Foreign (National) Savings Companies - - CA Financial

Section § 10000

This section explains how certain terms are defined specifically for this chapter. A 'California savings association' includes associations authorized in California since 1935. 'Foreign holding company' refers to savings or bank holding companies primarily operating outside California without branches in the state. A 'foreign savings association' is an insured entity that is neither a California nor a federal association. An 'insured institution' is a savings entity insured by the FDIC but excludes certain types of savings banks. Additionally, the 'principal place of deposits' is where an entity has its largest deposits overall.

Terms not expressly defined in this chapter have the meaning given in Chapter 1 (commencing with Section 5000) or as the commissioner may provide by regulation. For the purposes of this chapter:

(a) “California savings association” means either (1) an association or (2) a foreign association or successor thereof that was licensed to do the business of an association in California on September 15, 1935.

(b) “Foreign holding company” means a savings and loan holding company as defined in Section 10 of the Home Owners Loan Act, as amended (12 U.S.C. Sec. 1467a) or bank holding company as defined in Section 3 of the federal Bank Holding Company Act, as amended, (12 U.S.C. Sec. 1841 et seq.), which savings and loan or bank holding company (1) has its principal place of deposits outside of California and (2) does not control a subsidiary California savings association or a subsidiary federal association with, or a subsidiary foreign savings association with, an authorized home or branch office in California at which accounts may lawfully be opened and deposits may lawfully be accepted.

(c) “Foreign savings association” means an insured institution other than a California savings association and other than a federal association.

(d) “Insured institution” means an entity: (1) that is organized and licensed as a savings association, savings and loan association, or savings bank under the laws of another state of the United States and the deposits of which are insured by the Federal Deposit Insurance Corporation or (2) that is chartered by the Office of Thrift Supervision. However, “insured institution” does not include any savings bank of the type defined in Section 3(g) of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1813(g)).

(e) The “principal place of deposits” of an entity is that state in which the total deposits of all of that entity’s depository operations and those of its affiliates are largest.

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(Amended by Stats. 2004, Ch. 176, Sec. 5. Effective January 1, 2005.)

Section § 10001

Only California savings associations or authorized entities can operate as an association in California. Foreign savings associations and foreign holding companies are not allowed to control a California savings association. The commissioner has the power to stop anyone from illegally conducting association business in California.

(a) No person, other than a California savings association or other person authorized by this division, shall do any business of an association.

(b) No foreign savings association may control a California savings association.

(d) The commissioner shall obtain an injunction or take other action necessary to prevent any person from unlawfully doing any business of an association in this state.

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(Added by Stats. 1987, Ch. 1162, Sec. 19. Effective September 26, 1987. Section operative January 1, 1991, pursuant to Section 10009.)

Section § 10002

This law allows foreign savings associations to operate or take control in California starting from January 1, 1991, but only if their home jurisdiction does not impose barriers on California savings associations wanting to do the same there. If it does, then California will impose similar restrictions on them.

Notwithstanding Section 10001, and subject to Section 10003, on and after January 1, 1991, a foreign savings association may conduct the business of an association in California or may acquire control of a California savings association, and a foreign holding company may acquire control of a California savings association; provided that, if the commissioner determines that the laws, court decisions, or practices of the jurisdiction under which the foreign savings association is incorporated or, in the case of a foreign holding company, the holding company’s principal place of deposits, would operate to prohibit, restrict, condition, or otherwise limit a California savings association from conducting the business of, or acquiring control of, a savings association in the relevant jurisdiction pursuant to the laws, court decisions, or practices of that jurisdiction, a similar prohibition, restriction, condition, or limitation to be prescribed by regulation or order of the commissioner shall apply in California to the foreign savings association or foreign holding company.

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(Added by renumbering Section 10001 by Stats. 1987, Ch. 1162, Sec. 18. Effective September 26, 1987. Section operative January 1, 1991, pursuant to Section 10009.)

Section § 10003

If a foreign savings association wants to do business in California or take control of a California savings association, it needs written approval from the state commissioner. To get approval, they must apply, pay certain fees, and provide the necessary documentation as required by the commissioner. The commissioner can set rules to protect the public and the interests of account holders, borrowers, and stockholders in California. Additionally, the commissioner can work with other states for mutual oversight of savings associations, which might affect the approval process.

No foreign savings association may conduct the business of an association in California, and no foreign savings association or foreign holding company may acquire control of a California savings association, without the written approval of the commissioner. A foreign savings association or foreign holding company shall submit to the commissioner a written application for approval in the form and shall pay such fees as the commissioner prescribes. The foreign savings association or foreign holding company shall submit with the application such information, data, and records as the commissioner may require in order to make his or her determination. The commissioner may issue such regulations as he or she deems to be appropriate to preserve the public interest and integrity of the state’s savings association system and to protect the interests of savings account holders, borrowers, and stockholders resident in this state. The commissioner may make arrangements with the supervisory officials of other states for reciprocal examination of California savings associations, foreign savings associations and foreign holding companies, and the imposition of fees therefor and may condition his or her approval pursuant to this chapter upon the existence of those arrangements.

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(Added by renumbering Section 10002 by Stats. 1987, Ch. 1162, Sec. 20. Effective September 26, 1987. Section operative January 1, 1991, pursuant to Section 10009.)

Section § 10004

This law states that if someone tries to sell or handle savings accounts from a foreign savings association in this state without following all the legal requirements, they can face serious penalties. These penalties can include time in jail or prison, a fine up to $10,000, or both.

Except as expressly provided for in this chapter, any person who, as principal, agent, salesperson, solicitor, or in any other capacity, solicits or conducts in this state the business of selling, disposing of, taking, or soliciting savings accounts of any foreign savings association that has not complied with all the requirements of this chapter, is guilty of a public offense punishable by imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code, or in a county jail not exceeding one year, or by a fine not exceeding ten thousand dollars ($10,000), or by both that fine and imprisonment.

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(Amended by Stats. 2011, Ch. 15, Sec. 106. (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.)

Section § 10005

This California law clarifies when a foreign savings association or securities broker-dealer isn't considered as doing business or soliciting savings accounts in the state. Federally insured foreign savings associations, which are supervised and audited, along with registered broker-dealers, aren’t considered engaging in business through certain activities. These activities include specific advertising methods and some offerings or placements of savings accounts.

Foreign associations can advertise through various media like mail, radio, or newspapers, but not via telemarketing or automatic calling devices. The advertising must be truthful and not give a false impression. Registered broker-dealers can also offer savings accounts from federally insured foreign savings associations. However, the accounts must be rated as ‘investment grade’ based on the foreign association's financial reliability, not just on federal deposit insurance.

For the purposes of this article and any other law of this state prohibiting, limiting, or regulating the doing of business or the selling, taking, or solicitation of savings accounts in this state by foreign savings associations or foreign corporations, any federally insured foreign savings association subject to state or federal supervision, which by law is subject to periodic examination by that supervisory authority and to a requirement of periodic audit, and any broker-dealer registered in accordance with the requirements of the Securities Exchange Act of 1934 and the Corporate Securities Law of 1968, and any partner, officer, director, branch manager, or person performing similar functions, and employees of that broker-dealer, shall not be considered to be doing business or selling, taking, or soliciting savings accounts in this state by reason of engaging in the following:

(a)

(1) Any of the activities specified in subdivision (d) of Section 191 of the Corporations Code, or (2) the advertising or solicitation of savings accounts in this state by a federally insured foreign savings association through the media of the mail, radio, television, magazines, newspapers, or any other media that are published or circulated within this state, except through or as a result of telemarketing, provided that the advertising or solicitation as a whole is accurate and does not create a misleading impression even though statements considered separately are literally accurate. A federally insured foreign savings association shall not sell, take or solicit savings accounts through telemarketing by use of the telephone or telephone transceiving equipment, or through the use of an automatic dial-announcing device as defined in Section 2871 of the Public Utilities Code.

(b) The offering by a registered broker-dealer of, or the placement by a registered broker-dealer of a customer’s funds into, a savings account at a federally insured foreign savings association chartered under the laws of a state in which broker-dealers make available savings accounts of associations chartered under the laws of this state, provided that (1) any advertising, offering material, or solicitation as a whole is accurate and does not create a misleading impression even though statements considered separately are literally accurate and (2) the savings accounts of the federally insured foreign savings association are rated “investment grade” by either Standard & Poor’s Corporation or Moody’s Investors Service, Inc. based upon the foreign savings association’s ability to repay the savings accounts independent of federal deposit insurance benefits.

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(Amended (as amended by Stats. 1991, Ch. 1206, Sec. 3) by Stats. 1993, Ch. 469, Sec. 9. Effective January 1, 1994.)

Section § 10006

This law states that foreign savings associations (savings banks from outside California) and their holding companies must follow the same rules as California-based savings associations when doing business in California, unless specific regulations say otherwise.

Except as provided by regulation, this division applies to a foreign savings association or its holding company as if business conducted in this state were that of a California savings association.

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(Added by Stats. 1987, Ch. 1162, Sec. 24. Effective September 26, 1987. Section operative January 1, 1991, pursuant to Section 10009.)

Section § 10007

A foreign savings association must comply with specific rules if it is overseen by a foreign holding company. Both the savings association and the holding company need to meet these set requirements.

If a foreign savings association is controlled by a foreign holding company, the requirements under this chapter applicable to both a foreign savings association and foreign holding company are required to be met.

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(Added by Stats. 1987, Ch. 1162, Sec. 25. Effective September 26, 1987. Section operative January 1, 1991, pursuant to Section 10009.)

Section § 10009

This law specifies that it took effect starting from January 1, 1991.

This chapter shall become operative on January 1, 1991.

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(Added by renumbering Section 10003 by Stats. 1987, Ch. 1162, Sec. 21. Effective September 26, 1987. Note: This section prescribes a delayed operative date for Chapter 10 (added by Stats. 1986, Ch. 1057), commencing with Section 10000.)