5600-5618
FINANCIAL CODE
SECTION 5600-5618
5600. (a) The board of directors of an association which is in the process of organization shall select a financial institution within this state as a depository for stock, savings account and mutual capital certificate subscription funds. (b) The financial institution shall assure the safekeeping of the subscription funds and the delivery of these funds to the association after the issuance of the certificate of authority and after the bonding of the officers. In the event of the failure to complete the organization of the association and to commence business, the financial institution shall insure the return of the amounts collected to the respective subscribers or their assigns, plus any earnings on the funds, less reasonable charges of the financial institution for services as depository of the funds. 5601. Before a certificate of authority is issued, the capital of the association shall be paid into the association and, in the case of stock, shall be the sum of the par or initially stated value of all shares of capital stock, plus the initial paid-in surplus. The minimum required capital shall be established by regulations, or instructions, issued by the commissioner. 5602. In addition to the minimum capital required, the commissioner may require that the consideration for the issuance of capital stock shall be sufficient to create a paid-in surplus in an amount satisfactory to the commissioner. The minimum capital and surplus may be used for the reserves required by law and for other purposes as may be permitted by the board of directors, provided that the par value or stated value of the stock subscribed shall be maintained as the permanent capital of the association, as required by Sections 5604 and 5605. 5603. In the case of a stock association, prior to issuance of a certificate of authority, the association shall file with the commissioner a statement in a form and with supporting data and proof that the commissioner may require, that verifies that the entire capital and paid-in surplus has been unconditionally paid in, that these funds are on deposit with the depository financial institution, and that all conditions contained in the notice of conditional approval of the petition for a certificate of authority have been met. 5604. (a) In the case of a stock association, on or after the date the commissioner issues the association a certificate of authority, the association shall issue the capital stock necessary to satisfy the minimum capital requirements of Section 5601 and any additional capital stock approved for issuance by its board of directors, up to the amount authorized in its articles of incorporation, and shall issue no additional shares except as authorized in this division. (b) The capital stock of an association, when issued, shall constitute permanent capital and shall not be retired or withdrawn except as provided in this division until all liabilities of the association have been satisfied in full, including the withdrawal value of all savings accounts, and until outstanding capital certificates have been retired. 5605. (a) Any association that does not commence business within one year after the date of the issuance of its certificate of approval of articles of incorporation shall forfeit its certificate of approval of articles of incorporation, unless the commissioner, before the expiration of the one year period, shall have approved the extension of time within which it may commence business, upon a written application stating the reasons for delay. Upon forfeiture, the association's certificate of approval of articles of incorporation shall expire. Amounts credited on savings accounts or paid in on capital stock, including any income earned on these funds, shall be returned on a pro rata basis to their respective subscribers. (b) The commissioner shall immediately notify the Secretary of State of forfeiture under this section. 5606. (a) Prior to doing business in this state, an association shall obtain and maintain insurance of its savings accounts by the Federal Deposit Insurance Corporation. (b) Prior to doing business in this state, a foreign savings association, as defined in Sections 10000 and 10010, shall maintain insurance of its savings accounts by the Federal Deposit Insurance Corporation. (c) The commissioner may enforce any statutes pertaining to, or any regulations of, the Federal Deposit Insurance Corporation or the Office of Thrift Supervision insofar as those statutes and regulations apply to associations, and may enforce any and all other federal statutes and regulations applicable to associations. 5612. For the purposes of this article, "security" means any stock, subordinated debenture, warrant, or right or option to purchase any stock issued by an association. 5613. (a) No association shall sell, except upon a sale for a delinquent assessment made in accordance with the provisions of the General Corporation Law, or offer for sale, or take subscriptions for, or issue any of its securities (except stock dividends), until the association has applied for and obtained from the commissioner a permit authorizing it to offer, sell or issue that security. (b) Notwithstanding subdivision (a), an association may enter into agreements for the sale of securities with accredited investors (as defined in Section 230. 215 of the Securities Exchange Commission regulations) or persons approved by the commissioner prior to obtaining a permit pursuant to subdivision (a). (c) The commissioner may, by regulation, instruction, or order exclude certain transactions from the operation of this section. 5614. (a) Except as provided in subdivision (b), no issued and outstanding stock of an association shall be sold or offered for sale to the public, nor shall subscriptions be solicited or taken for those sales, until the association or the selling stockholders have applied for and obtained from the commissioner a permit authorizing the sale of the capital stock. (b) Subdivision (a) shall not apply to any of the following: (1) An offering involving less than 10 percent of the issued and outstanding capital stock of an association and less than five hundred thousand dollars ($500,000). (2) An offering made under a registration statement filed under the Securities Act of 1933. (3) Any offering exempted by regulation, instruction, or order issued in writing by the commissioner. 5615. An application for a permit to sell securities shall be in writing, verified as provided in the Code of Civil Procedure for the verification of pleadings, and shall be filed in the office of the commissioner by the association or the selling stockholders. The application shall include the following: (a) Regarding the association. (1) The names and addresses of its officers. (2) The location of its office. (3) A balance sheet or statement of its financial condition as of a date within 90 days of the filing date. (4) A copy of all minutes of any proceedings of its directors, shareholders, or stockholders relating to or affecting the issue of such securities. (b) Regarding the offering. (1) A brief description of the method by which the securities are to be offered for sale, including the offering price and the underwriting commissions and expense, if any. (2) A copy of a prospectus or advertisement or other description of the securities prepared for distribution or publication in accordance with requirements prescribed by the commissioner. (3) A copy of any contract concerning the sale of the securities. (4) With respect to any permit issued pursuant to Section 5614, the names and addresses of the selling stockholders and of the officers of any selling corporation and the partners of any selling partnership. (c) Such additional information as the commissioner may require. (d) An application fee as prescribed by the commissioner pursuant to Section 9001. 5616. Upon the filing of the application for a permit to sell securities, the commissioner shall examine the application and other papers and documents filed therewith, and he or she may make a detailed examination, audit, and investigation of the association and its affairs. If the commissioner finds that the proposed plan for the issue and sale of such securities is fair, just, and equitable, the commissioner shall issue to the applicant a permit authorizing it to issue and dispose of its securities in such amounts and for such considerations and upon such terms and conditions as the commissioner may provide in the permit. If the commissioner does not so find, the commissioner shall deny the application and notify the applicant in writing of his or her decision. 5617. Every permit to sell securities shall recite in bold type that the issuance thereof is permissive only and does not constitute a recommendation or endorsement of the securities permitted to be issued. 5618. The commissioner may amend, alter, or revoke any permit issued by the commissioner, or temporarily suspend the rights of the association under such permit.