Any reference in this article to the time a notice is given or sent shall be construed in accordance with Section 118 of the Corporations Code.
Corporate RequirementsDirectors
Section § 1170
This law states that whenever timing for sending or receiving a notice is mentioned, it should be interpreted according to the rules set out in Section 118 of the Corporations Code.
notice timing send notice receive notice
Section § 1171
This law requires that the board of directors for any new bank or trust company must have between 5 and 25 members. It also states that existing banks or trust companies cannot change their rules to have fewer than 5 directors.
The board of a bank or trust company hereafter organized shall consist of not less than 5 nor more than 25 directors, and no bank or trust company shall amend its articles or bylaws so as to reduce the number of directors below five.
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Section § 1172
Banks and trust companies must have board meetings at least once every three months. These regular meetings need to take place in California. Meetings can also be held elsewhere if every board member agrees in writing. Special meetings can be called with four days' notice via mail or 24 hours' notice given in person, by phone, or telegraph, unless the company’s rules say otherwise.
The board of each bank and of each trust company shall hold a meeting not less than once each calendar quarter. Regular meetings of the board shall be held within this state. Any regular or special meeting is valid wherever held if held upon written consent of all members of the board given either before or after the meeting and filed with the secretary of the corporation. Special meetings of the board may be held upon four days’ notice by mail, unless the articles or bylaws provide
otherwise, or 24 hours’ notice delivered personally or by telephone or by telegraph, unless the articles or bylaws provide for a shorter period.
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Section § 1173
This law allows the commissioner to step in and either start or join a legal case to decide if the election or appointment of a bank director is valid. The commissioner has the same rights to take this action as if they were a shareholder of the bank.
The commissioner may, in the name of the people of this state, bring or intervene in an action under Section 709 of the Corporations Code to determine the validity of any election or appointment of any director of a bank to the same extent as a shareholder of such bank might bring such an action.
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Section § 1174
This section gives the commissioner the authority to act on behalf of the state in legal actions related to the management of banks. Specifically, the commissioner can be involved in cases to appoint bank directors, using powers similar to those of a major shareholder. The commissioner can take these actions either by starting a case or joining an existing one, as needed.
(a)CA Financial Code § 1174(a) The commissioner shall be deemed to be a party in interest within the meaning of Section 306 of the Corporations Code with respect to a bank and may, in the name of the people of this state, bring or intervene in an action under Section 306 of the Corporations Code for the appointment of directors of a bank.
(b)CA Financial Code § 1174(b) The commissioner may, in the name of the people of this state, bring or intervene in an
action under Section 308 of the Corporations Code for the appointment of a provisional director or directors of a bank to the same extent as a shareholder who held 50 percent of the voting power of such bank might bring such an action.
commissioner's authority party in interest appointment of directors
Section § 1175
This section talks about banks and their majority-owned subsidiaries that make improper distributions to shareholders, which are against certain rules. If a bank makes such a distribution, it is considered a violation of corporate law. The law allows the commissioner the power to take legal action against the directors of the bank or its subsidiaries as if acting as a creditor who didn’t agree to the illegal action and whose claim predated the distribution. Alternatively, instead of suing, the commissioner can impose a financial penalty on the bank.
(a)CA Financial Code § 1175(a) For purposes of Section 316 of the Corporations Code, to the extent that the making by a bank or by any majority-owned subsidiary of a bank of a distribution to any shareholder of the bank is contrary to any provision of Article 3 (commencing with Section 1130), the making of the distribution shall, to that extent, be deemed to be contrary to the provisions of Section 500 of the Corporations Code.
(b)CA Financial Code § 1175(b) The commissioner may, in the name of the people of this state, bring or intervene in an action under Section 316 of the Corporations Code for the benefit of a bank against any or all of the directors of the bank or of any majority-owned subsidiary of the bank on account of the making of a distribution to any shareholder of the bank contrary to any provision of Article 3 (commencing with Section 1130) or any provision of Sections 501, 502, and 503 of the Corporations Code, to the same extent as a creditor of the bank who did not consent to the illegal distribution and who had a valid claim against the bank that arose prior to the time of the illegal distribution and exceeded the amount of the illegal distribution, may bring the action in the name of the bank.
(c)CA Financial Code § 1175(c) As an alternative to the action provided for in subdivision (b), the commissioner may levy a civil penalty against the bank pursuant to Section 329.
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Section § 1176
This law makes it clear that if a bank gives a loan or credit in violation of certain banking rules, it's automatically considered a violation of corporate regulations as well. If such a violation occurs, a state commissioner can either sue the bank's directors on behalf of the bank, as if they were a creditor with a valid claim, or choose to impose a financial penalty on the bank.
(a)CA Financial Code § 1176(a) For purposes of Section 316 of the Corporations Code, the making of a loan or guarantee by a bank or any other extending of credit by a bank contrary to any provision of this division shall be deemed to be contrary to Section 315 of the Corporations Code.
(b)CA Financial Code § 1176(b) The commissioner may, in the name of the people of this state, bring or intervene in an action under Section 316 of the Corporations Code for
the benefit of a bank against any or all of the directors of the bank on account of the making of a loan or guarantee or any other extending of credit contrary to any provision of this division, to the same extent as a creditor of the bank who did not consent to the illegal making of the loan or guarantee or the other illegal extending of credit and who had a valid claim against the bank which arose prior to the time of the illegal making of the loan or guarantee or the other illegal extending of credit and which exceeded the amount of loss suffered by the bank as a result of the illegal making of the loan or guarantee or the other illegal extending of credit, might bring the action in the name of the bank.
(c)CA Financial Code § 1176(c) As an alternative to the action provided for in subdivision (b), the commissioner may levy a civil penalty against the bank pursuant to Section 329.
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