Bank Holding Companies - - CA Financial

Section § 1280

This section defines what qualifies as a 'bank holding company' in California. A company is a bank holding company if it owns or controls at least 10% of the stock or voting power of a domestic bank, or if it can influence the election of the majority of a bank's directors. Additionally, if a company or person is determined by the commissioner to have a controlling influence over a bank's management, it also qualifies. Furthermore, the law includes any company that controls another company fitting this description. However, a trust controlled by or under common control with a title insurance company does not count as a bank holding company.

“Bank holding company” means:

(a) Any person or company which:

(1) Directly or indirectly owns, controls, or holds with power to vote, 10 percent or more of the outstanding stock of any domestic bank, or 10 percent or more of the outstanding stock of any domestic bank together with 10 percent or more of the shares or proxy of shares of any national bank located in California.

(2) Controls in any manner whether by the holding of proxy, or otherwise, the election of a majority of the directors of any domestic bank, or of both any domestic bank and any national bank located in California.

(3) The commissioner determines, after reasonable notice and opportunity for hearing, directly or indirectly exercises, or has power to exercise, a controlling influence over the management and policies of any domestic bank, or of both any domestic bank and any national bank located in California.

(b) Any company which controls in any manner any company which is or becomes a bank holding company by virtue of this chapter.

(c) Bank holding company does not include a trust company controlled by or under common control with a title insurance company.

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

Section § 1281

This section defines the term “Company” broadly to include various types of business entities, whether they are official corporations or not. It covers everything from corporations and trusts to partnerships and organized groups.

“Company” means any domestic or foreign corporation, voting trust, business trust, limited partnership, partnership fund, joint stock company, association, syndicate, organized group of persons, or similar organization or group, whether incorporated or not.

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

Section § 1282

This law defines what a 'subsidiary' is in relation to a bank holding company. A subsidiary is any company where the bank holding company owns or controls 10% or more of the voting shares, controls the majority of the company's board of directors, or owns 10% or more of the legal or beneficial ownership through direct or indirect means.

“Subsidiaries,” with respect to a specified bank holding company, means:

(a) Any company 10 percent or more of whose voting securities are directly or indirectly owned or controlled by such bank holding company;

(b) Any company a majority of whose directors are controlled in any manner by such holding company;

(c) Any company 10 percent or more of whose voting securities are held by trustees or nontrustees for the benefit of the stockholders, shareholders, or members of such holding company; or

(d) Any company 10 percent or more of the legal or beneficial ownership of which is directly or indirectly owned or controlled by such holding company.

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

Section § 1283

The commissioner can ask for reports from bank holding companies and their subsidiaries about issues that are important for the commissioner's responsibilities. These reports can be required in any form, including under oath.

The commissioner may from time to time require, under oath or otherwise, reports from any bank holding company and its subsidiaries in such form and as to such matters as the commissioner may deem necessary and appropriate, and which are relevant to the jurisdiction and responsibilities of the commissioner under this division.

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

Section § 1284

This law allows the commissioner to inspect bank holding companies and their subsidiaries to ensure compliance. These inspections can be done by the commissioner's own team or independent accountants. Instead of conducting a new inspection, the commissioner may accept inspections done by federal or other state agencies. If the commissioner uses their own staff for the inspection, the bank holding company must pay $200 per day per examiner plus travel costs if the examiner needs to travel out of state. If independent accountants are used, the company must cover their fees within ten days of receiving a billing statement.

Each bank holding company and its subsidiaries shall be subject to examination by the commissioner. The commissioner may use, for this purpose, his or her own examiners or independent public accountants who are disinterested persons. In lieu of making an examination, the commissioner may accept the examination of any holding company made by any federal agency, any other agency of this state, or any agency of any other state of the United States and may examine any such holding company in conjunction with these agencies. If the commissioner examines a bank holding company or any of its subsidiaries, other than a domestic bank, using the commissioner’s own examiners, the bank holding company shall pay, within 10 days after receipt of a statement from the commissioner, a fee of two hundred dollars ($200) per day for each examiner engaged in the examination plus, in the event it is necessary for any examiner engaged in the examination to travel outside this state, the travel expenses of the examiner. If the commissioner examines a bank holding company or any of its subsidiaries, other than a domestic bank, using independent public accountants, the bank holding company shall pay, within 10 days after receipt of a statement from the commissioner, the fee of the independent public accountants.

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

Section § 1285

This law states that when a trust company is controlled by or shares control with a title insurance company, the commissioner must work with the Insurance Commissioner to create rules for inspecting and examining these companies. These inspections will follow certain provisions from the Insurance Code.

With respect to a trust company controlled by or under common control with a title insurance company, the commissioner in cooperation with the Insurance Commissioner shall adopt reasonable rules and regulations for the conduct of the inspection and examination authorized by Sections 1282 and 1284. Any such examination or inspection shall be conducted pursuant to the provisions of Article 4.7 (commencing with Section 1215) of Chapter 2 of Part 2 of Division 1 of the Insurance Code.

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

Section § 1286

This section makes it clear that the commissioner can't demand reports or conduct examinations of a national bank if it goes against federal law.

Nothing in this chapter shall be construed to authorize the commissioner to require reports from a national bank or to examine a national bank contrary to federal law.

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

Section § 1287

This law states that the interest rate limits in California's Constitution don't apply to loans and financial activities involving bank holding companies or their subsidiaries that aren't banks. It recognizes these as a special exempt class based on constitutional authority. However, these companies must still follow all other laws that regulate their business activities.

Pursuant to the authority contained in Section 1 of Article XV of the California Constitution, the restrictions upon rates of interest contained in Section 1 of Article XV of the California Constitution shall not apply to any obligations of, loans made or arranged by, or forbearances of or arranged by, a bank holding company or a subsidiary of a bank holding company which is not a bank. As used in this section, the terms “bank holding company” and “subsidiary” mean a bank holding company or subsidiary as defined in Chapter 17 (commencing with Section 1841) of Title 12 of the United States Code.

This section creates and authorizes an exempt class of persons pursuant to Section 1 of Article XV of the Constitution. This section does not exempt a bank holding company or a subsidiary of a bank holding company from complying with all other applicable provisions of law regulating the business of these companies.

This section does not exempt a bank holding company or a subsidiary thereof from complying with all other laws or regulations governing the business in which the bank holding company or subsidiary is engaged.

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