appear.

history: (History: Added by Stats. 1996, Ch. 1064, Sec. 610. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Securities Transactions


text:
There shall be exempted from the provisions of Section 18427.1 all of the following:

(a) (1) Any offer, not involving a public offering, to an affiliate or to a person of the type described in subdivision (i) of Section 25102 of the Corporations Code or in the regulations of the Commissioner of Financial Protection and Innovation adopted thereunder.

(2) The execution and delivery of an agreement for the sale of securities to any person of the type described in paragraph (1), subject to all of the following:

(A) The agreement shall contain substantially the following provision: “The sale of the securities which are the subject of this agreement has not been authorized by a permit issued by the Commissioner of Financial Protection and Innovation. The issuance of the securities or the payment or receipt of any part of the consideration therefor prior to the issuance of a permit is unlawful, unless the sale of securities is exempt from Section 18427.1 of the California Financial Code. The rights of all parties to this agreement are expressly conditioned upon the issuance of a permit, unless the sale is so exempt.”

(B) No part of the purchase price may be paid or received, and none of the securities may be issued, until a permit authorizing the sale of the securities is issued, unless the sale is exempt from Section 18427.1.

(b) Any transaction or security that the commissioner by regulation or order exempts as not being comprehended within the purposes of this article and the regulation of which they find is not necessary or appropriate in the public interest or for the protection of investors.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 130. (SB 1498) Effective January 1, 2023.)

article: 5. Securities Transactions


text: Nothing contained in this article shall affect the Corporate Securities Law of 1968, Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code.

history: (History: Added by Stats. 1996, Ch. 1064, Sec. 612. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Securities Transactions


text: The commissioner may by regulation or order restrict, limit, prohibit or otherwise condition the uses of the proceeds from the sale of securities, the extent to which a security may be included within the definition of capital, or the extent to which the proceeds from the sale of securities may be included in the investment certificate ratio as defined by Section 18016, or used to increase outstanding investment certificates.

history: (History: Added by Stats. 1996, Ch. 1064, Sec. 613. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Securities Transactions


text: Except as otherwise provided in this division, any person who willfully violates any provision of this division, or who willfully violates any rule or order adopted pursuant to this division, shall, upon conviction, be punished by a fine of not more than ten thousand dollars ($10,000), by imprisonment in a county jail for not more than one year or pursuant to subdivision (h) of Section 1170 of the Penal Code, or by both that fine and imprisonment. However, no person may be imprisoned for the violation of any rule or order unless he or she had knowledge of the rule or order. Conviction under this section shall not preclude the commissioner from exercising the authority provided in Section 18349.5.

history: (History: Amended by Stats. 2011, Ch. 15, Sec. 111. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)

chapter: 6. Prohibited Practices and Penalties

path: 7. INDUSTRIAL LOAN COMPANIES > 6. Prohibited Practices and Penalties


text: An industrial loan company shall not, directly or indirectly, make any loan of money or property to or guarantee the obligation of any of its directors or officers, or officers and directors of its holding company, or officers and directors of its affiliates.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 4.)


text:
(a) Except as provided in subdivision (b), an industrial loan company shall not make loans to, or purchase any obligations from, persons who do not reside or have a place of business in the State of California, unless those loans or obligations comply with all of the following conditions:

(1) If the loan or obligation is unsecured, then only if the loan or obligation bears the unqualified written guaranty of a financially responsible person, considering the amount of the obligation, who resides or has a place of business in the State of California.

(2) If the documents and security for the loan or obligation and all records relating to the transaction are in California at the time the loan or obligation is made or acquired and are thereafter kept in California while the loan or obligation remains unsatisfied, except that where the security is aircraft, the security need not be in California at the time the loan or obligation is made or acquired, nor need it thereafter be held in California while the loan or obligation remains unsatisfied.

(b) Notwithstanding subdivision (a), an industrial loan company may make loans to, or purchase any obligations from, persons who do not reside or have a place of business in the State of California not to exceed 25 percent, in the aggregate, of an industrial loan company’s total assets. Upon application to and approval by the commissioner, an industrial loan company may increase its loans to, or purchases of obligations from, persons who do not reside or have a place of business in this state not to exceed 50 percent, in the aggregate, of an industrial loan company’s total assets. The application shall include all of the following information:

(1) A description of the company’s proposed plan of business.

(2) The character, business qualifications, and other experience of the proposed officers and managers directing the line of business for which authorization is requested.

(3) Any other facts and circumstances bearing on the proposal that, as determined by the commissioner, may be relevant.

(c) This section does not apply to loans made to, or acquired from, persons who do not reside or have a place of business in this state if all of the following conditions are met:

(1) The loans are for the purchase or refinance of single- or multi-family residential property or nonresidential property.

(2) The loans are salable in the secondary market as evidenced by commitments to buy by a buyer in the secondary market.

(3) The loans are owned by the industrial loan company for 90 days or less.

history: (History: Amended by Stats. 1999, Ch. 345, Sec. 4. Effective January 1, 2000.)


text: If a loan is made or other thing is purchased or discounted in violation of Section 18271, 18272, 18273, 18274, or 18437, the officers, directors and shareholders of the industrial loan company, its holding company, or its affiliates participating therein or knowingly approving the same shall be personally liable for any loss suffered by the industrial loan company by reason thereof.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 5.)


text: If any amount in excess of the charges permitted by this division, including interest, is charged, contracted for, or received in the making or collection of a contract of loan, except as a result of an accidental and bona fide error in computation, such contract is void and no person has any right to collect or receive the principal, interest, or charges.

history: (History: Added by Stats. 1976, Ch. 964.)


text: An industrial loan company shall not take any confession of judgment or any power of attorney at the time of making the loan except a power of attorney taken to effectuate the transfer of the ownership of any motor vehicle, the transfer of the ownership of securities, or the cancellation of an insurance policy and the receipt and distribution of any unearned premiums in the event of default in the payment of a loan made to finance the purchase of any such insurance policy.


text:
No person in connection with or incidental to the making of any loan under this division, shall require the borrower to contract for, purchase, or agree to purchase anything in connection with the loan. A policy of insurance of the type specified in Article 6 (commencing with Section 18290) of Chapter 3 of this division is not prohibited by this section.

No person shall require a borrower to enter into any collateral sales agreement or contract except as expressly permitted by this division.


text: An industrial loan company shall not make any loan of money or property to or guarantee the obligation of any person upon the security of its capital (including the shares of capital stock) of the company, its holding company, or its affiliates.

history: (History: Amended by Stats. 1989, Ch. 663, Sec. 18. Operative January 1, 1991, by Sec. 20 of Ch. 663.)


text: If any loan or guaranty is made in violation of Section 18436 or 18442, the directors and officers who authorize it or assent thereto are jointly and severally liable to the company as guarantors for the repayment or return of the sum or value so loaned with interest thereon at the rate of 6 percent per year until paid.


text: Any officer or director held liable under Section 18443, who satisfies such liability is entitled to contribution from any other officer or director who participates in authorizing, making or allowing any such loan or guaranty, and is subrogated to all rights of the corporation against the borrower or principal obligor.


text: Any director, officer, or employee of an industrial loan company, its holding company, or its affiliates who asks for or receives, or consents or agrees to receive any commission, emolument, or gratuity or any money, property, or thing of value for procuring or endeavoring to procure for any person any loan from such company, or the purchase or discount of any note, contract, or other obligation or property by such company, is guilty of a felony.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 7.)


text: Any director, officer, or employee of an industrial loan company, its holding company, or its affiliates who knowingly receives or possesses himself of any of its property otherwise than in payment of a just demand, or with intent to defraud, omits to make or causes to be made a full and true entry thereof in its books and accounts or concurs in omitting to make any material entry thereof, is guilty of a felony.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 8.)


text: Any director, officer, or employee of an industrial loan company, its holding company, or its affiliates who knowingly makes or concurs in making or publishing any false entry in its books or records, any written report, exhibit, or statement of its affairs or pecuniary condition containing any material statement which is false, or having the custody of its books, willfully refuses or neglects to make any proper entry in such books as required by law, or to exhibit or allow the same to be inspected or extracts to be taken therefrom by the commissioner or his deputies or investigators, is guilty of a felony.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 9.)


text: No director, officer, stockholder, or employee of an industrial loan company, its holding company, or its affiliates shall purchase, directly or indirectly, or be interested in the purchase of, any of the company’s assets for an amount less than the then current market value thereof and any such purchase may not be made without the express approval of the board of directors of the company. Title and possession of assets shall not be transferred to the purchaser until full consideration in cash has been received by the industrial loan company. Every person violating this section shall be liable to the company for twice the market value of the assets so purchased.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 10.)


text:
Every director of an industrial loan company who: (a) In the case of the fraudulent insolvency of such company, shall have participated in such fraud; or(b) Willfully does any act as such director which is expressly forbidden by law or willfully omits to perform any duty imposed upon him as such director by law, is guilty of a misdemeanor.

The insolvency of a company is deemed fraudulent for the purposes of this section, unless its affairs appear upon investigation to have been administered clearly, legally, and with the same care and diligence that agents receiving a compensation for their services are bound by law, to observe.


text: A director, officer, or employee of an industrial loan company, its holding company, or its affiliates who concurs in any vote or act by which it is intended to make a loan or purchase a contract in violation of this division, is guilty of a misdemeanor.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 11.)


text: A director, officer, or employee of an industrial loan company, its holding company, or its affiliates who makes or maintains, or attempts to make or maintain, a deposit of such company’s funds with any other person on condition, or with the understanding, express or implied, that the person receiving such deposit make a loan or advance, directly or indirectly, to any director, officer, or employee of the company so making or maintaining or attempting to make or maintain such deposit, is guilty of a misdemeanor.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 12.)


text: Every officer or employee of an industrial loan company, its holding company, or its affiliates who sells investment or thrift certificates knowing that the company is insolvent, is guilty of a misdemeanor.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 13.)


text: Any person who knowingly sells investment certificates in violation of any provision of this division or any order or regulation of the commissioner, is guilty of a felony.


text: Any director, officer, agent or employee of an industrial loan company, its holding company, or its affiliates who willfully makes a false or untrue entry in any book or record or in any report, tag, or statement of the business, affairs, or condition, or in connection with any transaction of such company, with intent to deceive any officer, director, or employee thereof, or any agent or examiner, private or official, employed or lawfully appointed to examine into its condition or any of its affairs or transactions, or to any public officer who has authority to examine into its affairs or transactions, or who, with like intent, willfully omits to make a new entry of any matter particularly pertaining to the business property condition, affairs, transactions, assets or accounts of such company in any book, record, report, statement, or tag of such company, or who, with like intent, alters, abstracts, conceals, or destroys any book, record, report, statement, or tag of such company made, written, or kept, or required to be made, written, or kept by him or under his direction, is guilty of a felony.

history: (History: Amended by Stats. 1980, Ch. 418, Sec. 14.)


text: It is unlawful for any person to willfully make any untrue statement of a material fact in any document filed with the commissioner under this division, or to willfully omit to state in any document any material fact which is required to be stated therein.

history: (History: Added by Stats. 1988, Ch. 537, Sec. 2.)


text:
An industrial loan company shall not, directly or indirectly, make any loan to, or purchase a contract, loan, or chose in action from, hold a lease obligation of, or purchase a lease contract from, any of the following:

(a) A person who is an officer or director of the industrial loan company or of its holding or affiliated company.

(b) A person who is a holder of record or beneficiary of the shares of the industrial loan company or of any holding or affiliated company. This restriction shall not apply to persons holding less than 10 percent of the shares of a holding company or affiliated company that is exempt from the qualification requirements of the Corporate Securities Law of 1968 contained in Section 25130 of the Corporations Code, pursuant to subdivision (a) or (b) of Section 25101 of the Corporations Code.

(c) A person in which an officer or director of the industrial loan company or of any holding or affiliated company directly or indirectly is financially interested, directly or indirectly.

(d) A person in which the holder of record or beneficiary of the shares of the industrial loan company or of any holding or affiliated company directly or indirectly is financially interested, directly or indirectly. This restriction shall not apply to persons holding less than 10 percent of the shares of a holding company or affiliated company that is exempt from the qualification requirements of the Corporate Securities Law of 1968 contained in Section 25130 of the Corporations Code, pursuant to subdivision (a) or (b) of Section 25101 of the Corporations Code.

(e) A person who acquired those contracts directly or indirectly or through intervening assignments from a person described in subdivision (a), (b), (c), or (d).

Any officer, director, or shareholder of an industrial loan company who directly or indirectly makes or procures, or participates in making or procuring, a loan or contract in violation of this section or knowingly approves the same is personally liable for any loss resulting to an industrial loan company from the loan or contract, in addition to any other penalties provided by law.

(f) The prohibition contained in this section shall not apply to the purchase by an industrial loan company of a contract, loan, or chose in action from a finance lender, as described in Section 22009, a mortgage broker, a mortgage banker, a real estate broker or other licensed lender, provided written authorization for the purchase is obtained from the commissioner.

(g) The prohibition contained in this section shall not apply to the purchase of life insurance by an industrial loan company on behalf of an officer or director as part of the officer’s or director’s employee benefit plan package.

(h) The prohibition contained in this section shall not apply to the following transactions:

(1) A transaction between an industrial loan company and a subsidiary corporation or other entity in which the industrial loan company is the owner of 50 percent or more of the common stock or equity interest, or directly controls the management of the corporation or other entity.

(2) The purchase of loans or other obligations by an industrial loan company from an affiliated company pursuant to a sale and repurchase agreement.

history: (History: Amended by Stats. 1997, Ch. 201, Sec. 6. Effective January 1, 1998.)


text: The provisions of this chapter shall be applicable to lease obligations.

history: (History: Added by Stats. 1979, Ch. 911.)


text: Any officer, director, employee, or agent of any company who abstracts or willfully misapplies any of the money, funds, or property of the industrial loan company, or willfully misapplies its credit, is guilty of a felony. Upon conviction, the court shall, in addition to any other punishment imposed, order the person to make full restitution to the industrial loan company. Nothing in this section shall be deemed or construed to repeal, amend, or impair any existing provision of law prescribing a punishment for such an offense.

history: (History: Added by Stats. 1990, Ch. 947, Sec. 5.)


text: “Guaranty corporation” means Thrift Guaranty Corporation of California which exists under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code).

history: (History: Amended by Stats. 1978, Ch. 1305.)

chapter: 7. Guarantee of Thrift Accounts

article: 1. Definitions

path: 7. INDUSTRIAL LOAN COMPANIES > 7. Guarantee of Thrift Accounts > 1. Definitions


text:
(a) “Member” means an industrial loan company required by Section 18100.5 to be a member of Guaranty Corporation. “Member” includes “special member” except where the term “special member” is used in the same section of this chapter.

(b) “Special member” means a member whose thrift obligations are insured by the Federal Deposit Insurance Corporation or by the Federal Savings and Loan Insurance Corporation or, subject to any rules promulgated by the commissioner, by a private insurer, surety or guarantee corporation acceptable to and approved by the commissioner.

history: (History: Amended by Stats. 1985, Ch. 142, Sec. 8. Effective July 1, 1985.)

article: 1. Definitions


text: “Thrift obligations” as used in this chapter include principal invested in investment or thrift certificates however evidenced, and unpaid interest thereon accrued as of the last interest accrual date prior to the date the commissioner takes possession of the property and business of a member or the date such member is the subject of an order for relief in bankruptcy, whichever occurs sooner.

history: (History: Amended by Stats. 2009, Ch. 500, Sec. 41. (AB 1059) Effective January 1, 2010.)

article: 1. Definitions


text: “Fund” means the Guaranty Corporation Fund established pursuant to Section 18535.

history: (History: Added by Stats. 1985, Ch. 142, Sec. 9. Effective July 1, 1985.)

article: 1. Definitions


text: “Capital contribution” means the amount each member is required to maintain as an investment in the corporation pursuant to Section 18535.

history: (History: Added by Stats. 1985, Ch. 142, Sec. 10. Effective July 1, 1985.)

article: 1. Definitions


text: “Member account” means the total of all amounts credited to a member for paid-in capital contributions, and other credits, net of any charges to that participating member.

history: (History: Added by Stats. 1985, Ch. 142, Sec. 11. Effective July 1, 1985.)

article: 1. Definitions


text: “Guaranteed investment certificate” means a thrift obligation guaranteed by Guaranty Corporation pursuant to Section 18523.

history: (History: Added by Stats. 1985, Ch. 142, Sec. 12. Effective July 1, 1985.)

article: 1. Definitions