BILL ANALYSIS Ó
AB 2289
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Date of Hearing: April 7, 2014
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Roger Dickinson, Chair
AB 2289 (Daly) - As Introduced: February 21, 2014
SUBJECT : Electronic records and signatures.
SUMMARY : Makes various changes to laws administered by the
Department of Business Oversight (DBO). Specifically, this
bill :
1)Authorizes DBO to accept electronic filings from licensees
under the Corporate Securities Law, Franchise Investment Law
(FIL), Check Sellers, Bill Payers and Prorators Law, Escrow
Agents Law, California Finance Lenders Law and the Deferred
Deposit Transaction Law.
2)Provides, that the commissioner of DBO may by rule, or order
prescribe the circumstances under which to accept electronic
records and signatures.
3)Defines "electronic record" as an initial registration
application, registration renewal statement, preeffective
amendment, posteffective amendment, or material modification
and any other record created, generated, sent, communicated,
received, or stored by electronic means, and includes a record
transmitted by means of facsimile machine or other telephone
transceiving equipment. "Electronic record" also includes,
but is not limited to, all of the following:
a) An application, amendment, supplement, and exhibit,
filed for any qualification, registration, order, permit,
certificate, license, consent, or other authority;
b) A financial statement, reports, advertising, and
correspondence between a party and the commissioner
directly relating to the record;
c) An order, permit, certificate, license, consent, or
other authority;
d) A notice of public hearing, accusation, and statement of
issues, in connection with any application, qualification,
registration , order, permit, certificate, license,
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consent, or other authority;
e) A proposed decision of a hearing officer and a decision
of the commissioner;
f) The transcripts of a hearing and correspondence between
a party and the commissioner directly relating to the
record; or,
g) A release, newsletter, interpretive opinion,
determination, specific ruling, and the correspondence
relating to the record.
4)Defines "electronic signature" as an electronic sound, symbol,
or process attached to or logically associated with an
electronic record and executed or adopted by a person with the
intent to sign the electronic record.
5)Extends the Franchise application review period from 15
business days to 30 business days.
6)Provides that the 30-business day review does not begin until
the franchisor files a complete application.
7)Defines "complete application" under the FIL as an application
that contains appropriate filing fee, Uniform Franchise
Disclosure Document and all additional exhibits, including
financial statements in conformity with regulation of the
commissioner of DBO.
8)Makes Legislative findings and declarations that DBO has
implemented methods to file records electronically and is
encouraged to continue to expand its use of electronic filings
to the extent feasible, as budget resources, and equipment are
made available to accomplish that goal.
EXISTING LAW provides for the regulation and licensing by DBO of
the following industries:
Affordable Credit Building Opportunities
Banks
Broker-Dealers and Investment Advisers
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Business and Industrial Development Corporations (BIDCO)
California Finance Lenders
California Residential Mortgage Lenders
Capital Access Companies
Certificate as a Securities Depository (DBO 1805.204)
Check Sellers, Bill Payers and Proraters
Credit Unions
Deferred Deposit Originators (commonly known as "Payday
Lenders")
Escrow Agents/ Escrow Law
Foreign (Other Nation) Banks
Foreign (Other State) Banks
Franchises
Industrial Banks
Local Agency Security Program (LASP)
Money Transmitters
Mortgage Loan Originators
Premium Finance Companies
Securities Depository Law
Trust Companies and Departments
FISCAL EFFECT : Unknown
COMMENTS :
AB 2289 contains two main reforms to the laws administered by
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DBO. First, it allows for the electronic filing of documents
relating to several industries regulated by DBO. Prior to its
creation via the Governor's Reorganization Plan, DBO was two
departments, the Department of Corporations (DOC) and Department
of Financial Institutions. Since DOC embarked in 2008 on
expanding its ability to accept electronic records from both
licensees and members of the public in order to reduce
administrative costs and save staff time. Even with the changed
proposed in AB 2289 the commissioner could still require certain
documents to be filed in person if deemed necessary.
The second major reform provision of AB 2289 concerns the FIL.
Under FIL, an initial franchise registration, and a franchise
renewal application automatically become effective at noon on
the 15th business day after filing. Typically, DBO will request
the applicant to voluntarily waive the 15 day limit in order to
have more time to review the applicant and associated documents.
Furthermore, Franchise applicant renewals are due on or before
April 20th which leads to a massive influx of applications with
DBO in a short window of time (Average of 1,053 applications).
AB 2289 would extend the review deadline to 30 days and provides
that the deadline clock doesn't start unless the applicant has
turned in a completed application which includes submission of
the filing fee, Uniform Franchise Disclosure Document, and other
required documents such as most recent financial statements.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Mark Farouk / B. & F. / (916) 319-3081