BILL NUMBER: AB 1419 CHAPTERED 09/06/05 CHAPTER 196 FILED WITH SECRETARY OF STATE SEPTEMBER 6, 2005 APPROVED BY GOVERNOR SEPTEMBER 6, 2005 PASSED THE SENATE AUGUST 22, 2005 PASSED THE ASSEMBLY JUNE 2, 2005 AMENDED IN ASSEMBLY MAY 27, 2005 INTRODUCED BY Assembly Member Parra FEBRUARY 22, 2005 An act to amend Sections 22105, 22109, and 22153 of, and to repeal and add Section 22102 of, the Financial Code, relating to finance lenders. LEGISLATIVE COUNSEL'S DIGEST AB 1419, Parra Finance lenders: business locations. Existing law, the California Finance Lenders Law, provides for the licensure and regulation of finance lenders by the Commissioner of Corporations and makes a willful violation of that law a crime. That law requires the commissioner to investigate a licensure applicant and designated personnel of the applicant. A licensee under that law may file a short form license application to operate at an additional location. This bill would specify application requirements for a licensee to operate at an additional location and would authorize the licensee to operate at that new location 10 days after the date of mailing the application. The bill would also require the commissioner to investigate any person responsible for the conduct of the lending activities of a licensure applicant and authorize the commissioner to deny an application based on the unlawful activities, as specified, of that person. Because the bill would specify additional requirements under the California Finance Lenders Law, the violation of which is a crime, it would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 22102 of the Financial Code is repealed. SEC. 2. Section 22102 is added to the Financial Code, to read: 22102. (a) A licensee seeking to engage in business at a new location shall submit an application to the commissioner by certified mail, return receipt requested, at least 10 days before engaging in business at a new location and pay the fee required by Section 22103. (b) The commissioner, by regulation, shall adopt a form for the application required by this section. The application shall contain the following information: (1) The address of the new location. (2) Information on the person responsible for the lending activity at the new location. (3) Any additional information required by the commissioner. (c) The licensee may engage in business at the new location 10 days after the date of mailing the application to engage in business at that location. (d) (1) The commissioner shall approve or deny the person responsible for the lending activity at the new location in accordance with Section 22109, and shall notify the licensee of this decision within 90 days of the date of receipt of the application. (2) If the commissioner denies the application, the licensee shall, within 10 days of the date of receipt of notification of the commissioner's denial, submit a new application to the commissioner designating a different person responsible for the lending activity at the new location. The commissioner shall approve or deny the different person as provided in paragraph (1). (e) A licensee shall not engage in business at a new location in a name other than a name approved by the commissioner. (f) The commissioner may adopt regulations to implement the requirements of this section. (g) A license to engage in business at a new location shall be issued in accordance with this section. A change of street address of a place of business designated in a license shall be made in accordance with Section 22153 and shall not constitute a new location subject to the requirements of this section. SEC. 3. Section 22105 of the Financial Code is amended to read: 22105. Upon the filing of an application pursuant to Section 22101 and the payment of the fees, the commissioner shall investigate the applicant and its general partners and persons owning or controlling, directly or indirectly, 10 percent or more of the outstanding interests or any person responsible for the conduct of the applicant's lending activities in this state, if the applicant is a partnership. If the applicant is a corporation, trust, or association, including an unincorporated organization, the commissioner shall investigate its principal officers, directors, and persons owning or controlling, directly or indirectly, 10 percent or more of the outstanding equity securities or any person responsible for the conduct of the applicant's lending activities in this state. Upon the filing of an application pursuant to Section 22102 and the payment of the fees, the commissioner shall investigate the person responsible for the lending activity of the licensee at the new location described in the application. The investigation may be limited to information that was not included in prior applications filed pursuant to this division. If the commissioner determines that the applicant has satisfied this division and does not find facts constituting reasons for denial under Section 22109, the commissioner shall issue and deliver a license to the applicant. For the purposes of this section, "principal officers" shall mean president, chief executive officer, treasurer, and chief financial officer, as may be applicable, and any other officer with direct responsibility for the conduct of the applicant's lending activities within the state. SEC. 4. Section 22109 of the Financial Code is amended to read: 22109. (a) Upon reasonable notice and opportunity to be heard, the commissioner may deny the application for any of the following reasons: (1) A false statement of a material fact has been made in the application. (2) An officer, director, general partner, person responsible for the applicant's lending activities in this state, or person owning or controlling, directly or indirectly, 10 percent or more of the outstanding interests or equity securities of the applicant has, within the last 10 years, been convicted of or pleaded nolo contendere to a crime, or committed an act involving dishonesty, fraud, or deceit, if the crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with this division. (3) The applicant or an officer, director, general partner, person responsible for the applicant's lending activities in this state, or person owning or controlling, directly or indirectly, 10 percent or more of the outstanding interests or equity securities of the applicant has violated any provision of this division or the rules thereunder or any similar regulatory scheme of the State of California or a foreign jurisdiction. (b) The application shall be considered withdrawn within the meaning of this section if the applicant fails to respond to a written notification of a deficiency in the application within 90 days of the date of the notification. (c) The commissioner shall, within 60 days from the filing of a full and complete application for a license with the fees, either issue a license or file a statement of issues prepared in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. SEC. 5. Section 22153 of the Financial Code is amended to read: 22153. (a) If a licensee desires to change its place of business to a street address other than that designated in its license, the licensee shall give written notice to the commissioner on a form provided by the commissioner at least 10 days prior to the change. The commissioner shall then provide a written approval of the change and the date of the approval. (b) If notice is not given at least 10 days prior to the change of a street address of a place of business, as required by subdivision (a), or notice is not given at least 10 days prior to engaging in business at a new location, as required by Section 22102, the commissioner may assess a civil or administrative penalty on the licensee not to exceed five hundred dollars ($500). SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.