State Codes and Statutes

State Codes and Statutes

Statutes > California > Fin > 700-711

FINANCIAL CODE
SECTION 700-711



700.  Unless the context otherwise requires, in this article:
   (a) "Bank" means a bank organized under the laws of this state.
   (b) "Control" means possession, direct or indirect, of the power:
   (1) To vote 25 percent or more of any class of the voting
securities issued by a person; or
   (2) To direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract (other than a commercial contract for goods
or nonmanagement services), or otherwise; provided, however, that no
individual shall be deemed to control a person solely on account of
being a director, officer, or employee of such person.
   For purposes of paragraph (2) of this subdivision, a person who,
directly or indirectly, owns, controls, holds with the power to vote,
or holds proxies representing, 10 percent or more of the then
outstanding voting securities issued by another person is presumed to
control such other person.
   For purposes of this article, the commissioner may determine
whether a person in fact controls another person.
   (c) "Controlling person" means a person who, directly or
indirectly, controls a bank.
   (d) "Person" means an individual, a corporation, an association, a
syndicate, a partnership, a limited liability company, a business
trust, an estate, a trust, or an organization of any kind, or any
combination of any of the foregoing acting in concert.
   (e) "Shareholder" means:
   (1) In the case of a corporation, a holder of a share of any class
or series.
   (2) In the case of a nonprofit or charitable corporation, an
unincorporated association, or a syndicate, a member.
   (3) In the case of a partnership, a partner.
   (4) In the case of a business trust, an estate, or a trust, a
holder of a beneficial interest.
   (5) In the case of an organization of any other kind, a holder of
an ownership interest.


701.  No person shall, directly or indirectly, unless the
commissioner has approved such acquisition of control, do any of the
following:
   (a) Make a tender offer for, a request or invitation for tenders
of, or an offer to exchange securities for, any voting security or
any security convertible into a voting security of a bank or a
controlling person if the person making such tender offer, request or
invitation for tenders, or offer to exchange securities would, by
consummation thereof, directly or indirectly, acquire control of such
bank or such controlling person.
   (b) Solicit approval of any shareholder of a controlling person
for a merger, consolidation, sale of assets, or other transaction by
which any person other than such controlling person would acquire
control of the bank controlled by such controlling person.
   (c) Acquire control of a bank or a controlling person; provided,
however, that nothing in this subdivision shall be deemed to prohibit
any person from negotiating to acquire (but not acquiring) control
of a bank or a controlling person.



701.1.  Notwithstanding any other provision of this article, except
for those persons approved by the commissioner prior to September 1,
2002, and for those persons who control industrial banks as of
September 1, 2002, no person may directly or indirectly, including
through any merger, consolidation, or any other type of business
combination, acquire control of an industrial bank, as defined in
Section 105.5, unless the person is engaged only in the activities
permitted for financial holding companies, as provided in Section 103
of the federal Gramm-Leach-Bliley Act (12 U.S.C. Sec. 1843(k)(1)),
or is a credit union, as defined in Section 134.5, when the
industrial bank is a credit union service organization, as defined in
Section 14651. Nothing in this section shall be construed to exempt
a person seeking to acquire control of a bank that otherwise
qualifies to do so pursuant to this section, from the requirements of
Sections 700 to 711, inclusive. For the purposes of this section,
the term "control" has the same meaning as in subdivision (b) of
Section 700.



702.  An application for approval to acquire control of a bank or a
controlling person shall be in such form and contain such information
as the commissioner may require by regulation or order and shall be
accompanied by the following fee:
   (a) In case the applicant has been a director or officer of the
bank for not less than two years (or, if the bank has been in
business for less than two years, for such lesser period), a fee of
five hundred dollars ($500); and
   (b) In any other case, a fee of one thousand five hundred dollars
($1,500).


703.  If the commissioner finds, with respect to the proposed
acquisition of control of a bank or a controlling person, that any of
the factors set forth in subdivisions (a) to (g), inclusive, is
true, he or she shall deny the application. If the commissioner finds
that none of such factors is true, he or she shall approve the
application.
   (a) That the proposed acquisition of control would result in a
monopoly or would be in furtherance of any combination or conspiracy
to monopolize or to attempt to monopolize the business of banking in
any part of this state;
   (b) That the effect of the proposed acquisition of control in any
section of the state may be substantially to lessen competition or to
tend to create a monopoly or that the proposed acquisition of
control would in any other manner be in restraint of trade, and that
the anticompetitive effects of the proposed acquisition of control
are not clearly outweighed in the public interest by the probable
effect of the transaction in meeting the convenience and needs of the
community to be served;
   (c) That the financial condition of any acquiring person is such
as might jeopardize the financial stability of the bank or the
controlling person, or prejudice the interests of the depositors,
creditors, or shareholders of the bank or the controlling person;
   (d) That plans or proposals to liquidate the bank or the
controlling person, to sell the assets of the bank or the controlling
person, to merge or consolidate the bank or the controlling person,
or to make any other major change in the business, corporation
structure or management of the bank or the controlling person are not
fair and reasonable to the depositors, creditors, and shareholders
of the bank or the controlling person;
   (e) That the competence, experience, or integrity of any acquiring
person indicates that it would not be in the interest of the
depositors, creditors, or shareholders of the bank or the controlling
person or in the interest of the public to permit such person to
control the bank or the controlling person;
   (f) That the proposed acquisition is unfair, unjust, or
inequitable to the bank or the controlling person or to the
depositors, creditors, or shareholders of the bank or the controlling
person; or
   (g) That the applicant neglects, fails, or refuses to furnish to
the commissioner all the information required by the commissioner.




703.5.  (a) In this section, "officer" has the meaning set forth in
Section 33057.
   (b) For purposes of Section 703, the commissioner may find:
   (1) That the integrity of an acquiring person indicates that it
would not be in the interest of the depositors, creditors, or
shareholders of a bank or controlling person or in the interest of
the public to permit the acquiring person to control the bank or
controlling person if the acquiring person or any director or officer
of the acquiring person has been convicted of, or has pleaded nolo
contendere to, any crime involving fraud or dishonesty.
   (2) That a plan to make a major change in the management of a bank
or controlling person is not fair and reasonable to the depositors,
creditors, or shareholders of the bank or controlling person if the
plan provides for a person who has been convicted of, or has pleaded
nolo contendere to, any crime involving fraud or dishonesty to become
a director or officer of the bank or controlling person.
   (c) Subdivision (b) shall not be deemed to be the only grounds
upon which the commissioner may find, for purposes of Section 703,
that the integrity of an acquiring person indicates that it would not
be in the interest of the depositors, creditors, or shareholders of
a bank or controlling person or in the interest of the public to
permit the acquiring person to control the bank or controlling person
or that a plan to make a major change in the management of a bank or
controlling person is not fair and reasonable to the depositors,
creditors, or shareholders of the bank or controlling person.




704.  The commissioner may, in approving a proposal to acquire
control of a bank or a controlling person pursuant to Section 703,
impose such conditions as the commissioner deems reasonable or
necessary or advisable in the public interest.




705.  The commissioner may, for good cause, amend, alter, suspend,
or revoke any approval of a proposal to acquire control of a bank or
a controlling person issued pursuant to Section 703.



706.  Notwithstanding any other provision of this article, any
application for approval to acquire control of a bank or a
controlling person which is not denied or approved by the
commissioner within a period of 60 days after such application is
filed with the commissioner or, if the applicant consents to an
extension of the period within which the commissioner may act, within
such extended period, shall be deemed to be approved by the
commissioner as of the first day after such period of 60 days or such
extended period, as the case may be.
   For purposes of this section, an application for approval to
acquire control of a bank or a controlling person is deemed to be
filed with the commissioner at the time when the complete
application, including any amendments or supplements, containing all
the information in the form required by the commissioner, is received
by him or her.



707.  (a) The commissioner, before determining whether, for purposes
of this article, a person controls another person or before denying
or approving an application for approval to acquire control of a bank
or controlling person, may hold a hearing.
   (b) After determining whether, for purposes of this article, a
person controls another person or after denying or approving an
application for approval to acquire control of a bank or controlling
person, the commissioner, upon the filing of a written request for a
hearing by any person prejudiced by the commissioner's decision,
shall hold a hearing and upon such hearing shall affirm, modify, or
reverse his or her decision. Any such hearing shall commence within a
period of 30 days after the written request for the hearing is filed
with the commissioner or, if the person filing the written request
for the hearing consents to an extension of the period within which
the hearing is to commence, within such extended period.



708.  There shall be exempted from the provisions of Section 701 any
transaction, including, without limitation, any type or class of
transactions, which the commissioner by regulation or order exempts
as not being comprehended within the purposes of this article and the
regulation of which the commissioner finds is not necessary or
appropriate in the public interest or for the protection of a bank, a
controlling person, or the depositors, creditors, or shareholders of
a bank or a controlling person.



709.  Whenever it appears to the commissioner that any person has
committed or is about to commit a violation of any provision of this
article or of any regulation or order of the commissioner issued
pursuant to this article, the commissioner may apply to the superior
court for an order enjoining such person from violating or continuing
to violate this article or any such regulation or order and for
other equitable relief as the nature of the case or the interests of
the bank, the controlling person, the depositors, creditors, or
shareholders of such bank or such controlling person, or the public
may require.


710.  No person shall be entitled to vote or to give a written
consent with respect to any security acquired in contravention of any
provision of this article or of any regulation or order of the
commissioner issued pursuant to this article for a period of three
years after such acquisition. If a security of a bank or a
controlling person is acquired in contravention of this article or
any such regulation or order, such bank, such controlling person, any
shareholder of such bank or such controlling person, or the
commissioner may apply to the superior court for equitable relief,
including costs and (except with respect to the commissioner)
attorney fees, to enjoin prospectively any person from voting or
giving any written consent with respect to such security for a period
of three years after such acquisition, and the commissioner may
apply to the superior court for equitable relief, including costs, to
void any voting or any giving of a written consent with respect to
such security which has occurred since such acquisition.




711.  If any provision or clause of this article or the application
thereof to any person or circumstance is held invalid, illegal, or
unenforceable, such invalidity, illegality, or unenforceability shall
not affect other provisions or applications of this article which
can be given effect without the invalid, illegal, or unenforceable
provision or application, and to this end, the provisions of this
article are declared to be severable.