Amended in Assembly August 4, 2016

Amended in Senate April 6, 2015

Senate Bill No. 777

Introduced by Senator Lara

February 27, 2015

begin delete An act to amend Section 19880 of the Business and Professions Code, relating to gambling. end delete begin insert An act to amend Section 22050 of the Financial Code, relating to finance lenders. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 777, as amended, Lara. begin delete Gambling Control Act: corporations. end delete begin insert The California Finance Lenders Law: application. end insert

begin insert

Existing law, the California Finance Lenders Law, provides for the licensure and regulation of finance lenders and brokers. Existing law exempts from its provisions, among others, persons making 5 or fewer commercial loans in a 12-month period if the loans are incidental to the business of the person relying upon the exemption.

end insert begin insert

This bill would also exempt a person who makes one commercial loan in a 12-month period from regulation pursuant to the California Finance Lenders Law.

end insert begin delete

Existing law, the Gambling Control Act, provides for the licensure and regulation of various legalized gambling activities and establishments by the California Gambling Control Commission and the investigation and enforcement of those activities and establishments by the Department of Justice. Existing law requires a corporation to comply with specified requirements in order to obtain a gambling license, including a requirement that the corporation register as a corporation with the department and supply specified supplemental information to the department with the application and upon request of the department, such as remuneration as compensation for services to specified individuals and the amount of remuneration to persons other than directors and officers in excess of $100,000. Existing law also requires that information to include a copy of the corporation’s annual federal income tax return, within 30 calendar days after that return is filed with the Internal Revenue Service.

end delete begin delete

This bill would specify that information on the extent of the remuneration as compensation for services of specified individuals includes bonuses. The bill would require supplying information on the amount of remuneration to persons other than directors and officers in excess of $95,000. The bill would also require the corporation to supply in its information a copy of its annual federal income tax return within 30 business days after that return is filed.

end delete

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 22050 of the end insert begin insert Financial Code end insert begin insert is amended
to read: end insert

22050.  

(a) This division does not apply to any person doing
business under any law of any state or of the United States relating
to banks, trust companies, savings and loan associations, insurance
premium finance agencies, credit unions, small business investment
companies, community advantage lenders, California business and
industrial development corporations when acting under federal
law or other state authority, or licensed pawnbrokers when acting
under the authority of that license.

“Community advantage lender” means an entity authorized by
the United States Small Business Administration to deliver
community advantage loans.

(b) This division does not apply to a check casher who holds a
valid permit issued pursuant to Section 1789.37 of the Civil Code
when acting under the authority of that permit, and shall not apply
to a person holding a valid license issued pursuant to Section 23005
of the Financial Code when acting under the authority of that
license.

(c) This division does not apply to a college or university making
a loan for the purpose of permitting a person to pursue a program
or course of study leading to a degree or certificate.

(d) This division does not apply to a broker-dealer acting
pursuant to a certificate then in effect and issued pursuant to
Section 25211 of the Corporations Code.

(e) This division does not apply to any person who makes five
or fewer loans in a 12-month period, these loans are commercial
loans as defined in Section 22502, and the loans are incidental to
the business of the person relying upon the exemption.

begin insert

(f) This division does not apply to any person who makes one
loan in a 12-month period if that loan is a commercial loan as
defined in Section 22502.

end insert begin delete

(f)

end delete

begin insert (g) end insert  This division does not apply to any public corporation as
defined in Section 67510 of the Government Code, any public
entity other than the state as defined in Section 811.2 of the
Government Code, or any agency of any one or more of the
foregoing, when making any loan so long as the public corporation,
public entity, or agency of any one or more of the foregoing
complies with all applicable federal and state laws and regulations.

begin delete

SECTION 1.  

Section 19880 of the Business and Professions
Code is amended to read:

19880.  

In addition to the requirements of Section 19852, in
order to be eligible to receive a gambling license as the owner of
a gambling enterprise, a corporation shall comply with all of the
following requirements:

(a) Maintain an office of the corporation in the gambling
establishment.

(b) Comply with all of the requirements of the laws of this state
pertaining to corporations.

(c) Maintain, in the corporation’s principal office in California
or in the gambling establishment, a ledger that meets both of the
following conditions:

(1) At all times reflects the ownership of record of every class
of security issued by the corporation.

(2) Is available for inspection by the department at all reasonable
times without notice.

(d) Supply supplemental forms and information, in accordance
with Section 19865, with the initial license application, and
thereafter only on request, to the department, which shall include,
but not be limited to, all of the following:

(1) The organization, financial structure, and nature of the
business to be operated, including the names, personal and criminal
history, and fingerprints of all officers and directors, and the names,
addresses, and number of shares held by all stockholders of record.

(2) The rights and privileges acquired by the holders of different
classes of authorized securities, including debentures.

(3) The terms and conditions on which securities are to be
offered.

(4) The terms and conditions on all outstanding loans,
mortgages, trust deeds, pledges, or any other indebtedness or
security interest.

(5) The extent of the equity security holdings in the corporation
of all officers, directors, and underwriters, and their remuneration
as compensation for services, in the form of salary, wages, fees,
bonuses, or otherwise.

(6) The amount of remuneration to persons other than directors
and officers in excess of ninety-five thousand dollars ($95,000)
per annum.

(7) Bonus and profit-sharing arrangements.

(8) Management, consultant, and service contracts related to
the operation of controlled gaming.

(9) Options existing, or to be created, in respect of their
securities or other interests.

(10) Financial statements for at least three fiscal years preceding
the year of registration, or, if the corporation has not been in
existence for a period of three years, financial statements from the
date of its formation. All financial statements shall be prepared in
accordance with generally accepted accounting principles and
audited by a licensee of the California Board of Accountancy.

(11) Any further financial data that the department, with the
approval of the commission, may deem necessary or appropriate
for the protection of the state.

(12) An annual profit-and-loss statement, an annual balance
sheet, and a copy of its annual federal income tax return, within
30 business days after that return is filed with the Internal Revenue
Service.

end delete