BILL ANALYSIS Ó
SB 537
Page 1
SENATE THIRD READING
SB 537 (Banking and Financial Institutions Committee)
As Amended August 12, 2013
Majority vote
SENATE VOTE : 36-0
BANKING & FINANCE 11-0 APPROPRIATIONS 17-0
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|Ayes:|Dickinson, Morrell, |Ayes:|Gatto, Harkey, Bigelow, |
| |Achadjian, Blumenfield, | |Bocanegra, Bradford, Ian |
| |Bonta, Chau, Gatto, | |Calderon, Campos, |
| |Harkey, Linder, Perea, | |Donnelly, Eggman, Gomez, |
| |Weber | |Hall, Holden, Linder, |
| | | |Pan, Quirk, Wagner, Weber |
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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)Standardizes, within the Franchise Investment Law, the length
of time in which franchisors have to deliver disclosure
documents to prospective franchisees at least 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)Corrects, within the Financial Code, 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
SB 537
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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
Reorganization Plan No. 2).
FISCAL EFFECT : None
COMMENTS : This bill 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 (Banking
and Financial Institutions Committee), 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, 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
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(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:
a) 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 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. This bill 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"). This bill standardizes the references to
this document in California law by deleting references to
"offering circular" and replacing them with references to
"franchise disclosure document."
Analysis Prepared by : Mark Farouk / B. & F. / (916) 319-3081
FN: 0001595