as amended, Committee on Banking and Finance.
begin deleteState government: omnibus technical changes. end delete
Existing law abolished the Department of Corporations, the Commissioner of Corporations, the Department of Financial Institutions, and the Commissioner of Financial Institutions and transferred the powers, duties, responsibilities, and functions of those entities and officers to the Department of Business Oversight and the Commissioner of Business Oversight.
This bill would make technical, nonsubstantive changes to update references from these abolished entities and officers to the successor Department of Business Oversight and the Commissioner of Business Oversight.
Existing law reorganized the provisions of the Financial Code.
This bill would make technical, nonsubstantive changes to update cross-references to the prior organization of the Financial Code to its current organization.
Existing law regulates telephonic sellers, as defined, and requires, among other things, a telephonic seller to, not less than 10 days prior to doing business in this state, register specific information with the Department of Justice.
This bill would modify the definition of “telephonic seller” or “seller” to remove an outdated reference.
The Corporate Securities Law of 1968 authorizes the Commissioner of Business Oversight to enforce its provisions, including the power to issue an order for a violation of that law, and, under certain conditions, make claim for ancillary relief.
This bill would make a technical, nonsubstantive change to include a cross-reference to a specific type of order issued by the commissioner within a procedure for a person to request a hearing regarding that order. The bill would also make a technical, nonsubstantive change to update a reference to the commissioner seeking administrative relief to instead refer to seeking ancillary relief.
Under federal law, the Office of Thrift Supervision merged with the Office of the Comptroller of the Currency.
This bill would make technical, nonsubstantive changes to update references to the Office of Thrift Supervision to instead refer to the Office of the Comptroller of the Currency.
Existing law prohibits the Secretary of State from filing articles of incorporation setting forth a name in which “bank,” “trust,” “trustee,” or related words appear, except as specified.
This bill would remove a duplicate exception that does not prohibit the Secretary of State from filing these types of articles if a certificate of approval of the Commissioner of Business Oversight is attached to the articles.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 7574.14 of the Business and Professions
2Code is amended to read:
This chapter shall not apply to the following:
4(a) An officer or employee of the United States of America, or
5of this state or a political subdivision thereof, while the officer or
6employee is engaged in the performance of his or her official
7duties, including uniformed peace officers employed part time by
8a public agency pursuant to a written agreement between a chief
9of police or sheriff and the public agency, provided the part-time
10employment does not exceed 50 hours in a calendar month.
11(b) A person engaged exclusively in the business of obtaining
12and furnishing information as to the financial rating of persons.
13(c) A charitable philanthropic society or association incorporated
14under the laws of this state that is organized and duly maintained
15for the public good and not for private profit.
16(d) Patrol special police officers appointed by the police
17commission of a city, county, or city and county under the express
18terms of its charter who also under the express terms of the charter
19(1) are subject to suspension or dismissal after a hearing on charges
20duly filed with the commission after a fair and impartial trial, (2)
21must be not less than 18 years of age nor more than 40 years of
22age, (3) must possess physical qualifications prescribed by the
23commission, and (4) are designated by the police commission as
P4 1the owners of a certain beat or territory as may be fixed from time
2to time by the police commission.
3(e) An attorney at law in performing his or her duties as an
4attorney at law.
5(f) A collection agency or an employee thereof while acting
6within the scope of his or her employment, while making an
7investigation incidental to the business of the agency, including
8an investigation of the location of a debtor or his or her property
9where the contract with an assignor creditor is for the collection
10of claims owed or due or asserted to be owed or due or the
12(g) Admitted insurers and agents and insurance brokers licensed
13by the state, performing duties in connection with insurance
14transacted by them.
15(h) A bank subject
to the jurisdiction of the Commissioner of
16Business Oversight under Division 1.1 (commencing with Section
171000) of the Financial Code or the Comptroller of the Currency
18of the United States.
19(i) A person engaged solely in the business of securing
20information about persons or property from public records.
21(j) A peace officer of this state or a political subdivision thereof
22while the peace officer is employed by a private employer to
23engage in off-duty employment in accordance with Section 1126
24of the Government Code. However, nothing herein shall exempt
25such a peace officer who either contracts for his or her services or
26the services of others as a private patrol operator or contracts for
27his or her services as or is employed as an armed private security
28officer. For purposes of this subdivision, “armed security officer”
29means an individual who carries or uses a firearm in the course
30and scope of that contract or employment.
31(k) A retired peace officer of the state or political subdivision
32thereof when the retired peace officer is employed by a private
33employer in employment approved by the chief law enforcement
34officer of the jurisdiction where the employment takes place,
35provided that the retired officer is in a uniform of a public law
36enforcement agency, has registered with the bureau on a form
37approved by the director, and has met any training requirements
38or their equivalent as established for security personnel under
39Section 7583.5. This officer may not carry an unloaded and
40exposed handgun unless he or she is exempted under the provisions
P5 1of Article 2 (commencing with Section 26361) of Chapter 6 of
2Division 5 of Title 4 of Part 6 of the Penal Code, may not carry
3an unloaded firearm that is not a handgun unless he or she is
4exempted under the provisions of Article 2 (commencing with
5Section 26405) of Chapter 7 of Division 5 of Title 4 of Part 6 of
6the Penal Code, and may not carry a loaded or concealed firearm
7unless he or she is exempted under the provisions of Sections
825450 to 25475, inclusive, of the Penal Code or Sections 25900
9to 25910, inclusive, of the Penal Code or has met the requirements
10set forth in subdivision (d) of Section 26030 of the Penal Code.
11However, nothing herein shall exempt the retired peace officer
12who contracts for his or her services or the services of others as a
13private patrol operator.
14(l) A licensed insurance adjuster in performing his or her duties
15within the scope of his or her license as an insurance adjuster.
16(m) A savings association subject to the jurisdiction of the
17Commissioner of Business Oversight or the Office of the
18Comptroller of the Currency.
19(n) A secured creditor engaged in the repossession of the
20creditor’s collateral and a lessor engaged in the repossession of
21leased property in which it claims an interest.
22(o) A peace officer in his or her official police uniform acting
23in accordance with subdivisions (c) and (d) of Section 70 of the
25(p) An unarmed, uniformed security person employed
26exclusively and regularly by a motion picture studio facility
27employer who does not provide contract security services for other
28entities or persons in connection with the affairs of that employer
29only and where there exists an employer-employee relationship if
30that person at no time carries or uses a deadly weapon, as defined
31in subdivision (a), in the performance of his or her duties, which
32may include, but are not limited to, the following business
34(1) The screening and monitoring access of employees of the
36(2) The screening and monitoring access of prearranged and
37preauthorized invited guests.
38(3) The screening and monitoring of vendors and suppliers.
P6 1(4) Patrolling the private property facilities for the safety and
2welfare of all who have been legitimately authorized to have access
3to the facility.
4(q) An armored contract carrier operating armored vehicles
5pursuant to the authority of the Department of the California
6Highway Patrol or the Public Utilities Commission, or an armored
7vehicle guard employed by an armored contract carrier.
Section 17511.1 of the Business and Professions Code
9 is amended to read:
As used in this article, “telephonic seller” or “seller”
11means a person who, on his or her own behalf or through
12salespersons or through the use of an automatic dialing-announcing
13device, as defined in Section 2871 of the Public Utilities Code,
14causes a telephone solicitation or attempted telephone solicitation
15to occur which meets the criteria specified in subdivision (a), (b),
16(c), or (d) and who is not exempted by subdivision (e), as follows:
17(a) A telephone solicitation or attempted telephone solicitation
18wherein the telephonic seller initiates telephonic contact with a
19prospective purchaser and represents or implies one or more of
21(1) That a prospective purchaser who buys one or more items
22will also receive additional or other items, whether or not of the
23same type as purchased, without further cost. For purposes of this
24subdivision, “further cost” does not include actual postage or
25common carrier delivery charges, if any.
26(2) That a prospective purchaser will receive a prize or gift, if
27the person also encourages the prospective purchaser to do either
28of the following:
29(A) Purchase or rent any goods or services.
30(B) Pay any money, including, but not limited to, a delivery or
32(3) That a prospective purchaser is able to obtain any item or
33service at a price which the seller states or implies is below the
34regular price of the item or service offered. This paragraph shall
35not apply to retailers who, within the previous 12 months, have
36 sold a majority of their goods or services through in-person sales
37at retail stores.
38(4) That a prospective purchaser who buys office equipment or
39supplies will, because of some unusual event or imminent price
P7 1increase, be able to buy these items at prices which are below those
2that are usually charged or will be charged for the items.
3(5) That the seller is a person other than the person he or she is.
4(6) That the items for sale are manufactured or supplied by a
5person other than the actual manufacturer or supplier.
6(7) That the seller is offering to sell the prospective purchaser
7any gold, silver, or other metals, including coins, diamonds, rubies,
8sapphires, or other stones, coal or other minerals, or any interest
9in oil, gas, or mineral fields, wells, or exploration sites, or any
10other investment opportunity of any type whatsoever.
11(8) That the seller is offering to make a loan, or to arrange or
12assist in arranging a loan or to assist in providing information
13which may lead to the obtaining of a loan, unless no payment of
14any kind is made until the loan proceeds are disbursed to the
16(9) That a prospective purchaser will receive a credit card, as
17defined in subdivision (a) of Section 1747.02 of the Civil Code,
18if the purchaser pays an upfront or preapplication fee for the credit
19card to the telephonic seller.
20(b) A solicitation or attempted solicitation which is made
21telephone in response to inquiries generated by unrequested
22notifications sent by the seller to persons who have not previously
23purchased goods or services from the seller or who have not
24previously requested credit from the seller, to a prospective
25purchaser wherein the seller represents or implies to the recipient
26of the notification that any of the following applies to the recipient:
27(1) That the recipient has in any manner been specially selected
28to receive the notification or the offer contained in the notification.
29(2) That the recipient will receive a prize or gift if the recipient
30calls the seller.
31(3) That if the recipient buys one or more items from the seller,
32the recipient will also receive additional or other items, whether
33or not of the same type as purchased, without further cost or at a
34cost which the seller states or implies is less than the regular price
35of such items.
36However, this subdivision does not apply to the solicitation of
37 sales by a catalog seller who periodically issues and delivers
38catalogs to potential purchasers by mail or by other means. This
39exception only applies if the catalog includes a written description
40or illustration and the sales price of each item of merchandise
P8 1offered for sale, includes at least 24 full pages of written material
2or illustrations, is distributed in more than one state, and has an
3annual circulation of not less than 250,000 customers.
4(c) A solicitation or attempted solicitation which is made by
5telephone in response to inquiries generated by advertisements on
6behalf of the telephonic seller wherein it is represented or implied
7that the seller is offering to sell to the prospective purchaser any
8gold, silver, or other metals, including coins, diamonds, rubies,
9sapphires, or other stones, coal or other minerals, or any interest
10in oil, gas, or mineral fields, wells, or exploration sites, or any
11other investment opportunity of any type whatsoever.
12(d) A solicitation or attempted solicitation which is made by
13telephone in response to inquiries generated by advertisements on
14behalf of the telephonic seller wherein it is represented or implied
15that the seller is offering to make a loan or to arrange or assist in
16arranging a loan or to assist in providing information which may
17lead to the obtaining of a loan, unless no payment of any kind is
18made until the loan proceeds are disbursed to the borrower.
19(e) For purposes of this article, “telephonic seller” or “seller”
20does not include any of the following:
21(1) A person offering or selling
a security qualified under
22Section 25110, 25120, or 25130 of the Corporations Code or
23exempt from qualification under Chapter 1 (commencing with
24Section 25100) of Part 2 of Division 1 of Title 4 of the
25Corporations Code. The fact that a notice claiming an exemption
26under the Corporate Securities Law of 1968 is filed with the
27Department of Business Oversight does not create an exemption
28under this paragraph.
29(2) A person licensed pursuant to Part 1 (commencing with
30Section 10000) of Division 4, when the solicited transaction is
31governed by that law.
32(3) A person licensed pursuant to Chapter 9 (commencing with
33Section 7000) of Division 3, when the solicited transaction is
34governed by that law.
35(4) A person licensed
or certificated pursuant to Part 2
36(commencing with Section 680) of Division 1 of the Insurance
37Code, including a person licensed pursuant to Chapter 5
38(commencing with Section 1621) thereof, when the solicited
39transaction is governed by that law.
P9 1(5) A person offering or selling a franchise registered pursuant
2to Section 31110 of the Corporations Code or exempt from
3registration under Chapter 1 (commencing with Section 31100)
4of Part 2 of Division 5 of Title 4 of the Corporations Code. The
5fact that a notice claiming an exemption under the Franchise
6Investment Law is filed with the Department of Business Oversight
7does not create an exemption under this paragraph.
8(6) A person soliciting the sale of a seller assisted marketing
9plan, as defined in Title 2.7 (commencing with Section 1812.200)
10of Part 4 of Division 3 of the Civil Code, who has filed with the
11Attorney General the documents required by Section 1812.203 of
12the Civil Code.
13(7) A person primarily soliciting the sale of a newspaper of
14general circulation, as defined in Article 1 (commencing with
15Section 6000) of Chapter 1 of Division 7 of Title 1 of the
16Government Code, a magazine, or membership in a book or record
17club whose program operates in conformity with the requirements
18of Section 1584.5 of the Civil Code.
19(8) A person soliciting business from prospective purchasers
20who have previously purchased from the business enterprise for
21which the person is calling.
22(9) A person soliciting without the intent to complete
23does not complete the sales presentation during the telephone
24solicitation but completes the sales presentation at a later
25face-to-face meeting between the solicitor and the prospective
26purchaser. However, if a seller, directly following a telephone
27solicitation, causes an individual whose primary purpose it is to
28go to the prospective purchaser to collect the payment or deliver
29any item purchased, this exemption does not apply.
30(10) Any supervised financial institution or parent, subsidiary,
31or subsidiary of parent thereof. As used in this paragraph,
32“supervised financial institution” means any commercial bank,
33trust company, savings and loan association, credit union, industrial
34loan company, finance lender or broker, or insurer, provided that
35the institution is subject to supervision by an official or agency of
36this state or of the United States.
37(11) A person soliciting the sale of a preneed funeral
38arrangement regulated by Article 9 (commencing with Section
397735) of Chapter 12 of Division 3.
P10 1(12) A person licensed pursuant to Chapter 19 (commencing
2with Section 9600) of Division 3 when acting pursuant to that
4(13) A person soliciting the sale of services provided by a cable
5television system licensed or franchised pursuant to Section 53066
6of the Government Code or any other authority.
7(14) A person or an affiliate of a person whose business is
8regulated by the Public Utilities Commission.
9(15) A person
soliciting the sale of a commodity pursuant to
10Part 2 (commencing with Section 58601) of Division 21 of the
11Food and Agricultural Code, if the solicitation neither intends to,
12nor actually results in, a sale which costs the purchaser in excess
13of one hundred dollars ($100).
14(16) An issuer or subsidiary of an issuer that has a security listed
15on a national securities exchange if the exchange has been certified
16by rule or order of the Commissioner of Business Oversight under
17subdivision (o) of Section 25100 of the Corporations Code. A
18subsidiary of an issuer that qualifies for exemption under this
19paragraph is not itself exempt unless not less than 60 percent of
20the voting power of its shares is owned by the qualifying issuer or
22(17) A person soliciting exclusively
the sale of telephone
23answering services to be provided by that person or that person’s
25(18) A person soliciting a transaction regulated by the
26 Commodity Futures Trading Commission if the person is registered
27or temporarily licensed for this activity with the Commodity
28Futures Trading Commission under the Commodity Exchange Act
29(7 U.S.C. Sec. 1 et seq.), and the registration or license has not
30expired or been suspended or revoked.
31(19) A person who sells coins or bullion at a price which is not
32more than 25 percent more than the price at which the seller is
33concurrently buying the same coins or bullion, if: (A) the seller
34has had a retail location in California from which he or she has
35been selling coins or bullion to the public in person for at least
36three years; (B) the telephonic solicitations are not the person’s
37primary business and sales made telephonically make up less than
3820 percent of the person’s total retail sales; and (C) the person
39claiming an exemption pursuant to this subdivision complies with
P11 1Section 17511.3, as applicable, and subdivision (p) of Section
3(20) A person licensed pursuant to Division 1.2 (commencing
4with Section 2000) of the Financial Code to engage in the business
5of money transmission if the license has not expired or been
6suspended or revoked.
7(21) A person licensed as a residential mortgage lender or
8servicer pursuant to Division 20 (commencing with Section 50000)
9of the Financial Code, when acting under the authority of that
11(22) A corporation that meets all of the following conditions:
12(A) It has been exempt from taxation under Section 23701e of
13the Revenue and Taxation Code for a minimum of 10 years.
14(B) It has maintained its principal purpose for a minimum of
16(C) It has been incorporated in the state for a minimum of 25
18(f) In any civil proceeding alleging a violation of this article,
19the burden of proving an exemption or an exception from a
20definition is upon the person claiming it, and in any criminal
21proceeding alleging a violation of this article, the burden of
22producing evidence to support a defense based upon an exemption
23or an exception from a definition is upon the person claiming it.
24(g) Compliance with this article does not satisfy nor substitute
25for any requirements for license, registration, or regulation
26mandated by other laws.
(a) A bank that sends or makes available to a customer
30a statement of account showing payment of items for the account
31shall either return or make available to the customer the items paid
32or provide information in the statement of account sufficient to
33allow the customer to identify the items paid. If the
36bank does not return the items, it shall provide in the statement of
37account the telephone number that the customer may call to request
38an item, a substitute check, or a legible copy thereof pursuant to
P12 1(b) If the items are not returned to the customer, the person
2retaining the items shall either retain the items or, if the items are
3destroyed, maintain the capacity to furnish legible copies of the
4items until the expiration of seven years after receipt of the items.
5A customer may request an item from the bank that paid the item,
6and that bank shall provide in a reasonable time either the item or,
7if the item has been destroyed or is not otherwise obtainable, a
8legible copy of the item. If the paid item requested by a customer
9was presented as a substitute check, the bank shall provide, in a
10reasonable time, either the substitute check or, if the substitute
11check has been destroyed or is not otherwise obtainable, a legible
12copy of the substitute check. A bank shall provide, upon request,
13and without charge to the customer, at least two items, substitute
14checks, or legible copies thereof, with respect to each statement
15of account sent to the customer.
16(c) If a bank sends or makes available a statement of account
17or items pursuant to subdivision (a), the customer shall exercise
18reasonable promptness in examining the statement or the items to
19determine whether any payment was not authorized because of an
20alteration of an item or because a purported signature by or on
21behalf of the customer was not authorized. If, based on the
22statement or items provided, the customer should reasonably have
23discovered the unauthorized payment, the customer shall promptly
24notify the bank of the relevant facts.
25(d) If the bank proves that the customer failed, with respect to
26an item, to comply with the duties imposed on the customer by
27subdivision (c), the customer is precluded from asserting any of
28the following against the bank:
29(1) The customer’s unauthorized signature or any alteration on
30the item if the bank also proves that it suffered a loss by reason of
32(2) The customer’s unauthorized signature or alteration by the
33same wrongdoer on any other item paid in good faith by the bank
34if the payment was made before the bank received notice from the
35customer of the unauthorized signature or alteration and after the
36customer had been afforded a reasonable period of time, not
37exceeding 30 days, in which to examine the item or statement of
38account and notify the bank.
39(e) If subdivision (d) applies and the customer proves that the
40bank failed to exercise ordinary care in paying the item and that
P13 1the failure contributed to loss, the loss is allocated between the
2customer precluded and the bank asserting the preclusion according
3to the extent to which the failure of the customer to comply with
4subdivision (c) and the failure of the bank to exercise ordinary
5care contributed to the loss. If the customer proves that the bank
6did not pay the item in good faith, the preclusion under subdivision
7(d) does not apply.
8(f) Without regard to care or lack of care of either the customer
9or the bank, a customer who does not within one year after the
10statement or items are made available to the customer (subdivision
11(a)) discover and report the customer’s unauthorized signature on
12or any alteration on the item is precluded from asserting against
13the bank the unauthorized signature or alteration. If there is a
14preclusion under this subdivision, the payer bank may not recover
15for breach of warranty under Section 4208 with respect to the
16unauthorized signature or alteration to which the preclusion applies.
17(g) As used in this section, “substitute check” shall have the
18same meaning as used in Section 229.2 of Title 12 of the Code of
20(h) This section shall become operative on January 1, 2015.
Section 2510 of the Corporations Code is amended to
“Social purpose corporation subject to the Banking Law”
25means any of the following:
26(a) A social purpose corporation that, with the approval of the
27Commissioner of Business Oversight, is incorporated for the
28purpose of engaging in, or that is authorized by the Commissioner
29of Business Oversight to engage in, the commercial banking
30business under the Banking Law (Division 1.1 (commencing with
31Section 1000) of the Financial Code).
32(b) Any social purpose corporation that, with the approval of
33the Commissioner of Business Oversight, is incorporated for the
34purpose of engaging in, or that is authorized by the Commissioner
35of Business Oversight to engage in, the industrial banking business
36under the Banking Law (Division 1.1 (commencing with Section
371000) of the Financial Code).
38(c) Any social purpose corporation, other than a social purpose
39corporation described in subdivision (d), that, with the approval
40of the Commissioner of Business Oversight, is incorporated for
P14 1the purpose of engaging in, or that is authorized by the
2Commissioner of Business Oversight to engage in, the trust
3business under the Banking Law (Division 1.1 (commencing with
4Section 1000) of the Financial Code).
5(d) Any social purpose corporation that is authorized by the
6Commissioner of Business Oversight and the Commissioner of
7Insurance to maintain a title insurance department to engage in
8title insurance business and a trust department to engage in trust
10(e) Any social purpose corporation that, with the approval of
11the Commissioner of Business Oversight, is incorporated for the
12purpose of engaging in, or that is authorized by the Commissioner
13of Business Oversight to engage in, business under Article 1
14(commencing with Section 1850) of Chapter 21 of Division 1.1
15of the Financial Code.
Section 2601 of the Corporations Code is amended to
(a) The Secretary of State shall not file articles setting
20forth a name in which “bank,” “trust,” “trustee,” or related words
21appear, unless the certificate of approval of the Commissioner of
22Business Oversight is attached to the articles. This subdivision
23does not apply to the articles of any social purpose corporation
24subject to the Banking Law on which is endorsed the approval of
25the Commissioner of Business Oversight.
26(b) (1) The Secretary of State shall not file articles that set forth
27a name that is likely to mislead the public or that is the same as,
28or resembles so closely as to tend to deceive, the name of a
29domestic corporation, the name of a domestic social purpose
30corporation, or the name of a foreign corporation that is authorized
31to transact intrastate business or has registered its name pursuant
32to Section 2101, a name that a foreign corporation has assumed
33under subdivision (b) of Section 2106, a name that will become
34the record name of a corporation or social purpose corporation or
35a foreign corporation upon the effective date of a filed corporate
36instrument where there is a delayed effective date pursuant to
37subdivision (c) of Section 110 or subdivision (c) of Section 5008,
38or a name that is under reservation for another corporation or social
39purpose corporation pursuant to this title, except that a social
40purpose corporation may adopt a name that is substantially the
P15 1same as an existing corporation or social purpose corporation,
2foreign or domestic, which is authorized to transact intrastate
3business or has registered its name pursuant to Section 2101, upon
4proof of consent by the domestic or foreign corporation or social
5purpose corporation and a finding by the Secretary of State that
6under the circumstances the public is not likely to be misled. The
7use by a social purpose corporation of a name in violation of this
8section may be enjoined notwithstanding the filing of its articles
9by the Secretary of State.
10(2) A corporation formed pursuant to this division before
11January 1, 2015, may elect to change its status from a flexible
12purpose corporation to a social purpose corporation by amending
13its articles of incorporation to change its name to replace “flexible
14purpose corporation” with “social purpose corporation” and to
15replace the term “flexible purpose corporation” with “social
16purpose corporation” as applicable in any statements contained in
17the articles. For any flexible purpose corporation formed prior to
18January 1, 2015, that has not amended its articles of incorporation
19to change its status to a social purpose corporation, any reference
20in this division to social purpose corporation shall be deemed a
21reference to “flexible purpose corporation.”
22(c) Any applicant may, upon payment of the fee prescribed in
23Article 3 (commencing with Section 12180) of Chapter 3 of Part
242 of Division 3 of Title 2 of the Government Code, obtain from
25the Secretary of State a certificate of reservation of any name not
26prohibited by subdivision (b), and upon the issuance of the
27certificate the name stated in the certificate shall be reserved for
28a period of 60 days. The Secretary of State shall not, however,
29issue certificates reserving the same name for two or more
30consecutive 60-day periods to the same applicant or for the use or
31benefit of the same person. No consecutive reservations shall be
32made by or for the use or benefit of the same person of names so
33similar as to fall within the prohibitions of subdivision (b).
Section 25100 of the Corporations Code is amended
The following securities are exempted from Sections
3825110, 25120, and 25130:
39(a) Any security (including a revenue obligation) issued or
40guaranteed by the United States, any state, any city, county, city
P16 1and county, public district, public authority, public corporation,
2public entity, or political subdivision of a state or any agency or
3corporate or other instrumentality of any one or more of the
4foregoing; or any certificate of deposit for any of the foregoing.
5(b) Any security issued or guaranteed by Canada, any Canadian
6province, any political subdivision or municipality of that province,
7or by any other foreign government with which the United States
8currently maintains diplomatic relations, if the security is
9 recognized as a valid obligation by the issuer or guarantor; or any
10certificate of deposit for any of the foregoing.
11(c) Any security issued or guaranteed by and representing an
12interest in or a direct obligation of a national bank or a bank or
13trust company incorporated under the laws of this state, and any
14security issued by a bank to one or more other banks and
15representing an interest in an asset of the issuing bank.
16(d) Any security issued or guaranteed by a federal savings
17association or federal savings bank or federal land bank or joint
18land bank or national farm loan association or by any savings
19association, as defined in subdivision (a) of Section 5102 of the
20Financial Code, which is subject to the supervision and regulation
21of the Commissioner of Business Oversight of this state.
22(e) Any security (other than an interest in all or portions of a
23parcel or parcels of real property which are subdivided land or a
24subdivision or in a real estate development), the issuance of which
25is subject to authorization by the Insurance Commissioner, the
26Public Utilities Commission, or the Real Estate Commissioner of
28(f) Any security consisting of any interest in all or portions of
29a parcel or parcels of real property that are subdivided lands or a
30subdivision or in a real estate development; provided that the
31exemption in this subdivision shall not be applicable to: (1) any
32investment contract sold or offered for sale with, or as part of, that
33interest, or (2) any person engaged in the business of selling,
34distributing, or supplying water for irrigation purposes or domestic
35use that is not a public utility except that the exemption is
36applicable to any security of a mutual water company (other than
37an investment contract as described in paragraph (1)) offered or
38sold in connection with subdivided lands pursuant to Chapter 2
39(commencing with Section 14310) of Part 7 of Division 3 of Title
P17 1(g) Any mutual capital certificates or savings accounts, as
2defined in the Savings Association Law, issued by a savings
3association, as defined by subdivision (a) of Section 5102 of the
4Financial Code, and holding a license or certificate of authority
5then in force from the Commissioner of Business Oversight of this
7(h) Any security issued or guaranteed by any federal credit
8union, or by any credit union organized and supervised, or
9regulated, under the Credit Union Law.
10(i) Any security issued or guaranteed by any railroad, other
11common carrier, public utility, or public utility holding company
12which is (1) subject to the jurisdiction of the Interstate Commerce
13 Commission or its successor or (2) a holding company registered
14with the Securities and Exchange Commission under the Public
15Utility Holding Company Act of 1935 or a subsidiary of that
16company within the meaning of that act or (3) regulated in respect
17of the issuance or guarantee of the security by a governmental
18authority of the United States, of any state, of Canada or of any
19Canadian province; and the security is subject to registration with
20or authorization of issuance by that authority.
21(j) Any security (except evidences of indebtedness, whether
22interest bearing or not) of an issuer (1) organized exclusively for
23educational, benevolent, fraternal, religious, charitable, social, or
24reformatory purposes and not for pecuniary profit, if no part of the
25net earnings of the issuer inures to the benefit of any private
26shareholder or individual, or (2) organized as a chamber of
27commerce or trade or professional association. The fact that
28amounts received from memberships or dues or both will or may
29be used to construct or otherwise acquire facilities for use by
30members of the nonprofit organization does not disqualify the
31organization for this exemption. This exemption does not apply
32to the securities of any nonprofit organization if any promoter
33thereof expects or intends to make a profit directly or indirectly
34from any business or activity associated with the organization or
35operation of that nonprofit organization or from remuneration
36received from that nonprofit organization.
37(k) Any agreement, commonly known as a “life income
38contract,” of an issuer (1) organized exclusively for educational,
39benevolent, fraternal, religious, charitable, social, or reformatory
40purposes and not for pecuniary profit and (2) which the
P18 1commissioner designates by rule or order, with a donor in
2consideration of a donation of property to that issuer and providing
3for the payment to the donor or persons designated by him or her
4of income or specified periodic payments from the donated
5property or other property for the life of the donor or those other
7(l) Any note, draft, bill of exchange, or banker’s acceptance
8which is freely transferable and of prime quality, arises out of a
9current transaction or the proceeds of which have been or are to
10be used for current transactions, and which evidences an obligation
11to pay cash within nine months of the date of issuance, exclusive
12of days of grace, or any renewal of that paper which is likewise
13limited, or any guarantee of that paper or of that renewal, provided
14that the paper is not offered to the public in amounts of less than
15twenty-five thousand dollars ($25,000) in the aggregate to any one
16purchaser. In addition, the commissioner may, by rule or order,
17exempt any issuer of any notes, drafts, bills of exchange or banker’s
18acceptances from qualification of those securities when the
19 commissioner finds that the qualification is not necessary or
20appropriate in the public interest or for the protection of investors.
21(m) Any security issued by any corporation organized and
22existing under the provisions of Chapter 1 (commencing with
23Section 54001) of Division 20 of the Food and Agricultural Code.
24(n) Any beneficial interest in an employees’ pension,
25profit-sharing, stock bonus, or similar benefit plan which meets
26the requirements for qualification under Section 401 of the federal
27Internal Revenue Code or any statute amendatory thereof or
28supplementary thereto. A determination letter from the Internal
29Revenue Service stating that an employees’ pension, profit-sharing,
30stock bonus, or similar benefit plan meets those requirements shall
31be conclusive evidence that the plan is an employees’ pension,
32profit-sharing, stock bonus, or similar benefit plan within the
33 meaning of the first sentence of this subdivision until the date the
34determination letter is revoked in writing by the Internal Revenue
35Service, regardless of whether or not the revocation is retroactive.
36(o) Any security listed or approved for listing upon notice of
37issuance on a national securities exchange, if the exchange has
38been certified by rule or order of the commissioner and any warrant
39or right to purchase or subscribe to the security. The exemption
40afforded by this subdivision does not apply to securities listed or
P19 1approved for listing upon notice of issuance on a national securities
2exchange, in a rollup transaction unless the rollup transaction is
3an eligible rollup transaction as defined in Section 25014.7.
4That certification of any exchange shall be made by the
5commissioner upon the written request of the exchange if the
6commissioner finds that the exchange, in acting on applications
7 for listing of common stock, substantially applies the minimum
8standards set forth in either subparagraph (A) or (B) of paragraph
9(1), and, in considering suspension or removal from listing,
10substantially applies each of the criteria set forth in paragraph (2).
11(1) Listing standards:
12(A) (i) Shareholders’ equity of at least four million dollars
14(ii) Pretax income of at least seven hundred fifty thousand
15dollars ($750,000) in the issuer’s last fiscal year or in two of its
16last three fiscal years.
17(iii) Minimum public distribution of 500,000 shares (exclusive
18of the holdings of officers, directors, controlling shareholders, and
19other concentrated or family holdings), together with a minimum
20of 800 public holders or minimum public distribution of 1,000,000
21shares together with a minimum of 400 public holders. The
22exchange may also consider the listing of a company’s securities
23if the company has a minimum of 500,000 shares publicly held, a
24minimum of 400 shareholders and daily trading volume in the
25issue has been approximately 2,000 shares or more for the six
26months preceding the date of application. In evaluating the
27suitability of an issue for listing under this trading provision, the
28exchange shall review the nature and frequency of that activity
29and any other factors as it may determine to be relevant in
30ascertaining whether the issue is suitable for trading. A security
31that trades infrequently shall not be considered for listing under
32this paragraph even though average daily volume amounts to 2,000
33shares per day or more.
34Companies whose securities are concentrated in a limited
35geographical area, or whose securities are largely held in block by
36institutional investors, normally may not be considered eligible
37for listing unless the public distribution appreciably exceeds
39(iv) Minimum price of three dollars ($3) per share for a
40reasonable period of time prior to the filing of a listing application;
P20 1provided, however, in certain instances an exchange may favorably
2consider listing an issue selling for less than three dollars ($3) per
3share after considering all pertinent factors, including market
4conditions in general, whether historically the issue has sold above
5three dollars ($3) per share, the applicant’s capitalization, and the
6number of outstanding and publicly held shares of the issue.
7(v) An aggregate market value for publicly held shares of at
8least three million dollars ($3,000,000).
9(B) (i) Shareholders’ equity of at least four million dollars
11(ii) Minimum public distribution set forth in clause (iii) of
12subparagraph (A) of paragraph (1).
13(iii) Operating history of at least three years.
14(iv) An aggregate market value for publicly held shares of at
15least fifteen million dollars ($15,000,000).
16(2) Criteria for consideration of suspension or removal from
18(A) If a company that (A) has shareholders’ equity of less than
19 one million dollars ($1,000,000) has sustained net losses in each
20of its two most recent fiscal years, or (B) has net tangible assets
21of less than three million dollars ($3,000,000) and has sustained
22net losses in three of its four most recent fiscal years.
23(B) If the number of shares publicly held (excluding the holdings
24of officers, directors, controlling shareholders, and other
25concentrated or family holdings) is less than 150,000.
26(C) If the total number of shareholders is less than 400 or if the
27number of shareholders of lots of 100 shares or more is less than
29(D) If the aggregate market value
of shares publicly held is less
30than seven hundred fifty thousand dollars ($750,000).
31(E) If shares of common stock sell at a price of less than three
32dollars ($3) per share for a substantial period of time and the issuer
33shall fail to effectuate a reverse stock split of the shares within a
34reasonable period of time after being requested by the exchange
35to take that action.
36A national securities exchange, certified by rule or order of the
37commissioner under this subdivision, shall file annual reports when
38requested to do so by the commissioner. The annual reports shall
39contain, by issuer: the variances granted to an exchange’s listing
40standards, including variances from corporate governance and
P21 1voting rights’ standards, for any security of that issuer; the reasons
2for the variances; a discussion of the review procedure instituted
3by the exchange to determine the effect of the variances on
4investors and whether the variances should be continued; and any
5other information that the commissioner deems relevant. The
6purpose of these reports is to assist the commissioner in
7determining whether the quantitative and qualitative requirements
8of this subdivision are substantially being met by the exchange in
9general or with regard to any particular security.
10The commissioner after appropriate notice and opportunity for
11hearing in accordance with the provisions of the Administrative
12Procedure Act, Chapter 5 (commencing with Section 11500) of
13Part 1 of Division 3 of Title 2 of the Government Code, may, in
14his or her discretion, by rule or order, decertify any exchange
15previously certified that ceases substantially to apply the minimum
16standards or criteria as set forth in paragraphs (1) and (2).
17A rule or order of certification shall conclusively establish that
18any security listed or approved for listing upon notice of issuance
19on any exchange named in a rule or order of certification, and any
20warrant or right to purchase or subscribe to that security, is exempt
21under this subdivision until the adoption by the commissioner of
22any rule or order decertifying the exchange.
23(p) A promissory note secured by a lien on real property, which
24is neither one of a series of notes of equal priority secured by
25 interests in the same real property nor a note in which beneficial
26interests are sold to more than one person or entity.
27(q) Any unincorporated interindemnity or reciprocal or
28interinsurance contract, that qualifies under the provisions of
29Section 1280.7 of the Insurance Code, between members of a
30cooperative corporation, organized and operating under Part 2
31(commencing with Section 12200) of Division 3 of Title 1, and
32whose members consist only of physicians and surgeons licensed
33in California, which contracts indemnify solely in respect to
34medical malpractice claims against the members, and which do
35not collect in advance of loss any moneys other than contributions
36by each member to a collective reserve trust fund or for necessary
37expenses of administration.
38(1) Whenever it appears to the commissioner that any person
39has engaged or is about to engage in any act or practice constituting
40a violation of any provision of Section 1280.7 of the Insurance
P22 1Code, the commissioner may, in the commissioner’s discretion,
2bring an action in the name of the people of the State of California
3in the superior court to enjoin the acts or practices or to enforce
4compliance with Section 1280.7 of the Insurance Code. Upon a
5proper showing a permanent or preliminary injunction, a restraining
6order, or a writ of mandate shall be granted and a receiver or
7conservator may be appointed for the defendant or the defendant’s
9(2) The commissioner may, in the commissioner’s discretion,
10(A) make public or private investigations within or outside of this
11state as the commissioner deems necessary to determine whether
12any person has violated or is about to violate any provision of
13Section 1280.7 of the Insurance Code or to aid in the enforcement
14of Section 1280.7, and (B) publish information concerning the
15violation of Section 1280.7.
16(3) For the purpose of any investigation or proceeding under
17this section, the commissioner or any officer designated by the
18commissioner may administer oaths and affirmations, subpoena
19witnesses, compel their attendance, take evidence, and require the
20production of any books, papers, correspondence, memoranda,
21agreements, or other documents or records which the commissioner
22deems relevant or material to the inquiry.
23(4) In case of contumacy by, or refusal to obey a subpoena
24issued to, any person, the superior court, upon application by the
25commissioner, may issue to the person an order requiring the
26person to appear before the commissioner, or the officer designated
27by the commissioner, to produce documentary evidence, if so
28ordered, or to give evidence touching the matter under investigation
29or in question. Failure to obey the order of the court may be
30punished by the court as a contempt.
31(5) No person is excused from attending or testifying or from
32producing any document or record before the commissioner or in
33obedience to the subpoena of the commissioner or any officer
34designated by the commissioner, or in any proceeding instituted
35by the commissioner, on the ground that the testimony or evidence
36(documentary or otherwise), required of the person may tend to
37incriminate the person or subject the person to a penalty or
38forfeiture, but no individual may be prosecuted or subjected to any
39penalty or forfeiture for or on account of any transaction, matter,
40or thing concerning which the person is compelled, after validly
P23 1claiming the privilege against self-incrimination, to testify or
2produce evidence (documentary or otherwise), except that the
3individual testifying is not exempt from prosecution and
4punishment for perjury or contempt committed in testifying.
5(6) The cost of any review, examination, audit, or investigation
6made by the commissioner under Section 1280.7 of the Insurance
7Code shall be paid to the commissioner by the person subject to
8the review, examination, audit, or investigation, and the
9commissioner may maintain an action for the recovery of these
10costs in any court of competent jurisdiction. In determining the
11cost, the commissioner may use the actual amount of the salary or
12other compensation paid to the persons making the review,
13examination, audit, or investigation plus the actual amount of
14expenses including overhead reasonably incurred in the
15performance of the work.
16The recoverable cost of each review, examination, audit, or
17investigation made by the commissioner under Section 1280.7 of
18the Insurance Code shall not exceed twenty-five thousand dollars
19($25,000), except that costs exceeding twenty-five thousand dollars
20($25,000) shall be recoverable if the costs are necessary to prevent
21a violation of any provision of Section 1280.7 of the Insurance
23(r) Any shares or memberships issued by any corporation
24organized and existing pursuant to the provisions of Part 2
25(commencing with Section 12200) of Division 3 of Title 1,
26provided the aggregate investment of any shareholder or member
27in shares or memberships sold pursuant to this subdivision does
28not exceed one thousand dollars ($1,000). This exemption does
29not apply to the shares or memberships of that corporation if any
30promoter thereof expects or intends to make a profit directly or
31indirectly from any business or activity associated with the
32corporation or the operation of the corporation or from
33remuneration, other than reasonable salary, received from the
34corporation. This exemption does not apply to nonvoting shares
35or memberships of that corporation issued to any person who does
36not possess, and who will not acquire in connection with the
37issuance of nonvoting shares or memberships, voting power
38(Section 12253) in the corporation. This exemption also does not
39apply to shares or memberships issued by a nonprofit cooperative
40corporation organized to facilitate the creation of an unincorporated
P24 1interindemnity arrangement that provides indemnification for
2medical malpractice to its physician and surgeon members as set
3forth in subdivision (q).
4(s) Any security consisting of or representing an interest in a
5pool of mortgage loans that meets each of the following
7(1) The pool consists of whole mortgage loans or participation
8interests in those loans, which loans were originated or acquired
9in the ordinary course of business by a national bank or federal
10savings association or federal savings bank having its principal
11office in this state, by a bank incorporated under the laws of this
12state or by a savings association as defined in subdivision (a) of
13Section 5102 of the Financial Code and which is subject to the
14supervision and regulation of the Commissioner of Business
15Oversight, and each of which at the time of transfer to the pool is
16an authorized investment for the originating or acquiring institution.
17(2) The pool of mortgage loans is held in trust by a trustee which
18is a financial institution specified in paragraph (1) as trustee or
20(3) The loans are serviced by a financial institution specified in
22(4) The security is not offered in amounts of less than
23twenty-five thousand dollars ($25,000) in the aggregate to any one
25(5) The security is offered pursuant to a registration under the
26Securities Act of 1933, or pursuant to an exemption under
27Regulation A under that act, or in the opinion of counsel for the
28issuer, is offered pursuant to an exemption under Section 4(2) of
30(t) (1) Any security issued or guaranteed by and representing
31an interest in or a direct obligation of an industrial loan company
32incorporated under the laws of the state and authorized by the
33Commissioner of Business Oversight to engage in industrial loan
35(2) Any investment certificate in or issued by any industrial
36loan company that is organized under the laws of a state of the
37United States other than this state, that is insured by the Federal
38Deposit Insurance Corporation, and that maintains a branch office
39in this state.
Section 25254 of the Corporations Code is amended
(a) If the commissioner determines it is in the public
5interest, the commissioner may include in any administrative action
6brought under this part a claim for ancillary relief, including, but
7not limited to, a claim for restitution or disgorgement or damages
8on behalf of the persons injured by the act or practice constituting
9the subject matter of the action, and the administrative law judge
10shall have jurisdiction to award additional relief.
11(b) In an administrative action brought under this part, the
12commissioner is entitled to recover costs, which in the discretion
13of the administrative law judge may include an amount representing
14reasonable attorney’s fees and investigative expenses for the
15services rendered, for deposit into the State Corporations Fund for
16the use of the Department of Business Oversight.
17(c) After the exhaustion of the review procedures provided in
18accordance with the provisions of the Administrative Procedure
19Act, Chapter 5 (commencing with Section 11500) of Part 1 of
20Division 3 of Title 2 of the Government Code, the commissioner
21may apply to the appropriate superior court for a judgment in the
22amount of the ancillary relief and costs awarded in a final decision
23and order compelling the respondent, or the named or cited person,
24to comply with the final decision of the commissioner brought
25under this division. The application shall include a certified copy
26of the final decision of the commission and shall constitute a
27sufficient showing to warrant the issuance of the judgment and
28order from superior court.
Section 25532 of the Corporations Code is amended
(a) If, in the opinion of the commissioner, (1) the sale
33of a security is subject to qualification under this law and it is being
34or has been offered or sold without first being qualified, the
35commissioner may order the issuer or offeror of the security to
36desist and refrain from the further offer or sale of the security until
37qualification has been made under this law or (2) the sale of a
38security is subject to the requirements of Section 25100.1, 25101.1,
39or 25102.1 and the security is being or has been offered or sold
40without first meeting the requirements of those sections, the
P26 1commissioner may order the issuer or offeror of that security to
2desist and refrain from the further offer or sale of the security until
3those requirements have been met.
4(b) If, in the opinion of the commissioner, a person has been or
5is acting as a broker-dealer or investment adviser, or has been or
6is engaging in broker-dealer or investment adviser activities, in
7violation of Section 25210, 25230, or 25230.1, the commissioner
8may order that person to desist and refrain from the activity until
9the person has been appropriately licensed or the required filing
10has been made under this law.
11(c) If, in the opinion of the commissioner, a person has violated
12or is violating Section 25401, the commissioner may order that
13person to desist and refrain from the violation.
14(d) If the commissioner determines that a person has engaged,
15is engaging, or is about to engage in an act, practice, or course of
16business constituting a violation of this division or a rule adopted
17or order issued under this division, the commissioner may issue
18an order directing the person to desist and refrain from engaging
19in the act, practice, or course of business, or take other action
20necessary or appropriate to comply with this division.
21(e) If the commissioner determines it is in the public interest,
22the commissioner may include in any administrative action brought
23under this division a claim for ancillary relief, including, but not
24limited to, a claim for restitution or disgorgement or damages on
25behalf of the persons injured by the act or practice constituting the
26subject matter of the action, and the administrative law judge shall
27have jurisdiction to award additional relief.
after an order has been served under subdivision (a), (b),
29(c), or (d), a request for hearing is filed in writing within 30 days
30of the date of service of the order by the person to whom the order
31was directed, a hearing shall be held in accordance with provisions
32of the Administrative Procedure Act, Chapter 5 (commencing with
33Section 11500) of Part 1 of Division 3 of Title 2 of the Government
34Code, and the commissioner shall have all of the powers granted
35under that chapter. Unless the hearing is commenced within 15
36business days after the request is filed (or the person affected
37consents to a later date), the order is rescinded.
38If that person fails to file a written request for a hearing within
3930 days from the date of service of the order, the order shall be
P27 1deemed a final order of the commissioner and is not subject to
2review by any court or agency, notwithstanding Section 25609.
3The commissioner may file a certified copy of the final order
4with the clerk of the superior court or any court of competent
5 jurisdiction. The order so filed has the same effect as a judgment
6of the court and may be recorded, enforced, or satisfied in the same
7manner as a judgment of the court.
8If a person does not comply with an order under this section, the
9commissioner may petition the superior court or any court of
10competent jurisdiction to enforce the order. The court may not
11require the commissioner to post a bond in an action or proceeding
12under this section. If the court finds, after service and opportunity
13for hearing, that the person was not in compliance with the order,
14the court may adjudge the person in civil contempt of the order.
15The court may impose a further civil penalty against the person
16for contempt and may grant any other relief the court determines
17is just and proper in the circumstances.
Section 5100.2 of the Financial Code is amended to
For purposes of this division:
22(a) Any reference to regulations of the federal Office of the
23Comptroller of the Currency or the Federal Deposit Insurance
24Corporation shall also be deemed to include and refer to regulations
25adopted by the Federal Home Loan Bank Board or the Federal
26Savings and Loan Insurance Corporation, to the extent these
27regulations have been continued in effect and made enforceable
28by the Office of the Comptroller of the Currency or Federal Deposit
29Insurance Corporation, respectively, pursuant to the Financial
30Institutions Reform, Recovery, and Enforcement Act of 1989
31(Public Law 101-73).
reference to charters issued by the Office of the
33Comptroller of the Currency shall also be deemed to include and
34refer to charters issued by the Federal Home Loan Bank Board.
Section 18139 of the Financial Code is amended to
A sale, merger, or conversion involving an industrial
39loan company and another industrial loan company, a bank, or a
P28 1savings association is subject to Division 1.6 (commencing with
Section 18427.9 of the Financial Code is amended
There shall be exempted from the provisions of
7Section 18427.1 all of the following:
8(a) (1) Any offer, not involving a public offering, to an affiliate
9or to a person of the type described in subdivision (i) of Section
1025102 of the Corporations Code or in the regulations of the
11Commissioner of Business Oversight adopted thereunder.
12(2) The execution and delivery of an agreement for the sale of
13securities to any person of the type described in paragraph (1),
14 subject to all of the following:
15(A) The agreement shall contain substantially the following
17“The sale of the securities which are the subject of this agreement
18has not been authorized by a permit issued by the Commissioner
19of Business Oversight. The issuance of the securities or the
20payment or receipt of any part of the consideration therefor prior
21to the issuance of a permit is unlawful, unless the sale of securities
22is exempt from Section 18427.1 of the California Financial Code.
23The rights of all parties to this agreement are expressly conditioned
24upon the issuance of a permit, unless the sale is so exempt.”
25(B) No part of the purchase price may be paid or received, and
26none of the securities may be issued, until a permit authorizing the
27sale of the securities is issued, unless the sale is exempt from
29(b) Any transaction or security which the commissioner by
30regulation or order exempts as not being comprehended within the
31purposes of this article and the regulation of which he or she finds
32is not necessary or appropriate in the public interest or for the
33protection of investors.
Section 53638 of the Government Code is amended
(a) The deposit shall not exceed the shareholder’s
38equity of any depository bank. For the purposes of this subdivision,
39shareholder’s equity shall be determined in accordance with Section
P29 1463 of the Financial Code, but shall be deemed to include capital
2notes and debentures.
3(b) The deposit shall not exceed the total of the net worth of
4any depository savings association or federal association, except
5that deposits not exceeding a total of five hundred thousand dollars
6($500,000) may be made to a savings association or federal
7association without regard to the net worth of that depository, if
8such deposits are insured or secured as required by law.
9(c) The deposit to the share accounts of any regularly chartered
10credit union shall not exceed the total of the unimpaired capital
11and surplus of the credit union, as defined by rule of the
12Commissioner of Business Oversight, except that the deposit to
13any credit union share account in an amount not exceeding five
14hundred thousand dollars ($500,000) may be made if the share
15accounts of that credit union are insured or guaranteed pursuant
16to Section 14858 of the Financial Code or are secured as required
18(d) The deposit in investment certificates of a federally insured
19industrial loan company shall not exceed the total of the unimpaired
20capital and surplus of the insured industrial loan company.