Authorization To Engage In Banking - - CA Financial

Section § 1040

This section defines key terms related to the expenses a bank incurs before it starts operating. A 'preopening expenditure' is any cost or obligation a bank takes on while setting up, before it officially begins business. 'Preopening noncapital expenditure' refers to these costs, except for those that can be capitalized, meaning they are counted as an investment rather than an immediate expense.

In this article:

(a) “Preopening expenditure” means any obligation incurred, or sum disbursed, by a bank prior to the time when it commences to transact banking business, for the purpose of organizing such bank.

(b) “Preopening noncapital expenditure” means any preopening expenditure other than such preopening expenditures as may be capitalized.

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(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Section § 1041

If you're starting a new bank or trust company in California, you have to get your articles of incorporation approved by the commissioner before filing them with the Secretary of State. Once filed, you must give the commissioner a certified copy of these articles and show proof that your bank's initial capital is fully paid in cash and deposited in a bank. Additionally, you'll need to pay a $2,500 fee to the commissioner.

The articles of incorporation of the proposed bank or trust company shall be submitted to the commissioner for his or her approval before they are filed with the Secretary of State pursuant to the Corporations Code. After the articles have been filed with the Secretary of State the proposed bank or trust company shall:

(a) File with the commissioner a copy of its articles of incorporation, certified by the Secretary of State.

(b) File with the commissioner a statement in the form and with any supporting data as the commissioner may require showing that the entire contributed capital has been fully paid in lawful money, unconditionally, and that the funds representing the contributed capital, less sums spent as authorized by this article for preopening expenditures are on deposit in a state or national bank in this state, subject to withdrawal on demand.

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(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Section § 1042

If a new bank or trust company meets all legal requirements and conditions to start operating, the commissioner must issue a certificate within 30 days. This certificate allows them to officially conduct business and confirms compliance with the necessary regulations. One copy of the certificate goes to the bank or trust company, and the other is kept on file by the department.

If the commissioner finds that the proposed bank or trust company has in good faith complied with all the requirements of law and fulfilled all the conditions precedent to commencing business imposed by this code or by regulation, the commissioner shall, within 30 days after the statement and supporting data specified in Section 1041 have been filed with him or her, issue in duplicate a certificate of authorization to transact business as a bank or trust company, as the case may be, and shall transmit one copy to the bank or trust company and place one copy on file in the department. The certificate of authorization shall state that the corporation named therein has complied with all the provisions of this code governing organization of banks or trust companies and that it is authorized to transact the business specified therein.

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(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Section § 1043

This law makes it illegal to accept money for shares in a new bank or trust company unless the company has received permission to be organized from the commissioner.

It shall be unlawful to accept payment of subscriptions for shares of any corporation proposing to engage in the banking or trust business unless authority to organize such corporation has been granted by the commissioner.

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(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Section § 1044

A bank or trust company in California cannot start doing business until it receives a certificate from the commissioner. Additionally, these companies cannot take on debt beyond what is needed to organize until their capital has been fully paid to their financial officer in legal money.

No corporation organized to transact a commercial banking or trust business shall transact any business until the commissioner has issued his or her certificate authorizing it to transact such business. No bank or trust company shall incur any indebtedness except that which is incidental to its organization until the amount of its contributed capital has been fully paid in lawful money to the cashier or chief financial officer thereof.

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(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Section § 1045

If a proposed bank or trust company does not file the necessary incorporation documents within a year after getting the green light to start organizing, they lose the right to organize. However, they can ask the commissioner for more time if they have a good reason, do it before the deadline, and pay $100. Each extension can be up to 6 months.

If the proposed bank or trust company fails to file evidence of incorporation and organization with the commissioner pursuant to Section 1041 within one year after the approval of the application for authority to organize the bank or trust company, the right to organize the bank or trust company automatically terminates. The commissioner, however, for good cause on written application filed before the expiration of the original period or any additional period, as the case may be, and payment of a fee of one hundred dollars ($100), may extend for additional periods not in excess of six months each the time within which the bank or trust company may be organized.

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(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Section § 1046

If a new bank or trust company doesn't start operating within 90 days after getting its authorization certificate, it loses the right to do business. However, if it needs more time, it can apply for an extension, and the commissioner might grant up to an extra 90 days if there's a good reason.

If the proposed bank or trust company fails to open for business within 90 days after the issuance of the certificate of authorization, the right to transact business automatically terminates. The commissioner, however, for good cause on written application filed before the end of said 90-day period, may extend for one additional period of not to exceed 90 days the time within which the bank or trust company may open for business.

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(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Section § 1047

This law prohibits using money collected from investors or subscribers to pay commissions or fees for attracting more investors or selling shares. Additionally, these funds can't be used for pre-opening expenses unless the commissioner has given approval.

It is unlawful to apply any part of the funds collected from subscribers or shareholders to the payment of commissions or fees for obtaining subscriptions or selling shares or, except with the prior approval of the commissioner, to the payment of preopening noncapital expenditures.

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(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Section § 1048

Banks and trust companies in California are required to display their certificate of authority, which permits them to conduct banking or trust business. This certificate must be posted prominently in the main banking area at their head office to show they are authorized by the commissioner.

Every bank and trust company shall keep posted in a conspicuous place in its banking room at its head office the certificate of authority to transact a banking or trust business issued by the commissioner.

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(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)