Capitalization - Formation And Organization - Financial - CA

Section § 18130

This law sets the minimum capital stock requirements for industrial loan companies in California, depending on when they were incorporated or started business. For those starting business on or before July 8, 1975, the minimum is $500,000. For those starting on or after July 9, 1975, it is $750,000 plus an additional $500,000 in surplus. Companies that began before July 9, 1975, and don't meet these requirements are governed by older laws until the end of 1986.

The capital stock of an industrial loan company incorporated under this division shall not be less than:

(a) Five hundred thousand dollars ($500,000), if incorporated or commencing business on or before July 8, 1975.

(b) Seven hundred fifty thousand dollars ($750,000), and a paid-in surplus of five hundred thousand dollars ($500,000), at the time business is commenced, if incorporated or commencing business on or after July 9, 1975.

(c) Industrial loan companies which commenced business prior to July 9, 1975, and which do not meet the capital stock and paid-in surplus requirements of this section shall be governed until January 1, 1987, by Sections 18130, 18131, 18132, 18133, 18134, and 18135 of the Financial Code, as in effect on December 31, 1983.

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Section § 18131

If an industrial loan company already has or decides to open new branch offices, it must have an extra $50,000 in capital stock for each additional branch beyond what's required by another rule, Section 18130.

In addition to the capital stock required by Section 18130, an industrial loan company which has branch offices or which opens an additional branch office or place of business shall have additional capital stock of fifty thousand dollars ($50,000) for each branch office.

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Section § 18132

This law states that an industrial loan company in California can only pay out dividends to its shareholders if it meets certain financial requirements. Specifically, the company must have at least $750,000 in unimpaired capital, which means its assets must exceed its liabilities by this amount. Additionally, for every branch office it has, it needs $50,000 more in capital.

An industrial loan company may declare a dividend on its capital stock only if the company has minimum unimpaired capital of seven hundred fifty thousand dollars ($750,000) plus additional capital stock of fifty thousand dollars ($50,000) for each branch office.

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Section § 18137

This law states that an industrial loan company in California cannot lower its capital stock below the minimum amount required by law or below the amount of its debts, not including investment certificates.

An industrial loan company shall not reduce its capital stock to an amount less than is required by this article to be maintained by such company or less than any indebtedness of such company other than its investment certificates.

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Section § 18138

If you want to buy 10% or more of an industrial loan company or a holding company with voting control in California, you need written consent from the commissioner. Before you make such a purchase, you must apply for approval, explaining your intentions and paying a $400 fee. The commissioner will decide to approve or deny your request within 60 days after receiving your completed application.

(a) No person may acquire in the aggregate 10 percent or more of the capital stock of, or the capital of, an industrial loan company through purchase, foreclosure pursuant to a pledge or hypothecation, or other devices without the written consent of the commissioner. Prior to any person acquiring 10 percent or more of the capital stock of, or the capital of, an industrial loan company, or prior to any person acquiring additional capital stock or capital of an industrial loan company which would result in an aggregate acquisition of 10 percent or more of the capital stock or of the capital, that person seeking the acquisition shall make written application to the commissioner requesting written consent for the acquisition.

(b) No person may acquire in the aggregate 10 percent or more of the capital stock or other securities that have voting power or control over the management of a holding company as defined in Section 18025 through purchase, foreclosure pursuant to a pledge or hypothecation, or otherwise without the written consent of the commissioner. Prior to any person acquiring 10 percent or more of the capital stock or other securities that have voting power or control over the management of a holding company as described herein, or prior to any person acquiring additional capital stock or other securities that have voting power or control over the management of a holding company as described herein which would result in an aggregate acquisition of 10 percent or more of the capital stock or other securities, or prior to any person acquiring 10 percent or more of the capital stock or other securities that have voting power or control over the management of a holding company as described herein, through the conversion of a security into another security or through the exercise of a right to purchase or subscribe to another security, that person seeking the acquisition shall make written application to the commissioner requesting written consent for the acquisition notwithstanding subdivision (e) of Section 25017 of the Corporations Code.

(c) With respect to the application required to be filed under subdivisions (a) and (b), the commissioner shall consent in writing or decline to consent within 60 days of the filing of a completed application.

(d) An application for consent under subdivision (a) or (b) shall be in the form and contain information as the commissioner may by rule or order require and shall be accompanied by a fee of four hundred dollars ($400).

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Section § 18139

If an industrial loan company is part of a sale, merger, or conversion with another industrial loan company, a bank, or a savings association, it must follow the rules laid out in Division 1.6, starting at Section 4800.

A sale, merger, or conversion involving an industrial loan company and another industrial loan company, a bank, or a savings association is subject to Division 1.6 (commencing with Section 4800).

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