BILL ANALYSIS Ó
SB 537
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Date of Hearing: June 10, 2013
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Roger Dickinson, Chair
SB 537 (Banking & Financial Institutions) - As Amended: May 16,
2013
SENATE VOTE : 36-0
SUBJECT : Business and finance
SUMMARY : Makes technical and clarifying changes to several
sections of the Financial Code administered by the Department of
Financial Institutions (DFI) and to provisions of the Franchise
Investment Law administered by the Department of Corporations (DOC).
Specifically, this bill :
1)Within the Franchise Investment Law, standardizes the length of
time in which franchisors have to deliver disclosure documents to
prospective franchisees at 14 calendar days, and updates state law
references to the document used by franchisors to provide
specified information to prospective franchisees, by referring to
this document as a "franchise disclosure document" rather than an
"offering circular."
2)Within the Financial Code, corrects a heading reference, updates
state law to reflect changes in minimum levels of federal deposit
insurance limits, deletes references to obsolete code sections,
corrects incorrect code section references, restores code section
references that were inadvertently deleted, and adds clarifying
language and definitions.
EXISTING LAW
1)Authorizes DFI to administer provisions of the Financial Code
regulating the activities of state-chartered banks and industrial
loan companies, state-chartered credit unions, money transmitters,
trust companies, and insurance premium finance companies
(Divisions 1 through 7 of the Financial Code).
2)Authorizes DOC to administer the Franchise Investment Law
(Division 5 of the Corporations Code).
3)Effective July 1, 2013, reorganizes DFI and DOC as divisions
within a new Department of Business Oversight (Government
SB 537
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Reorganization Plan Number 2).
FISCAL EFFECT : None
COMMENTS :
SB 537 is a technical clean-up bill to various provisions of the
Financial Code. The following summarizes the purpose of the
proposed amendments to the Financial Code:
1)Correct the heading of Division 1, Article 4, Chapter 7 to restore
applicability of the provisions in this article to banks. This
article was incorrectly titled by SB 664 (Committee on Banking &
Financial Institutions, Chapter 243, Statutes of 2011).
2)Reflect the increase in federal deposit insurance from $100,000 to
$250,000 (Section 1805).
3)Amend references to incorrect code sections and delete references
to obsolete code sections (Sections 155, 185, 329, 376, 413, 563,
1024, 1026, 1080, 1255, 1495, 1515, 1702, 1805, 1806, 1835, 1858,
4805.01, 4805.02, 4805.05, 4805.10, 4821,5, 4822, 4823, 4824,
4826.5, 4827, 4827.3, 4827.7, 4871.5, 4877.03, 4901.5, 4961.5,
4970, 4982, 4990, 4995, and 18003).
4)Clarify to which law or laws a particular section applies
(Sections 101, 103, 133, 171, 189, 326, 331, 377, and 600).
5)Conform language to the Money Transmission Act definition of a
money transmitter (Sections 185 and 329).
6)Add clarifying language and definitions (Sections 186, 187, 188,
190, 329, 405, 589, 590, 672, 1331, 1473, 1485, and 1495).
7)Restore inadvertently deleted code section references (Sections
329 and 1485).
8)Simplify an unnecessarily complicated definition (Section 379).
9)The following summarizes the purpose of the proposed amendments to
the Franchise Investment Law:
10)SB 998 (Cox), Chapter 101, Statutes of 2007 required disclosure
documents to be delivered by franchisors to prospective
franchisees 14 calendar days, rather than 10 business days, before
SB 537
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that prospective franchisee signs any franchise agreement.
However, that legislation failed to revise all of the sections
that required revision, in order to effect its change. SB 537
would make the changes inadvertently omitted from SB 998.
The Federal Trade Commission, North American Securities
Administrators Association, and California regulations refer to the
disclosure document required to be provided by franchisors to
prospective franchisees as a franchise disclosure document.
However, some provisions of California's Franchise Investment Law
continue to refer to this document by its old name ("offering
circular"). SB 537 standardizes the references to this document in
California law by deleting references to "offering circular" and
replacing them with references to "franchise disclosure document."
REGISTERED SUPPORT / OPPOSITION :
Support
International Franchise Association (IFA)
Opposition
None on file.
Analysis Prepared by : Mark Farouk / B. & F. / (916) 319-3081