This article does not apply to any distribution made to the shareholders of a bank in any proceeding to wind up and dissolve or to liquidate such bank.
Corporate RequirementsDistributions to Shareholders
Section § 1130
This law section states that the rules in this article don't apply when a bank is distributing its assets to shareholders as part of a process to wind up, dissolve, or liquidate the bank.
bank liquidation shareholder distribution winding up a bank
Section § 1131
This law states that banks and their majority-owned subsidiaries are not subject to the rules in Section 500 of the Corporations Code when making distributions to their shareholders.
Section 500 of the Corporations Code does not apply to the making by a bank or by any majority-owned subsidiary of a bank of any distribution to the shareholders of such bank.
bank distribution shareholder distribution majority-owned subsidiary
Section § 1132
This law section states that banks and their majority-owned subsidiaries are restricted in how much they can pay out to their shareholders. They can only distribute the lesser amount between their retained earnings and their net income from the past three fiscal years, after deducting any distributions already made in that period.
Neither a bank nor any majority-owned subsidiary of a bank shall make any distribution to the shareholders of such bank in an amount which exceeds the lesser of:
(a)CA Financial Code § 1132(a) The retained earnings of the bank; or
(b)CA Financial Code § 1132(b) The net income of the bank for its last three fiscal years, less the amount of any distributions made by the bank or by any majority-owned subsidiary of
the bank to the shareholders of the bank during such period.
bank shareholder distributions retained earnings limit net income distribution
Section § 1133
This law allows a bank or its majority-owned subsidiary to distribute money to its shareholders. However, they need prior approval from the commissioner to do so. The amount distributed can be the highest among the bank's retained earnings, net income from the last fiscal year, or net income from the current fiscal year.
Notwithstanding the provisions of Section 1132, a bank or a majority-owned subsidiary of a bank may, with the prior approval of the commissioner, make a distribution to the shareholders of such bank in an amount not exceeding the greatest of:
(a)CA Financial Code § 1133(a) The retained earnings of the bank;
(b)CA Financial Code § 1133(b) The net income of the bank for its last fiscal year; or
(c)CA Financial Code § 1133(c) The net income of the bank for its current fiscal year.
bank distribution shareholders distribution retained earnings
Section § 1134
This section allows a bank in California to distribute money or stock to its shareholders in two specific ways. First, with the commissioner's approval, the bank can buy back its redeemable shares. Second, it can make other types of distributions if it gets approval both from its shareholders and the commissioner, especially when it's reducing its contributed capital.
Notwithstanding the provisions of Section 1132, a bank may:
(a)CA Financial Code § 1134(a) With the prior approval of the commissioner, make a distribution to its shareholders by means of redeeming its redeemable shares; and
(b)CA Financial Code § 1134(b) With the prior approval of its outstanding shares and of the commissioner, otherwise make a distribution to its shareholders in connection with a reduction of
its contributed capital.
bank distributions redeemable shares shareholder approval
Section § 1135
This law allows the commissioner to stop a bank from making payouts to its shareholders if the bank's financial health is shaky, meaning not enough money or risky to distribute funds. The commissioner can also fine the bank using another regulation, Section 329, if necessary.
If the commissioner finds that the shareholders’ equity of a bank is not adequate or that the making by a bank or by any majority-owned subsidiary of a bank of a distribution to the shareholders of the bank would be unsafe or unsound for the bank, the commissioner may order the bank and its majority-owned subsidiaries not to make any distribution to the shareholders of the bank. In addition to the order authorized by this section, the commissioner may levy a civil penalty against the
bank pursuant to Section 329.
shareholders' equity bank distribution unsafe or unsound
