Law:Division 5. Credit Unions (California)

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Contents

Chapter 1. General Provisions

Article 1. Definitions

Ca Codes (fin:14000-14007) Financial Code Section 14000-14007



14000. This division shall be known as the "California Credit Union Law."

14001. The definitions given in this division govern the construction of this division unless the context otherwise requires.


14001.1. This division is applicable to any person, other than a federal credit union engaging in the business of a credit union in this state. For purposes of this division, "person" shall have the meaning set forth in Section 5065 of the Corporations Code.


14001.5. If and to the extent that any provision of this division is preempted by federal law, the provision shall not apply and shall not be enforced.

14002. A credit union is a cooperative, organized for the purposes of promoting thrift and savings among its members, creating a source of credit for them at rates of interest set by the board of directors, and providing an opportunity for them to use and control their own money on a democratic basis in order to improve their economic and social conditions. As a cooperative, a credit union conducts its business for the mutual benefit and general welfare of its members with the earnings, savings, benefits, or services of the credit union being distributed to its members as patrons.


14002.5. (a) Except as provided in subdivision (b), all provisions of law applicable to nonprofit mutual benefit corporations generally (including, but not limited to, the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code)) shall apply to credit unions. However, whenever any provision of this division applicable to credit unions is inconsistent with any provision of law applicable to nonprofit mutual benefit corporations generally, the provision of this division shall apply and the inconsistent provision of law applicable to nonprofit mutual benefit corporations generally shall not apply to a credit union. (b) Notwithstanding the provisions of subdivision (a), the following provisions of the Corporations Code are not applicable to credit unions: (1) Section 7131. (2) Subdivision (a) of Section 7132. (3) Section 7142. (4) Subdivision (c) of Section 7223. (5) Subdivision (c) of Section 7225. (6) Article 4 (commencing with Section 7240) of Chapter 2 of Part 3 of Title 1. (7) Chapter 11 (commencing with Section 8110) of Part 3 of Division 2 of Title 1. (8) Chapter 16 (commencing with Section 8610) of Part 3 of Division 2 of Title 1. (9) Chapter 17 (commencing with Section 8710) of Part 3 of Division 2 of Title 1.

14003. "Commissioner" means the Commissioner of Financial Institutions of the State of California.


14004. "Impaired capital" means that the losses or projected losses of a credit union are such that the book value of a member's share is reduced below 100 percent of the monetary amount of that share when initially purchased plus any accumulated dividends.


14005. Unless otherwise defined in this division, "insolvent" means a credit union has ceased to pay its debts in the ordinary course of business, or cannot pay its debts as they become due, or is insolvent within the meaning of the federal bankruptcy law.


14006. "Credit manager" means a natural person approved by the board of directors and employed by a credit union to supervise the lending activities of the credit union in accordance with the loan policies established by the board of directors and consistent with the applicable state and federal law and regulations. A credit manager may be but is not required to be a member of the credit union.

14007. "Obligation" means any contractual obligation to the credit union for money borrowed or credit extended or guaranteed from its members, including, but not limited to, loans, lines of credit, agreements to extend credit, and lease agreements.


Article 2. General

Ca Codes (fin:14050-14052) Financial Code Section 14050-14052



14050. The use by any person, other than those authorized by this division, of any name or title which contains the phrase "credit union," is a misdemeanor. Nonprofit associations, which are formed for the mutual benefit and protection of credit unions, by credit unions organized under this division, or under the provisions of the statutes of the United States applicable to credit unions or any nonprofit association formed for the mutual benefit and protection of credit union employees by bona fide employees of credit unions, may use the phrase "credit union" in the name or title designating any such association.

14051. Any person who willfully and knowingly makes, circulates, or transmits to another or others any statement or rumor, written, printed or by word of mouth, which is untrue in facts and is directly or by inference derogatory to the financial condition or affects the solvency or financial standing of any credit union doing business in this state, or who knowingly counsels, aids, procures, or induces another to start, transmit, or circulate any such statement or rumor, is guilty of a misdemeanor and shall be punished by a fine of not more than one thousand dollars ($1,000) or by imprisonment for not more than one year, or both.

14052. In addition to the powers enumerated in this division, every credit union has the general powers conferred upon corporations by the Nonprofit Mutual Benefit Corporation Law of this state unless restricted by this division.


Chapter 2. Formation

Article 1. Incorporation And Bylaws

Ca Codes (fin:14100-14103) Financial Code Section 14100-14103



14100. (a) Credit unions shall be incorporated under the Nonprofit Mutual Benefit Corporation Law of this state. (b) The Secretary of State shall not file the articles of incorporation of a credit union organized pursuant to subdivision (a) unless the approval of the commissioner is endorsed thereon. (c) The Secretary of State shall not file articles of incorporation setting forth a name in which "credit union" or related words appear unless the approval of the commissioner is attached. This section shall not apply to the articles of any corporation subject to the California Credit Union Law on which the approval of the commissioner is endorsed.


14101. The articles of incorporation of every credit union shall set forth the following: (a) The name of the corporation, which shall include the phrase "credit union." (b) (1) The following statement: The purpose of the corporation is to engage in credit union business and any other lawful activities which are not prohibited to a credit union by applicable laws or regulations. (2) By December 31, 2003, each credit union that immediately prior to the enactment of this section was authorized to operate as a credit union shall amend its articles to comply with the provisions of paragraph (1). Notwithstanding Section 7813.5 of the Corporations Code, the amendment of the articles of a credit union as required by paragraph (1) may be adopted by approval of the board alone. (c) The name and address in this state of the corporation's initial agent for service of process in accordance with subdivision (b) of Section 8210 of the Corporations Code. (d) The names and addresses of five or more persons appointed to act as initial directors.


14101.2. (a) The articles shall be signed by each director named in the articles, acknowledged pursuant to Section 5030 of the Corporations Code and filed in the office of the Secretary of State. (b) Corporate existence shall begin upon the filing of the articles and shall continue perpetually, unless otherwise expressly provided by law.


14101.4. (a) The provisions of Section 14101, except as provided in subdivision (b) of that section, shall not apply to a credit union organized prior to January 1, 1981, but the articles of the credit union shall continue to be governed by the law applicable as of December 31, 1980, until an amendment of its articles pursuant to subdivision (b). (b) Except as provided in subdivision (b) of Section 14101, a credit union organized prior to January 1, 1981, may amend its articles to conform to Section 14101 except that an initial agent for service of process shall not be set forth and the names and addresses of initial directors shall be deleted. The amendment may be adopted by the board of directors alone.

14101.6. (a) Every credit union shall, within 90 days after the filing of its original articles and annually thereafter during the applicable filing period in each year, file, in a form prescribed by the Secretary of State, a statement containing: (1) the names and complete business or residence addresses of its chief executive officers, secretary and chief financial officer; (2) the street address of its principal office, if any; and (3) the name and address of a natural person residing in this state who will serve as the credit union's agent for service of process. The applicable filing period for a credit union shall be the calendar month during which its original articles were filed and the immediately preceding five calendar months. The Secretary of State shall mail a form for compliance with this section to each credit union approximately three months prior to the close of the applicable filing period. The form shall state the due date thereof and shall be mailed to the last address of the credit union according to the records of the Secretary of State. Neither the failure of the Secretary of State to mail the form nor the failure of the credit union to receive it is an excuse for failure to comply with this section. (b) Whenever any of the information required by subdivision (a) is changed, the credit union may file a current statement containing all the information required thereby. In order to change its agent for service of process or the address of the agent, the corporation must file a current statement containing all the information required by subdivision (a). Whenever any statement is filed pursuant to this section, it supersedes any previously filed statement and the statement in the articles as to the agent for service of process and the address of the agent. (c) An agent designated for service of process pursuant to subdivision (a) may file a signed and acknowledged written statement of resignation as such agent. Thereupon the authority of the agent to act in such capacity shall cease and the Secretary of State forthwith shall give written notice of the filing of the statement of resignation by mail to the credit union addressed to its principal office. (d) If a natural person who has been designated agent for service of process pursuant to subdivision (a) dies or resigns or no longer resides in the state, the credit union shall forthwith file a designation of a new agent conforming to the requirements of subdivision (a). (e) The Secretary of State may destroy or otherwise dispose of any statement filed pursuant to this section after it has been superseded by the filing of a new statement. (f) This section shall not be construed to place any person dealing with the credit union on notice of or in any duty to inquire about the existence or content of the statement filed pursuant to this section.


14101.8. (a) No amendment of the articles of a credit union shall become effective unless the certificate of amendment or other instrument setting forth the amendment is filed with the Secretary of State with the commissioner's approval endorsed thereon. The amendment shall become effective upon being filed with the Secretary of State. Promptly after the amendment becomes effective, the credit union shall file with the commissioner a copy of the certificate of amendment or other instrument certified by the Secretary of State. (b) An amendment of the articles set forth in an agreement of merger that requires the approval of the commissioner shall not be subject to the provisions of subdivision (a). An amendment meeting this criteria shall become effective at the time the merger becomes effective, pursuant to this division.


14102. (a) Amendments to the articles of incorporation of any credit union may be adopted by resolution of the board of directors, which is also adopted by a vote of a majority of the members of the credit union present, in person or by proxy, as provided in the credit union's bylaws, at any regular or special meeting of the members for which notice of the proposed amendments has been given; provided, however, that a minimum vote of at least 10 percent of the entire membership entitled to vote on the question votes in favor of the amendment and those voting in favor of the amendment constitute a majority of the members participating in the vote. (b) The commissioner may approve the amendment according to the resolution adopted by the board of directors if approved by less than 10 percent of the entire membership as provided in this section if the commissioner finds, upon the written and verified application filed by the board of directors, that (1) notice of the meeting called to consider the amendment or the ballot for written vote on the amendment was mailed to each member entitled to vote upon the question, (2) the notice or ballot disclosed the purpose of the meeting or the written vote, (3) the notice or ballot informed the membership that approval of the amendment might be sought pursuant to this section, and (4) a majority of the votes cast upon the question were in favor of the amendment. (c) Notwithstanding subdivision (a) and Section 7812 of the Corporations Code, a credit union may amend its articles of incorporation to change its name with the approval of its board of directors and without the approval of its members.


14102.2. (a) No restated articles of a credit union shall become effective unless the certificate setting forth the restated articles, with the commissioner's approval endorsed thereon, is filed with the Secretary of State. The restated articles shall become effective upon being filed with the Secretary of State. (b) Promptly after the restated articles become effective, the credit union shall file with the commissioner a copy of the certificate setting forth the restated articles, certified by the Secretary of State.


14102.4. (a) No certificate of correction of a credit union shall become effective unless the certificate, with the commissioner's approval endorsed thereon, is filed with the Secretary of State. The certificate of correction shall become effective upon being filed with the Secretary of State. (b) Promptly after the certificate of correction becomes effective, the credit union shall file with the commissioner a copy of the certificate of correction, certified by the Secretary of State.


14102.6. (a) No certificate of revocation by a credit union shall become effective unless the certificate, with the commissioner's approval endorsed thereon, is filed with the Secretary of State. The certificate of revocation shall become effective upon being filed with the Secretary of State. (b) Promptly after the certificate of revocation becomes effective, the credit union shall file with the commissioner a copy of the certificate of revocation, certified by the Secretary of State.


14103. The bylaws shall prescribe the manner in which the business of the credit union shall be conducted with reference to the following matters: (a) The purpose of the credit union. (b) The qualification for membership. (c) Determination of the month, time and place of the annual meeting; the manner of conducting meetings; the method by which members shall be notified of meetings; and the number of members which shall constitute a quorum. (d) The authorized number of directors, the number of directors necessary to constitute a quorum, and the powers and duties of officers elected by the directors. (e) The membership, powers, and duties of the supervisory committee. (f) The membership, powers, and duties of the credit committee or if applicable, the general powers, responsibilities and duties of the credit manager. (g) The manner in which the bylaws may be amended.


Article 2. Certificate To Act As A Credit Union

Ca Codes (fin:14150-14156) Financial Code Section 14150-14156



14150. No membership shares, certificates for funds or other securities shall be issued by any credit union until it has applied for and obtained from the commissioner a certificate authorizing it to act as a credit union.

14151. Applications for a certificate to act as a credit union shall be made in writing to the commissioner, setting forth such information as the commissioner requires. The application shall be verified by one or more officers of the credit union authorized by its board of directors.


14152. At the time of filing an application to operate as a credit union, the applicant shall pay to the commissioner a filing fee of five dollars ($5).

14153. Upon the filing of the application for a certificate to act as a credit union, the commissioner shall examine the application together with the other papers and documents filed therewith. The commissioner may make any further investigation of the applicant and its affairs that he deems advisable.


14154. If the commissioner determines that the applicant has satisfied the provisions of this division and does not find facts constituting reasons for denial as specified in Section 14155, the commissioner shall issue and deliver a certificate to the applicant to engage in business in accordance with the provisions of this division.


14155. Upon reasonable notice and opportunity to be heard, the commissioner may deny the application for a certificate to act as a credit union or an expansion of the field of membership of an existing credit union for any of the following reasons: (a) The field of membership of the applicant is contrary to the principles of organizing credit unions, including principles of organizing credit unions based on common bond of occupation, association, or groups within a well-defined neighborhood, community or rural district. (b) A false statement of a material fact has been made in the application for certificate. (c) Any officer, director, or committee member of the applicant has, within the last 10 years, been (1) convicted of or pleaded nolo contendere to a crime, or (2) committed any act involving dishonesty, fraud, or deceit, which crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with the provisions of this division. (d) The applicant or any officer, director, or committee member of the applicant has violated any provision of this division or the rules thereunder or any similar regulatory scheme of a foreign jurisdiction. (e) The number of persons eligible for membership is less than 500. (f) The applicant's showing as to the economic feasibility of the proposed credit union is inadequate. Notwithstanding anything to the contrary, nothing shall prohibit a credit union from admitting to membership any corporation formed to provide services to credit unions or to credit union members in which the credit union holds shares pursuant to Sections 14650 and 14651 and any limited liability company formed to provide services to credit unions or to credit union members in which the credit union holds membership or economic interests pursuant to Section 14651.


14156. Each certificate issued under this division remains in full force and effect until surrendered and accepted by the commissioner, or until suspended or revoked by the commissioner.


Chapter 3. Administration And Powers Of The Commissioner

Article 1. General

Ca Codes (fin:14200-14212) Financial Code Section 14200-14212



14200. The powers of supervision and examination of all credit unions organized under the provisions of this division are vested in the commissioner.

14200.1. There is in the Department of Financial Institutions, the Division of Credit Unions. The Division of Credit Unions has charge of the execution of the laws of this state relating to credit unions or to the credit union business.

14200.2. The Chief Officer of the Division of Credit Unions is the Deputy Commissioner of Financial Institutions for the Division of Credit Unions. The Deputy Commissioner of Financial Institutions for the Division of Credit Unions shall administer the laws of this state relating to credit unions or the credit union business under the direction of and on behalf of the commissioner. The Deputy Commissioner of Financial Institutions for the Division of Credit Unions shall be appointed by the Governor and shall hold office at the pleasure of the Governor. The Deputy Commissioner of Financial Institutions shall receive an annual salary as fixed by the Governor.


14201. The commissioner may establish or waive such rules and regulations as may be reasonable or necessary to carry out the purposes and provisions of this division.


14202. The commissioner may by regulation authorize credit unions organized under the provisions of this division to engage in any activity authorized by law or regulation for credit unions organized under the laws of the United States. Any such regulation shall expire on the first day of January two years following the end of the calendar year in which such regulation was promulgated.


14203. Upon request of the commissioner, a credit union shall furnish to the commissioner an authorization for examination of financial records of any capital funds, undivided profits, and reserve funds, maintained in a financial institution, in accordance with the procedures set forth in Section 7473 of the Government Code.


14204. If the commissioner upon any examination, or from any report made to the commissioner, finds any credit union is violating the provisions of this division or the rules made pursuant to this division, or has impaired capital, or is insolvent, or is conducting its business in an unsafe or unauthorized manner, the commissioner may notify the credit union to, and the credit union shall, cease these practices. The commissioner may notify the credit union to, and the credit union shall, temporarily suspend or entirely cease the transaction of any new business or the portion thereof as is ordered by the commissioner. Within 10 days from the date of a notification or order pursuant to this section, the credit union may request a hearing. Neither the request for a hearing nor the hearing itself shall stay the notification or order issued by the commissioner under this section.


14205. The commissioner may, upon reasonable notice and opportunity to be heard, suspend or revoke any certificate if the commissioner finds that the credit union has violated any provisions of this division or any rule or regulation of the commissioner made pursuant to this division, or if any fact or condition exists which, if it had existed at the time of the original application for certificate, reasonably would have warranted the commissioner in refusing originally to issue such certificate.


14207. In any proceeding under this law, the burden of proving an exemption or an exception from a definition is upon the person claiming it.

14208. The commissioner may, after appropriate notice and opportunity for hearing, by order censure, or suspend for a period not exceeding 12 months, or bar from any position of employment or management of, any credit union, any officer, director, or employee of, or person performing similar functions for, a credit union, if the commissioner finds that: (1) The censure, suspension or bar is in the public interest, that the person has committed a violation of this division or rule of the commissioner, and that the violation was either willful or caused, or will probably cause, material damage to the credit union or any member thereof. (2) Any officer, director, employee of, or person performing similar functions for a credit union has been convicted of, or pleaded nolo contendere to, a crime, or has been held liable in a civil action by final judgment if the crime or civil action involved fraud, embezzlement, fraudulent conversion or misappropriation of property.


14209. (a) Whenever it appears to the commissioner that any person has engaged in or is about to engage in any acts or practices constituting a violation of any provision of this division or any rule or order adopted pursuant to this division, the commissioner may in the commissioner's discretion bring an action in the name of the people of the State of California in the superior court to enjoin the acts or practices or to enforce compliance. Upon a proper showing a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted and a receiver or conservator, which may include the commissioner, may be appointed for the defendant or the defendant's assets, and any other ancillary relief may be granted as appropriate. A receiver or conservator appointed by the court pursuant to this section may, with the approval of the court, exercise all of the powers of the defendant's officers, directors, trustees, or persons who exercise similar powers and perform similar duties, including the powers expressly authorized by subdivision (b) of Section 14300. (b) If the commissioner determines it is in the public interest, the commissioner may include in any action authorized by subdivision (a), a claim for ancillary relief, including, but not limited to, a claim for restitution or disgorgement or damages on behalf of the persons injured by the act or practice constituting the subject matter of the action, and the court shall have jurisdiction to award the additional relief.

14211. In determining for purposes of this division whether the capital of any credit union is adequate, the commissioner shall consider the following: (a) The nature and volume of the business and the proposed business of the credit union. (b) The amount, nature, quality, and liquidity of the assets of the credit union. (c) The amount and nature of the liabilities, including contingent liabilities, of the credit union. (d) The history of, and prospects for, the credit union to earn and retain income. (e) The nature and scope of the operations of the credit union. (f) The performance of the management of the credit union. (g) Any other factors as are, in the opinion of the commissioner, relevant.


14212. (a) The commissioner, whenever in his or her opinion such action is necessary or appropriate to carry out his or her duties, may call a meeting of the board of directors of a credit union. (b) A meeting of the board of a credit union called by the commissioner shall be held upon four days' notice by first class mail or 24 hours' notice delivered personally or by telephone. The notice shall be given by the commissioner or, if the commissioner so orders, by an officer of the credit union. (c) A meeting of the board of a credit union called by the commissioner shall be held at the head office of the credit union, the department office closest to the head office of the credit union, or any other place within a reasonable distance to the head office of the credit union as may be designated by the commissioner and specified in the notice of that meeting. (d) The expenses of the credit union pertaining to a meeting of the board of a credit union called by the commissioner shall be paid by the credit union.


Article 2. Examinations And Reports

Ca Codes (fin:14250-14257) Financial Code Section 14250-14257



14250. (a) (1) The commissioner may at any time investigate into the affairs and examine the books, accounts, records, files, and any office within or outside of this state used in the business of every credit union, whether it acts or claims to act under or without authority of this division. (2) The commissioner and the commissioner's duly designated representatives shall have free access to the offices and places of business, books, accounts, papers, records, files, safes, and vaults of every credit union referred to in paragraph (1). (3) The officers and employees of every credit union being examined shall exhibit to the examiners, on request, any or all of its securities, books, records, and accounts and shall otherwise cooperate with the examination so far as it may be in their power. (b) (1) The commissioner shall examine every credit union organized under the laws of this state to the extent and whenever and as often as the commissioner shall deem it advisable, but in no case less than once every two years. (2) For purposes of this subdivision, an examination made by the commissioner in conjunction with or with assistance from the National Credit Union Administration or a credit union regulatory agency of another state of the United States is deemed to be an examination made by the commissioner. (3) No provision of this subdivision shall be deemed to require that the commissioner make an examination onsite at the offices of a credit union.

14251. The commissioner upon the written consent of any credit union officer or director may make any examination of the credit union in any regularly established office of the commissioner.


14252. (a) A credit union with total assets equal to or greater than ten million dollars ($10,000,000) shall, within 105 days after the end of each fiscal year or within any extended time that the commissioner may specify, file with the commissioner an audit report for the fiscal year. (b) The audit report called for in subdivision (a) shall comply with all of the following provisions: (1) The audit report shall contain the audited financial statements of the credit union for, or as of the end of, the fiscal year, prepared in accordance with generally accepted accounting principles that the commissioner may specify, and any other information that the commissioner may specify. (2) The audit report shall be based upon an audit of the credit union, conducted in accordance with generally accepted auditing standards, and any other requirements that the commissioner may specify. (3) The audit report shall be prepared by an independent certified public accountant or independent public accountant who is acceptable to the commissioner. (4) The audit report shall include, or be accompanied by, a certificate or opinion of the independent certified public accountant or independent public accountant that is satisfactory in form and content to the commissioner. If the certificate or opinion is qualified, the commissioner may order the credit union to take any action that the commissioner may find necessary or advisable to enable the independent certified public accountant or independent public accountant to remove the qualification. (c) A credit union with total assets of less than ten million dollars ($10,000,000) shall, within 105 days after the end of each fiscal year or within any extended time that the commissioner may specify, file with the commissioner an audit report for the fiscal year. (d) The audit report called for in subdivision (c) may comply with all the provisions of subdivision (b), or may consist of alternative procedures acceptable to the commissioner. An alternative procedures audit may be performed by any of the following: (1) An independent certified public accountant. (2) An independent public accountant. (3) The credit union's supervisory committee, provided that the audit complies with the requirements of Section 14253. (e) Notwithstanding subdivision (d), the commissioner may reject an alternative procedures audit that he or she determines is not satisfactory. If the commissioner rejects an alternative procedures audit for any reason, he or she may order a credit union to obtain an audit that is satisfactory to the commissioner. (f) The commissioner may, by order or regulation, either unconditionally or upon specified terms and conditions, grant an exemption from this section in any case where the commissioner finds that the requirements of this section are not necessary or advisable.


14253. A credit union shall, when requested by the commissioner, submit its unaudited financial statements, prepared in accordance with generally accepted accounting principles and consisting of at least a balance sheet and statement of income as of the date and for the period specified by the commissioner. The commissioner may require the submission of such reports on a monthly or other periodic basis.


14254.5. (a) Except as provided in subdivisions (b) and (c), within 10 business days of opening, closing, or relocating a branch office, a credit union shall notify the commissioner in writing of the action, including the street and mailing addresses of the branch office. (b) A credit union shall not establish a branch office in another state of the United States without the approval of the governmental authority with jurisdiction to license or charter credit unions in that state. "State" has the meaning set forth in Section 146.7. (c) A credit union shall not establish a branch office in a foreign nation without the prior written approval of the commissioner. "Foreign nation" has the meaning set forth in Section 139.3.


14255. Every credit union shall make other special reports to the commissioner as the commissioner may from time to time require. Such reports shall be in the form and filed at such date as prescribed by the commissioner, and shall if required by him, be verified in such manner as he prescribes.

14256. (a) If any credit union fails to file with the commissioner any report required by this division on or before the day designated for the filing of the report or, if the time for filing the report is extended by the commissioner, within the extended time, or fails to include in the report any matter required by the commissioner, the failure is grounds for the suspension or revocation of the certificate authorizing the credit union to act as a credit union. (b) If any credit union fails to file with the commissioner any report required by this division or by any order or regulation of the commissioner, on or before the day designated for the filing of the report or, if the time for filing the report is extended by the commissioner, within the extended time, or fails to include in the report any matter required by the commissioner, the commissioner may order the credit union to pay to the commissioner a civil penalty imposed pursuant to Section 216.3.


14257. Investigation and examination reports prepared by the commissioner's duly designated representatives shall not be public records. The reports may be disclosed to the officers, directors, members of the supervisory committee, members of the credit committee, and key management personnel of the credit union that is the subject of a report for the purpose of corrective action by those persons. The examination report may also be disclosed to internal and external auditors and attorneys that are retained by the subject credit union, but only to the extent necessary for the auditors and attorneys to perform work related to issues addressed in the examination report. The disclosure shall not operate as a waiver of the exemption specified in subdivision (d) of Section 6254 of the Government Code.


Article 3. Enforcement

Ca Codes (fin:14300-14319) Financial Code Section 14300-14319



14300. For purposes of this chapter, the following terms shall have the following meanings: (a) "Officer with a subject institution" means the position of director, officer, or employee with the subject institution. (b) "Subject institution" means any of the following: (1) A California credit union. (2) A subsidiary of a California credit union. (3) A foreign, whether other state or other nation, credit union, other than a federal credit union, that maintains an office in this state, with respect to the office. (4) Any other person, other than a federal credit union, conducting business in this state. (c) "Subject person," when used with respect to a subject institution, means any of the following: (1) A director, officer, employee, or agent of the subject institution. (2) A member, consultant, joint venture partner, or other person that participates in the affairs of a subject institution. (3) An independent contractor, including an appraiser or accountant, who knowingly or recklessly participates in any of the following acts if the act caused or is likely to cause a material financial loss to, or a significant adverse effect on, the subject institution. (A) A violation of any applicable law, regulation, or order. (B) A breach of fiduciary duty. (C) An unsafe or unsound act. (d) "Violation" includes any act done alone or with other persons for or toward causing, bringing about, participating in, counseling, aiding, or abetting a violation of any applicable statute, regulation, provision of a written order issued by the commissioner, or provision of a written operating agreement signed by the commissioner and a subject institution or subject person.


14301. Any requirement in this chapter for notice or hearing before the commissioner issues an order may be waived by the person to whom the order is issued.

14302. (a) The commissioner may bring an action in the name of the people of this state in the superior court to enjoin any violation of, to enforce compliance with, or to collect any penalty or other liability imposed under, this division or any regulation or order issued under this division. Upon a proper showing, a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted, and a monitor, receiver, conservator, or other designated fiduciary or officer of the court may be appointed for the defendant or the defendant's assets, or other relief may be granted as appropriate. (b) A receiver, monitor, conservator, or other designated fiduciary officer of the court appointed by the court pursuant to this section may, with the approval of the court, exercise all powers of the defendant's officers, directors, partners, trustees, or persons who exercise similar powers and perform similar duties. No action at law or in equity may be maintained by any party against the commissioner, or a receiver, monitor, conservator, or other designated fiduciary or officer of the court by reason of their exercising these powers or performing these duties pursuant to the order of, or with the approval of, the court. (c) If the commissioner finds that it is in the public interest, the commissioner may include in an action authorized by subdivision (a) a claim for ancillary relief, including a claim for restitution, disgorgement, or damages on behalf of the person injured by the act or practice constituting the subject matter of the action, and the court shall have jurisdiction to award ancillary relief. (d) Neither the provision of subdivision (a) that authorizes the appointment of a monitor, receiver, conservator, or other designated fiduciary or officer of the court, nor any provision of subdivision (b) or (c), applies to any of the following: (1) A California credit union that is authorized by the commissioner to transact credit union business. (2) A foreign, whether other state or other nation, credit union that maintains an office in this state in accordance with federal law, the law of this state, and the law of the credit union's domicile. (e) The provisions of this section that authorize the commissioner to bring actions and seek relief are not intended to, and do not, affect any right that another person may have to bring the same or similar actions or to seek the same or similar relief.


14303. (a) The commissioner may, without any prior notice or hearing, order a person to cease and desist from violating Section 14150 if either of the following criteria are met: (1) The commissioner finds that the person has violated Section 14150. (2) The commissioner finds that there is reasonable cause to believe that the person will imminently violate Section 14150. (b) (1) (A) Within 30 days after an order is issued pursuant to subdivision (a), the person to whom the order is issued may file with the commissioner an application for a hearing on the order. (B) If the commissioner fails to commence the hearing within 15 business days after the application is filed with the commissioner, or within any longer period to which the person consents, the order shall be deemed rescinded. (C) Within 30 days after the hearing, or within any longer period to which the person consents, the commissioner shall affirm, modify, or rescind the order. If the commissioner fails to affirm, modify, or rescind the order within this time limit, the order shall be deemed rescinded. (2) The right of a person to whom an order is issued under subdivision (a) to petition for judicial review of the order shall not be affected by the failure of the person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).


14304. If, after notice and a hearing, the commissioner finds any of the factors set forth in subdivision (a) or (b) with respect to a subject institution or subject person, the commissioner may order the subject institution or subject person to cease and desist from the action or violation: (a) That the subject institution or subject person has engaged or participated, is engaging or participating, or that there is reasonable cause to believe that the subject institution or subject person will imminently engage or participate in any unsafe or unsound act with respect to the business of the subject institution. (b) That the subject institution or subject person has violated, is violating, or that there is reasonable cause to believe that the subject institution or subject person will imminently violate, any provision of this division, of any regulation or order issued under this division, of any other applicable law, or of any written agreement with the commissioner.


14305. (a) If the commissioner finds that any of the factors set forth in Section 14304 is true with respect to a subject institution or subject person and that the action or violation is likely to have any of the consequences set forth in paragraphs (1) to (4), inclusive, the commissioner may, without any prior notice or hearing, order the subject institution or subject person to cease and desist from the action or violation: (1) To cause the insolvency of the subject institution. (2) To cause significant dissipation of the assets or earnings of the subject institution. (3) To weaken the condition of the subject institution. (4) To otherwise prejudice the interests of the members of the subject institution. (b) (1) (A) Within 30 days after an order is issued pursuant to subdivision (a), any subject institution or subject person to whom the order is issued may file with the commissioner an application for a hearing on the order. (B) If the commissioner fails to commence the hearing within 15 business days after the application is filed with the commissioner, or within any longer period to which the subject institution or subject person consents, the order shall be deemed rescinded. (C) Within 30 days after the hearing, or within any longer period to which the subject institution or subject person consents, the commissioner shall affirm, modify, or rescind the order. If the commissioner fails to affirm, modify, or rescind the order within this time limit, the order shall be deemed rescinded. (2) The right of any subject institution or subject person to whom an order is issued under subdivision (a) to petition for judicial review of the order shall not be affected by the failure of the subject institution or subject person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).


14306. An order issued pursuant to Sections 14303 to 14305, inclusive, may include any of the following provisions: (a) Require the subject institution or subject person to take affirmative action to correct any condition resulting from the action or violation, including any of the following actions: (1) To make restitution or provide reimbursement, indemnification, or guarantee against loss, if the subject institution or subject person was unjustly enriched in connection with the action or violation or if the action or violation involved a reckless disregard for any provision of this division, any regulation or order issued under this division, any other applicable law, or any agreement with the commissioner. (2) Restrict the growth of the subject institution. (3) Dispose of any loan or other asset involved. (4) Correct violations of law. (5) Employ qualified officers or employees, who may be subject to approval of the commissioner. (6) Take any other action that the commissioner may find to be necessary or advisable. (b) Limit the business activities or functions of the subject institution or subject person.


14307. (a) If the commissioner finds that a subject institution's books or records are so incomplete or inaccurate that the commissioner is unable through the normal supervisory process to determine the financial condition of the subject institution or of the details or purpose of any transaction or transactions that may materially affect the financial condition of the subject institution, the commissioner may, without any prior notice or hearing, order the subject institution to do any of the following: (1) To cease any activity or practice that gave rise, in whole or in part, to the incomplete or inaccurate state of the books or records. (2) To take affirmative action to restore the books or records to a complete and accurate state. (b) (1) (A) Within 30 days after an order is issued pursuant to subdivision (a), any subject institution or subject person to whom the order is issued may file with the commissioner an application for a hearing on the order. (B) If the commissioner fails to commence the hearing within 15 business days after the application is filed with the commissioner, or within any longer period to which the subject institution or subject person consents, the order shall be deemed rescinded. (C) Within 30 days after the hearing, or within any longer period to which the subject institution or subject person consents, the commissioner shall affirm, modify, or rescind the order. If the commissioner fails to affirm, modify, or rescind the order within this time limit, the order shall be deemed rescinded. (2) The right of any subject institution or subject person to whom an order is issued under subdivision (a) to petition for judicial review of the order shall not be affected by the failure of the subject institution or subject person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).


14308. If, after notice and a hearing, the commissioner finds that any of the factors set forth in subdivision (a), any of the factors set forth in subdivision (b), and any of the factors set forth in subdivision (c) are true with respect to a subject person of a subject institution, the commissioner may issue an order suspending or removing the subject person from the subject person's office, if any, with the subject institution and prohibiting the subject person from participating in any manner in the conduct of the affairs of the subject institution without the approval of the commissioner: (a) (1) That the subject person has, directly or indirectly, violated any provision of this division, of any regulation or order issued under this division, of any other applicable law relating to the business of the licensee, or of any written agreement with the commissioner. (2) That the subject person has, directly or indirectly, engaged or participated in any unsafe or unsound act in connection with the business of the subject institution or any other business institution. (3) That the subject person has, directly or indirectly, engaged or participated in any act which constitutes a breach of the subject person's fiduciary duty. (b) That, by reason of the act, violation, or breach of fiduciary duty described in subdivision (a) the following have occurred: (1) The subject institution or business institution has suffered or will probably suffer financial loss or other damage. (2) The interests of the members of the subject institution have been or could be prejudiced. (3) The subject person has received financial gain or other benefit. (c) That the act, violation, or breach of fiduciary duty described in subdivision (a) either involves dishonesty on the part of the subject person or demonstrates the subject person's willful or continuing disregard for the safety or soundness of the subject institution or business institution.


14309. (a) If the commissioner finds that any of the factors set forth in subdivision (a) of Section 14308, any of the factors set forth in subdivision (b) of Section 14308, and any of the factors set forth in subdivision (c) of Section 14308 are true with respect to a subject person of a subject institution, and that an action is necessary or advisable for the protection of the subject institution or the interests of the members of the subject institution, the commissioner may, without any prior notice or hearing, issue an order that does both of the following: (1) Suspends the subject person from the subject person's office, if any, with the subject institution. (2) Prohibits the subject person from participating in any manner in the conduct of the affairs of the subject institution without the approval of the commissioner. (b) (1) (A) Within 30 days after an order is issued pursuant to subdivision (a), any subject person to whom the order is issued may file with the commissioner an application for a hearing on the order. (B) If the commissioner fails to commence the hearing within 15 business days after the application is filed with the commissioner or within any longer period to which the subject person consents, the order shall be deemed rescinded. (C) Within 30 days after the hearing or within any longer period to which the subject person consents, the commissioner shall affirm, modify, or rescind the order. If the commissioner fails to affirm, modify, or rescind the order within this time limit, the order shall be deemed rescinded. (2) The right of any subject person to whom an order is issued under subdivision (a) to petition for judicial review of the order shall not be affected by the failure of the subject person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).


14310. (a) If the commissioner finds that any of the factors set forth in paragraph (1) and the factor set forth in paragraph (2) are true with respect to a subject person or former subject person of a subject institution, the commissioner may, without any prior notice or hearing, issue an order suspending the subject person or former subject person from his or her office, if any, with the subject institution and prohibiting him or her from further participating in any manner in the conduct of the affairs of the subject institution without the approval of the commissioner: (1) That the subject person or former subject person has been charged in an indictment issued by a grand jury or in an information, complaint, or similar pleading issued by a United States attorney, district attorney, or other governmental official or agency authorized to prosecute crimes, with commission of or participation in any of the following crimes: (A) A crime that involves dishonesty or breach of trust and that is punishable by imprisonment for a term exceeding one year. (B) A criminal violation of any provision of this division. (C) A criminal violation of Section 1956, 1957, or 1960 of Title 18 of, or Section 5322 or 5324 of Title 31 of, the United States Code. (D) A criminal violation of a law of any jurisdiction other than the United States that is substantially similar to any of the statutes specified in subparagraph (C). (2) That continued or resumed service or participation by the subject person or former subject person may pose a threat to the interests of the members of the subject institution or may threaten to impair public confidence in the subject institution. (b) An order issued pursuant to subdivision (a) shall remain in effect until the indictment or the information, complaint, or similar pleading is finally disposed of or, if the order is earlier terminated by the commissioner, until the order is so terminated. (c) If the commissioner finds that the factors set forth in paragraphs (1) and (2) are true with respect to a subject person or former subject person of a subject institution, the commissioner may, without any prior notice or hearing, issue an order suspending or removing the subject person or former subject person from his or her office, if any, with the subject institution and prohibiting him or her from further participating in any manner in the conduct of the affairs of the subject institution without the approval of the commissioner: (1) That the subject person or former subject person has been finally convicted of any crime of the type described in paragraph (1) of subdivision (a). For purposes of this paragraph, an agreement to enter a pretrial diversion or similar program is deemed to be a conviction. (2) That continued or resumed service or participation by the subject person or former subject person may pose a threat to the interests of the members of the subject institution or may threaten to impair public confidence in the subject institution. (d) (1) (A) Within 30 days after an order is issued pursuant to subdivision (a) or (c), any subject person or former subject person of a subject institution to whom the order is issued may file with the commissioner an application for a hearing on the order. (B) If the commissioner fails to commence the hearing within 15 business days after the application is filed with the commissioner or within any longer period to which the subject person or former subject person consents, the order shall be deemed rescinded. (C) Within 30 days after the hearing or within any longer period to which the subject person or former subject person consents, the commissioner shall affirm, modify, or rescind the order. If the commissioner fails to affirm, modify, or rescind the order within this time limit, the order shall be deemed rescinded. (2) The right of any subject person or former subject person of a subject institution to whom an order is issued pursuant to subdivision (a) or (c) to petition for judicial review of the order shall not be affected by the failure of the person to apply to the commissioner for a hearing on the order pursuant to paragraph (1). (e) The fact that any subject person of a subject institution charged with a crime of the type described in paragraph (1) of subdivision (a) is not finally convicted of the crime does not preclude the commissioner from issuing an order regarding the subject person pursuant to any other section of this division.


14311. (a) Any subject institution, subject person of a subject institution, or former subject person of a subject institution to whom an order is issued under Sections 14308 to 14310, inclusive, may apply to the commissioner to modify or rescind the order. In deciding the application, the commissioner shall consider whether it is in the public interest to modify or rescind the order and whether it is reasonable to believe that the subject person or former subject person will, if and when he or she becomes a subject person of a subject institution, comply with all applicable provisions of this division and of any regulation or order issued under this division. (b) The right of any subject institution, subject person of a subject institution, or former subject person of a subject institution to whom an order is issued under Sections 14308 to 14310, inclusive, to petition for judicial review of the order shall not be affected by the failure of the subject institution, subject person, or former subject person to apply to the commissioner pursuant to subdivision (a) to modify or rescind the order.


14312. (a) For purposes of this section, "subject depository institution" means any of the following: (1) A credit union that is organized under the laws of this state or that maintains an office in this state. (2) An affiliate of an institution specified in paragraph (1). (b) It shall be unlawful for a subject person or former subject person of a subject institution to whom an order is issued under Sections 14308 to 14310, inclusive, willfully to do, directly or indirectly, any of the following without the approval of the commissioner so long as the order is in effect: (1) To act as a subject person of any subject depository institution. (2) To vote any shares or other securities having voting rights for the election of any person as a director of a subject depository institution. (3) To solicit, procure, transfer or attempt to transfer, or vote any proxy, consent, or authorization with respect to any shares or other securities of a subject depository institution having voting rights. (4) To otherwise participate in any manner in the conduct of the affairs of any subject depository institution.


14313. If the commissioner finds that any of the factors set forth in subdivisions (a) to (g), inclusive, are true with respect to a California credit union, the commissioner may by order, without any prior notice or hearing, take possession of the property and business of the California credit union: (a) That the California credit union has violated any provision of this division, of another applicable law, of any order issued under this division, or of any written agreement with the commissioner, or has committed a material violation of any regulation of the commissioner. (b) That the California credit union is conducting its business in an unsafe or unsound manner. (c) That the California credit union is in such condition that it is unsafe or unsound for it to transact credit union business. (d) That the California credit union has inadequate net worth or is insolvent. The net worth of the credit union shall be considered inadequate if it is less than 2 percent of the credit union's total assets. (e) That the California credit union failed to pay any of its obligations as they came due or is reasonably expected to be unable to pay its obligations as they come due. (f) That the California credit union has ceased to transact credit union business. (g) That the California credit union has, with the approval of its board, requested the commissioner to take possession of its property and business.


14314. (a) If the commissioner takes possession of the property and business of a California credit union pursuant to Section 14313, the California credit union may, within 10 days, apply to the superior court in the county where its principal executive office is located to enjoin further proceedings. The court may, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing, dismiss the application or enjoin the commissioner from further proceedings and order the commissioner to surrender the property and business of the California credit union to the California credit union or make any further order as may be just. The judgment of the court may be appealed by the commissioner or by the California credit union in the manner provided by law for appeals from the judgment of a superior court. (b) At any time after the commissioner takes possession of the property and business of a California credit union pursuant to Section 14313, the California credit union may, with the approval of the commissioner, resume business upon conditions as the commissioner may prescribe.


14315. (a) On taking possession of the business and assets of any credit union as provided in this chapter, the commissioner may proceed to liquidate the credit union in the manner provided by Article 8 (commencing with Section 305) of Chapter 2 of Division 1, and the provisions of that article, except Sections 325, 325.1, 325.2, and 330, shall apply as if the California credit union were a California state commercial bank, or he or she may appoint a liquidating agent or a liquidating committee of three members of the credit union to liquidate the business and assets of the credit union in the manner provided in Article 2 (commencing with Section 15250) of Chapter 9, except that in lieu of the certificate required under Section 15252 the commissioner shall prepare and file in the office of the Secretary of State a certificate of commencement of liquidation proceedings upon taking possession of the business and assets, and the commissioner or his authorized deputy shall countersign the certificate referred to in Sections 15257 and 15258 whenever liquidation is involuntary. The commissioner may, however, prepare and file a final certificate whenever he or she retains possession of the assets of any credit union for the purpose of liquidation. The liquidating agent need not be a member of the credit union to be liquidated, and may be a person, firm, or corporation as determined by the commissioner. (b) If the commissioner takes possession of the property and business of a California credit union pursuant to Section 14313, the commissioner may tender to the National Credit Union Administration an appointment as conservator or receiver of the California credit union. If the National Credit Union Administration accepts the appointment, the National Credit Union Administration shall have, in addition to any powers conferred by federal law, the powers conferred on the commissioner pursuant to subdivision (a).


14316. The commissioner shall supervise the acts of the liquidating agent or the liquidating committee appointed under this article and may remove the liquidating agent or any member of the liquidating committee in his or her discretion.

14317. If required by the commissioner, the liquidating agent or the members of the liquidating committee appointed under this article shall provide proof of bond coverage extending to the liquidating agent or members of the liquidating committee. The bond shall include coverage for fraud, dishonesty, and faithful performance. The premium for that bond shall be paid out of the assets of the credit union.


14318. If the commissioner retains possession of the assets of a credit union for purposes of liquidation, the commissioner shall use the services of civil service employees of the commissioner's office and the attorneys employed by the commissioner or the Department of Justice shall render all necessary legal services, as the commissioner may request.


14319. In any case where the commissioner takes possession of a subject institution pursuant to this article without a prior notice or hearing, or takes action against a subject person without prior notice or hearing, the commissioner shall, upon taking possession or taking the action, concurrently provide to the subject institution or person a written order. The order shall set forth the condition or conditions of the subject institution or action or actions of the subject person that constitute the basis or bases for the commissioner's action as to the subject institution or subject person. In any case where the commissioner takes possession of a subject institution pursuant to this article, the commissioner shall establish clear evidence upon which he or she is taking action against the subject institution.


Article 4. Costs Of Administration

Ca Codes (fin:14350-14356) Financial Code Section 14350-14356



14350. The commissioner shall annually levy on and collect from credit unions holding certificates authorizing them to act as credit unions, pro rata on the basis of total assets, an assessment in a total amount that is sufficient in the commissioner's opinion to (a) meet the expenses of the department in administering this division and other laws relating to credit unions or the credit union business that are not otherwise provided for and (b) provide a reasonable reserve for contingencies.


14351. (a) The amount of the annual assessment on any credit union holding a certificate authorizing it to act as a credit union shall be the greater of (1) one thousand five hundred dollars ($1,500) or (2) the sum of the products determined by multiplying (A) increments of the credit union's total assets by (B) percentages of the base assessment rate, according to the following table: Total Assets Percentage of Base (In millions) Assessment Rate First $3 85.0% Next $3 30.0% Next $4 12.5% Excess over $10 11.0% (b) The base assessment rate for each annual assessment shall be fixed by the commissioner but shall not exceed two dollars and twenty cents ($2.20) per one thousand dollars ($1,000) of total assets.


14352. For purposes of the annual assessment, the total assets of a credit union holding a certificate authorizing it to act as a credit union shall be determined as of a date fixed by the commissioner. However, if a credit union does not hold a certificate authorizing it to act as a credit union as of that date but does so as of the date when the annual assessment is levied, its total assets for purposes of the annual assessment shall be determined as of the date of the levy.


14353. (a) Whenever the commissioner levies an annual assessment on credit unions holding certificates authorizing them to act as credit unions, the commissioner shall promptly mail or otherwise deliver to each credit union assessed an invoice that shows (1) the amount of the credit union's annual assessment and (2) the date when the annual assessment is due and payable. (b) The annual assessment on a credit union holding a certificate authorizing it to act as a credit union becomes a liability of the credit union on the date on which the commissioner levies the annual assessment. (c) If the annual assessment on a credit union holding a certificate authorizing it to act as a credit union is not paid on time, the commissioner shall be entitled to and may collect, in addition to the amount of the annual assessment, a penalty of 5 percent of the amount of the unpaid annual assessment for each month or part of a month that the payment is delinquent.


14353.5. Whenever the commissioner finds it necessary or advisable to make an extra examination of a credit union, the commissioner may charge the credit union a fee of seventy-five dollars ($75) per hour for each examiner engaged in the extra examination, and the credit union shall, within 10 days after the mailing or other delivery of a statement by the commissioner, pay the fee charged by the commissioner.


14354. There is established the Credit Union Fund in the State Treasury.

14355. All money received or collected by the commissioner under this division or any other law relating to credit unions or the credit union business shall be paid at least once each week, accompanied by a detailed statement thereof, into the State Treasury to the credit of the Credit Union Fund.


14356. All expenses of the department in administering this division and other laws relating to credit unions or the credit union business shall be paid out of the Credit Union Fund; and, except as otherwise provided in Section 276 or 277, the Credit Union Fund shall be used only for such purposes.


Article 5. Credit Union Advisory Committee

Ca Codes (fin:14380-14384) Financial Code Section 14380-14384



14380. There is established in the department a Credit Union Advisory Committee.


14381. The Credit Union Advisory Committee shall advise the commissioner and the Deputy Commissioner of Financial Institutions for the Division of Credit Unions on matters relating to credit unions or the credit union business.

14382. (a) The Credit Union Advisory Committee consists of seven members. (b) The members of the Credit Union Advisory Committee shall be appointed by the Secretary of the Business, Transportation and Housing Agency. (c) The term of a member of the Credit Union Advisory Committee is two years. However, a member may be reappointed. (d) Membership in the Credit Union Advisory Committee is voluntary. No person is required to accept an appointment to the Credit Union Advisory Committee, and any member may resign by filing a resignation with the commissioner. (e) No member of the Credit Union Advisory Committee shall receive any compensation, reimbursement for expenses, or other payment from the state in connection with service on the Credit Union Advisory Committee.

14383. The Credit Union Advisory Committee shall meet at least once each calendar quarter.


14384. The commissioner may by order or regulation prescribe rules governing the Credit Union Advisory Committee and its members, including such matters as meetings, quorum, and actions.


Chapter 4. Management And Operations

Article 1. General

Ca Codes (fin:14400-14410) Financial Code Section 14400-14410



14400. (a) The savings capital of a credit union shall consist of the payments made by members on shares as set forth in the credit union's written savings capital structure policy pursuant to Section 14862. (b) The equity capital of the credit union shall consist of the credit union's regular reserve account, the undivided earnings account, any appropriated undivided earnings accounts, and other forms of capital approved by the commissioner.


14401. A credit union may borrow money from any source in an aggregate amount not to exceed 50 percent of the paid-in and unimpaired capital and surplus of the credit union. Loans from the National Credit Union Central Liquidity Facility (12 U.S.C. Sec. 1795 et seq.) shall not be included in computing the aggregate borrowings of a credit union. For the purposes of this division, "certificate for funds" means borrowed money.


14402. Every credit union may purchase and hold, either individually or jointly with other credit unions or affiliated organizations, a lot and building to be employed principally for the transaction of business, and to provide for future expansion of the facilities of those organizations. Any excess space that is not occupied by the organizations purchasing and holding the building may be leased to the public. The lot and building may be sold if all the holders of the property join in its sale.


14403. Every credit union may purchase and hold, either individually or jointly with other credit unions or affiliated organizations, furniture, fixtures, vaults, and other personal property necessary or proper to carry on its business, and to equip or furnish any space in any building purchased or held individually or jointly with other credit unions or affiliated organizations under authorization of Section 14402, whether occupied by the credit union or leased to the public. The personal property may be sold, if all the holders of the property join in its sale.


14404. A credit union shall not invest more than the amounts permitted pursuant to regulations which shall be promulgated by the commissioner for the investments set forth in Sections 14402, 14403, 14650 and 14651.

14405. Every credit union may: (a) (1) Become a member of any organization or organizations composed of credit unions, credit associations, chambers of commerce, financial institutions, community economic development entities, or business or trade organizations. (2) Become a member of any nonprofit organization approved by the board of directors. (b) Pay dues and assessments as may be levied upon it by any organization of which it is a member.


14406. The savings capital, undivided profits, and reserve funds of a credit union shall be deposited only in the following: (a) Commercial banks or trust companies, incorporated under the laws of this state. (b) National banks doing business in this state. (c) Shares or periodic certificates for funds received by or any form of evidence of interest or indebtedness issued by any credit union organized under this division or by any other credit union if its member accounts are insured as provided for by Subchapter II of the Federal Credit Union Act (12 U.S.C. Sec. 1781 et seq.), or, alternatively, are insured by other means determined acceptable by the commissioner. (d) Accounts with, investment certificates or withdrawable shares of, any savings and loan association doing business in this state that is an insured institution pursuant to the Federal Deposit Insurance Corporation Act (12 U.S.C. Sec. 1811 et seq.).


14407. (a) Whenever the losses of any credit union resulting from a depreciation in the value of its securities or otherwise exceed its undivided earnings and reserve fund so that the estimated value of its assets is less than the total amount due its shareholders, the credit union may, if approved by a majority of all members at a meeting called to consider the matter, order a reduction of the liability to each of its shareholders, so as to divide the loss equitably among the shareholders. If thereafter the credit union realizes from its assets a greater amount than was fixed in the order of reduction, the excess shall be divided among the shareholders whose assets were reduced, but to the extent of the reduction only. (b) The commissioner may approve a reduction in the liability on shares approved by less than a majority of all members as provided in subdivision (a) if the commissioner finds, upon the written and verified application filed by the board of directors, that (1) notice of the meeting called to consider the question was mailed to each member entitled to vote upon the question, (2) the notice disclosed the purpose of the meeting and properly informed the membership that approval of the reduction in liability might be sought pursuant to this subdivision, and (3) that a majority of the votes cast upon the question were in favor of the reduction in liability.


14408. No credit union shall make any gift or donation having a value in excess of twenty-five thousand dollars ($25,000) unless the gift or donation is in the best interest of the credit union, is approved by a resolution of the board of directors and is in conformance with any regulation or order that the commissioner may issue. The resolution of the board of directors approving the gift or donation shall identify the recipient of the gift or donation, state the value of the gift or donation, and specify the basis for the board's determination that the gift or donation is in the best interests of the credit union. The board may establish a budget for gifts and donations and authorize appropriate officials of the credit union to select recipients and disburse budgeted funds among those recipients.


14409. (a) Every credit union shall obtain adequate bond or insurance coverage, for each director, officer, supervisory committee member, and credit committee member, for the credit manager, and for each employee. (b) The commissioner may adopt regulations setting forth guidelines with respect to the minimum amount of the bond or insurance coverage deemed adequate. The regulations may be based upon the gross assets of the credit union and may contain a formula or schedule for the calculation of minimum bond or insurance coverage.


14409.2. (a) Notwithstanding the provisions of Sections 1051, 1052, and 1054 of the Labor Code and Section 2947 of the Penal Code, any credit union or officer or employee thereof may deliver fingerprints taken of an applicant for employment by the credit union to local, state, or federal law enforcement agencies for the purpose of obtaining information as to the existence and nature of a criminal record, if any, of the applicant relating to convictions, and to any arrest for which the applicant is released on bail or on his or her own recognizance pending trial, for the commission or attempted commission of a crime involving robbery, burglary, theft, embezzlement, fraud, forgery, bookmaking, receiving stolen property, counterfeiting, or involving checks or credit cards or using computers. (b) The Department of Justice shall, pursuant to Section 11105 of the Penal Code, and a local agency may, pursuant to Section 13300 of the Penal Code, furnish to the officer of the credit union responsible for the final decision regarding employment of the applicant, or to his or her designees having responsibilities for personnel or security decisions in the usual scope and course of their employment with the credit union, summary criminal history information when requested pursuant to this section. If, upon evaluation of the criminal history information received pursuant to this section, the credit union determines that employment of the applicant would constitute an unreasonable risk to the credit union or its customers, the applicant may be denied employment. (c) A request for records pursuant to this section made of the Department of Justice shall be on a form approved by the department. The department may charge a fee to be paid by the requesting credit union pursuant to subdivision (e) of Section 11105 of the Penal Code. No request shall be submitted without the written consent of the applicant. (d) Any criminal history information obtained pursuant to this section is confidential and no recipient shall disclose its contents other than for the purpose for which it was acquired.


14410. (a) No member of the board of directors, supervisory committee, or credit committee shall receive any compensation for his or her services as a member of the board of directors, supervisory committee, or credit committee, but he or she may be provided with reasonable health, accident, and similar insurance. Nothing in this subdivision shall prohibit a member of the board of directors, supervisory committee, or credit committee from receiving nonmonetary compensation that is incidental to the person's service as a member of the board of directors, supervisory committee, or credit committee, if and as approved by regulation or order of the commissioner. (b) Notwithstanding subdivision (a), a director or committee member may be reimbursed for actual expenses incurred in the performance of his or her duties if reimbursement is made pursuant to the requirements of the commissioner's regulations controlling expense reimbursement by the credit union. Reimbursement for actual expenses may include, among other things, travel expenses incurred on or relating to credit union business, and any other matters, categories, or items of expense that the commissioner may establish by regulation. (c) Nothing in this section shall prevent any person from receiving compensation for actual services as a general manager, credit manager, loan officer, or other position as an employee of the credit union.


Article 2. Directors

Ca Codes (fin:14450-14456) Financial Code Section 14450-14456



14450. The credit union shall be directed by a board consisting of an odd number of directors, at least five in number, each of whom shall be a member of the credit union in his own right, to be elected by the members at their annual meeting.


14451. Directors may be elected for a term of three years or less. If directors are elected for terms in excess of one year their terms of office shall be staggered so that insofar as possible an equal number of such terms shall expire each year.


14452. The office of any director shall be declared vacant if such director is absent from three consecutive regular meetings of the board of directors unless excused therefrom.


14452.5. A vacancy on the board of directors shall be filled in accordance with Section 7224 of the Corporations Code, subject to the following: (a) A vacancy that exists due to the expiration of the term of a director shall be filled only by the members of a credit union. (b) If the board of directors elects a director to fill a vacancy, the director so elected shall hold office only until the next annual meeting at which time the members shall elect a director to hold office until the expiration of the term for which elected. (c) If the members elect a director to fill a vacancy, the director so elected shall hold office until the expiration of the term for which elected.


14453. The board of directors of every credit union shall have the general management of the affairs, funds, and records of the credit union. The board may appoint an executive committee of no fewer than three directors, to serve at its pleasure, to act as expressly approved by the board of directors in accordance with the laws and regulations.


14454. The directors shall hold a meeting of all directors within 10 days after the annual meeting of members pursuant to Section 14804 for the purpose of electing the officers of the credit union as prescribed in Sections 14500 and 14501.


14456. Unless the bylaws expressly reserve any or all of the following duties to the members, the directors have all of the following special duties: (a) To act upon all applications for membership. The directors may delegate the power to approve applications for new membership to: (1) the chairperson of a membership committee or to an executive committee; or (2) any officer, director, committee member, or employee, pursuant to a written membership plan adopted by the board of directors, provided the board of directors reviews at least quarterly a report of membership applications approved by an officer, director, committee member, or employee. (b) To expel members for any of the following causes: (1) Conviction of a criminal offense involving moral turpitude. (2) Failure to carry out contracts, agreements or obligations with the credit union. (3) Refusal to comply with the provisions of this division or of the bylaws. Any members who are expelled by the board of directors have the right to appeal therefrom to the members, in which event, after hearing, the order of suspension may be revoked by a two-thirds vote of the members present at a special meeting to consider the matter. (c) To determine from time to time the interest rate on obligations with members and to authorize the payment of interest refunds to borrowing members. (d) To fix the maximum number of shares which may be held by, and, in accordance with Section 15100, establish the maximum amount of obligations which may be entered into with, any one member. (e) To declare dividends on shares in accordance with the credit union's written capital structure policy and to determine the interest rate or rates which will be paid on certificates for funds. (f) To amend the bylaws, except where membership approval is required. (g) To fill vacancies in the credit committee, and to temporarily fill vacancies caused by the suspension of any or all members of the credit committee, pending a meeting of the members to determine whether to affirm the suspension and vacate the office, or to reinstate the member or members. (h) To direct the deposit or investment of funds, except loans to members. (i) To designate alternate members of the credit committee who shall serve in the absence or inability of the regular members to perform their duties. (j) To perform or authorize any action not inconsistent with law or regulation and not specifically reserved by the bylaws for the members, and to perform any other duties as the bylaws may prescribe.



Article 3. Officers

Ca Codes (fin:14500-14502) Financial Code Section 14500-14502



14500. (a) The officers of every credit union shall include a chairman or president, one or more vice chairmen or vice presidents, a secretary and a treasurer or chief financial officer. (b) The officers of any credit union may include other officers with titles and duties specified in the bylaws or determined by resolution of the board as may be necessary for the conduct of its affairs. The president, or if there is no president, the chairman of the board, is the general manager and chief executive officer of the credit union, unless otherwise provided in the bylaws. (c) Except as otherwise provided in a credit union's bylaws, officers, other than those officers elected pursuant to Section 14454 and required pursuant to subdivision (a), shall be chosen by the board and serve at the pleasure of the board, subject to the rights, if any, of an officer under any contract of employment. Any officer may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract or obligation with the credit union to which the officer is a party. An officer other than those officers required pursuant to subdivision (a), may, but need not be, a director of the credit union.

14501. If the bylaws so provide, the directors may elect the same person as secretary and treasurer or chief financial officer.


14502. The powers and duties of the officers of any credit union required pursuant to subdivision (a) of Section 14500 are as prescribed in the bylaws.


Article 4. Supervisory Committee

Ca Codes (fin:14550-14555) Financial Code Section 14550-14555



14550. Every credit union shall have a supervisory committee of at least three persons, each of whom shall be a member of the credit union.

14551. The supervisory committee may: (a) Suspend at any time by unanimous vote, at a meeting called for that purpose, the credit committee, or any member thereof, or the credit manager, or any member of the board of directors, or any officer. (b) By a majority vote call a meeting of the members to consider any violation of this division or the bylaws, or any practices of the credit union which, in the opinion of the committee, are unsafe or unauthorized. (c) Inspect the securities, cash, and accounts of the credit union. (d) Fill vacancies in the supervisory committee until the next annual meeting of the members. (e) Declare vacant any office of a member of the supervisory committee if such member is absent from three consecutive regular meetings of the supervisory committee unless excused therefrom or is completely inactive as a member of the supervisory committee for a consecutive 12 months' period.


14551.5. The supervisory committee shall be responsible for reviewing the credit union's policies and control procedures to safeguard against fraud and self-dealing, and the supervisory committee shall exercise whatever efforts are necessary pursuant to Sections 14551 and 14553 to meet those responsibilities.


14552. The supervisory committee shall, within seven days after suspension of any or all members of the credit committee, or any member of the board of directors, or any other officer, cause notice of a special meeting to be given to the members to take such action regarding the suspension as the members deem necessary.


14553. (a) The supervisory committee shall at least once each year make or cause to be made an audit of the books and records and an examination of the business and affairs of the credit union. The supervisory committee shall make a full report of the assets and liabilities, receipts and disbursements of the credit union to the board of directors. Those reports shall be presented at the annual meeting of members and filed with the records of the credit union. (b) The supervisory committee may make or cause to be made any supplementary inspections of the securities, cash, and accounts of the credit union or audits as it deems necessary, and submit reports of those audits to the board of directors.


14554. No member of the supervisory committee shall serve as a member of the credit committee, as the credit manager, as a member of the board of directors, or as an employee of the credit union.


14555. The commissioner may, after investigation and finding that the supervisory committee is not performing in conformance with this article, declare all offices of the supervisory committee of a credit union vacant and shall direct the board of directors of the credit union to call a special meeting of the members for the purpose of electing a new supervisory committee to serve until the next regular annual meeting.


Article 5. Credit Committee And Loan Officers

Ca Codes (fin:14600-14605) Financial Code Section 14600-14605



14600. Every credit union shall have a credit committee of at least three persons, each of whom shall be a member of the credit union, or in the alternative, a credit manager, to have general supervision of all obligations of members. The bylaws of the credit union shall provide that either: (1) the members of the credit committee shall be elected by the members of the credit union at their annual meeting, or (2) they shall be appointed by the board of directors, or (3) that the board of directors may establish the position of credit manager in lieu of a credit committee. The bylaws of the credit union shall provide for the terms of office of the credit committee, where the credit committee has been provided for in the bylaws, which shall not exceed three years, and which may be staggered.


14601. No member of the credit committee or the credit manager or any loan officer shall serve as a member of the supervisory committee.

14602. (a) (1) No credit union shall create any obligation with a credit union member, without the written approval of a majority of all the members of the credit committee, the credit manager, or a loan officer appointed as provided in this section. (2) Paragraph (1) does not apply to the creation of an obligation in accordance with a credit scoring program, preapproval credit program, or similar program, if the program was adopted by the board of directors, credit committee, or credit manager and complies with a written lending policy on programs of that type established by the board of directors in accordance with Section 15100. (b) The credit committee or the credit manager may, with the approval of the board of directors, appoint one or more loan officers who shall be authorized to approve obligations with credit union members. (c) Neither the credit committee, a credit manager, or any loan officer shall have the power to approve membership applications. (d) No loan officers shall be permitted to approve any extension agreement of any obligation or the refinancing of any obligation except as prescribed in regulations promulgated by the commissioner. (e) The credit committee, or in the alternative, the credit manager shall be provided with a record of each obligation approved or not approved by any loan officer, within 30 days of the approval or disapproval.


14603. The credit committee, the credit manager, or a loan officer may approve in advance, upon their own motion or upon the application of any member, the extension of credit to any member and loans may be granted to such member within the limit of such extension of credit authorized by the board of directors pursuant to Section 15100. Where an extension of credit has been approved, applications for any extension of credit need not be approved by the credit committee, the credit manager, or loan officer as long as the aggregate amount of such obligations does not exceed the limit of such extension of credit authorized by the board of directors pursuant to Section 15100. The credit committee, the credit manager, or loan officer shall review, from time to time, all extensions of credit approved by them and any extension of credit approved for any member shall expire if such member becomes ineligible for a loan or becomes more than 90 days delinquent in his obligations to the credit union.

14604. A credit union member whose written application to enter into any obligation is denied, may appeal from the denial of the credit committee, the credit manager, or loan officer to the board of directors.

14605. A credit manager shall not disburse or have the authority to authorize any person to disburse the proceeds of any loan. A credit manager shall not authorize or make loans to other credit unions.


Article 6. Investments

Ca Codes (fin:14650-14656) Financial Code Section 14650-14656



14650. Subject to the limitations of Sections 14402, 14403, and 14404, any credit union or credit unions may purchase, acquire and hold outstanding shares of a corporation engaged exclusively in holding property of the character described in Section 14402 and which property is or is to be used for the purposes set forth in Section 14402. The purchase or acquisition of stock of any such corporation shall be approved by two-thirds of all the directors of such credit union or credit unions.


14651. (a) Every credit union may invest in the shares of stock of a corporation, or in membership or economic interests of a limited liability company, organized solely for the purpose of providing services to credit unions, provided the corporation or limited liability company is formed by a credit union or group of credit unions. (b) Every credit union may invest in the securities of a corporation or in membership or economic interests of a limited liability company that is not a corporation or limited liability company of the type described in subdivision (a) and that provides services to credit unions, provided the investment is approved by the commissioner.


14652. Every credit union may invest in securities and other assets described in Chapter 9 (commencing with Section 1000) of the Banking Law as legal investments for savings banks.


14652.5. A credit union may organize, sponsor, operate, control, or render investment advice to, an investment company, or underwrite, distribute, or sell securities of any investment company which has qualified to sell its securities in this state pursuant to Part 2 (commencing with Section 25100) of Division 1 of Title 4 of the Corporations Code, if the officers and employees of the credit union who sell these securities meet such standards with respect to training, experience, and sales practices as established by the Secretary of the Business, Transportation and Housing Agency or the secretary's designee. For the purpose of this section, "investment company" means an investment company as defined in the Investment Company Act of 1940 (15 U.S.C., Sec. 80a-1 et seq.).


14653. Credit unions may invest in a trust organized solely for the purpose of investing in United States government securities and United States government agency securities, provided the trust is formed by an organization composed of credit unions or an organization of credit union associations.


14653.5. Notwithstanding any other provision of law, a credit union may make any investment authorized by regulation or in writing by the commissioner.

14654. Credit unions may purchase from the vendor or lessor of any personal property, conditional sale contracts or vehicle lease agreements covering the sale or lease of that property or vehicle to its members. The credit union may hold and retain any such conditional sale contract or vehicle lease agreement as an investment.


14655. A credit union may purchase from the owner thereof a promissory note upon which a member is primary obligor provided the credit union could have made a loan to such member in the amount and upon the terms and conditions provided in such note under the provisions of this division.


14656. A credit union may, in accordance with rules and regulations prescribed by the commissioner, purchase from any liquidating credit union notes made by individual members of such liquidating credit union, at such prices and under such terms as may be agreed upon by the board of directors of the purchasing credit union and the board of directors, or liquidating agent, of the liquidating credit union.



Article 7. Reserves

Ca Codes (fin:14700-14703) Financial Code Section 14700-14703



14700. Every credit union shall create and maintain a regular reserve as specified by the commissioner.


14701. Losses incurred by a credit union may be charged to its regular reserve as permitted by rule of the commissioner.


14702. In addition to the regular reserve, special reserves shall be established when required by regulation or when found necessary by the board of directors of the credit union or by the commissioner.


14703. A credit union shall establish and maintain an allowance-for-loan-losses account in accordance with generally accepted accounting principles. The commissioner may order the credit union to increase the amount of its allowance-for-loan-losses account if the commissioner finds that the amount of the account is not adequate.


Article 8. Penalties

Ca Codes (fin:14750-14768) Financial Code Section 14750-14768



14750. Except as provided in Section 14950, any officer, director, member of a committee of a credit union, loan officer appointed pursuant to Section 14602, or employee who knowingly permits the creation of an obligation with, or participates in the creation of an obligation with, a nonmember of the credit union, or knowingly permits the creation of an obligation or participates in the creation of an obligation which is not made in conformity with the requirements of this division, is guilty of a misdemeanor.


14751. Any officer, director, member of a committee, credit manager, or loan officer appointed pursuant to Section 14602 who violates Section 14750 is primarily liable to the credit union for the amount of any obligation that was created in violation of Section 14750. The illegality of the creation of the obligation is no defense in an action by the credit union to recover any amounts owing as a result of any obligation created in violation of Section 14750.


14752. Except as provided for in Section 14051 and this article, any person who willfully violates any provision of this division, or who willfully violates any rule or order issued pursuant to this division, shall upon conviction be fined not more than ten thousand dollars ($10,000) or imprisoned in the state prison, or in a county jail for not more than one year, or be punished by both such fine and imprisonment, but no person may be imprisoned for the violation of any rule or order unless he or she had knowledge of the rule or order. Conviction under this section shall not bar the exercise of the administrative authority of the commissioner provided in Section 14208.

14752. Except as provided for in Section 14051 and this article, any person who willfully violates any provision of this division, or who willfully violates any rule or order issued pursuant to this division, shall upon conviction be fined not more than ten thousand dollars ($10,000) or imprisoned pursuant to subdivision (h) of Section 1170 of the Penal Code, or in a county jail for not more than one year, or be punished by both that fine and imprisonment, but no person may be imprisoned for the violation of any rule or order unless he or she had knowledge of the rule or order. Conviction under this section shall not bar the exercise of the administrative authority of the commissioner provided in Section 14208.


14753. Any director, officer, or employee of a credit union who asks for, receives, or agrees to receive any money, property, or thing of value for his personal benefit or advantage for (a) procuring or attempting to procure for any person any loan from that credit union, (b) for the purchase or discount of any note, draft, check, bill of exchange, or other obligation by that credit union, or (c) for permitting any person to overdraw any account with that credit union, is guilty of a felony.


14754. Any director, officer, or employee of a credit union who knowingly overdraws his or her account with that credit union, except for any overdraft pursuant to an agreement which is approved in advance as provided in Section 14603 and which is in conformity with Section 15050, is guilty of a felony.


14755. Any director, officer, agent, or employee of any credit union who knowingly receives or possesses the credit union's property otherwise than in payment of a just demand with intent to defraud, omits to make or omits to cause to be made a full and true entry thereof in the credit union's books and accounts, or concurs in omitting to make any material entry thereof, is guilty of a felony.


14756. Any director, officer, agent, or employee of a credit union who (1) knowingly concurs in making or publishing any written report, exhibit, or statement of the credit union's affairs or financial condition containing any material statement which is false, or (2) having the custody of the credit union's books, willfully refuses or neglects to make any proper entry in those books as required by law, or (3) refuses to allow the books to be inspected or extracts to be taken therefrom by the commissioner or the commissioner's deputies or examiners, is guilty of a felony.


14758. Any director, officer, or employee of a credit union who makes or maintains, or attempts to make or maintain, a deposit of the credit union's funds with any other person on the condition or with the understanding, whether express or implied, that the person receiving that deposit will make a loan or advance, directly or indirectly, to any director, officer, or employee of the credit union is guilty of a felony.


14759. Any officer, director, employee, or agent of any credit union who willfully makes a false or untrue entry in any book, record, report, statement concerning the business or affairs of the credit union, or statement of condition or in connection with any transaction of the credit union with intent to deceive any officer or director thereof, or with intent to deceive any agent or examiner, whether private or public, employed or lawfully appointed to examine into the credit union's condition or to examine into any of the credit union's affairs or transactions, or with intent to deceive any public officer, office, or board to which the credit union is required by law to report or which has authority by law to examine into the credit union's affairs or transactions or to examine into any of the credit union's affairs or transactions or who, with like intent, willfully omits to make a new entry of any matter particularly pertaining to the business, property, condition, affairs, transactions, assets, or accounts of the credit union in any book, record, report, or statement of the credit union, or who with like intent alters, abstracts, conceals, or destroys any book, record, report, or statement of the credit union made, written, or kept, or required to be made, written, or kept by him or her or under his or her direction, is guilty of a felony.


14760. (a) Every director of a credit union is guilty of a misdemeanor who: (1) In case of the fraudulent insolvency of that credit union, has participated in the fraud; or (2) Willfully does any act in his or her capacity as director which is expressly forbidden by law or willfully omits to perform any duty imposed upon him or her as such a director by law. (b) The insolvency of a credit union is deemed fraudulent for the purposes of this section, unless its affairs appear upon investigation to have been administered lawfully and with the same care and diligence that agents receiving a compensation for their services are bound to observe.


14761. Any officer or agent of any credit union who makes or delivers any guaranty or endorsement on behalf of the credit union whereby the credit union may become liable upon any of the credit union's discounted notes, bills, or obligations in a sum beyond the amount of loans and discounts which the credit union may lawfully make, is guilty of a misdemeanor.


14762. A director of a credit union who concurs in any vote or act of the directors of the credit union by which it is intended to make a loan or discount to any director of the credit union exceeding the amount allowed by law, is guilty of a misdemeanor.


14763. Any officer or employee of any credit union who intentionally conceals from the directors of the credit union any discounts or loans made by the credit union between the regular meetings of its board of directors, or intentionally conceals the purchase of any securities or the sale of the credit union's securities during that period, or who knowingly fails to report to the board of directors when required to do so by law all discounts or loans made by the credit union and all securities purchased or sold by the credit union between the regular meetings of its board of directors, is guilty of a misdemeanor.


14764. No credit union shall purchase any real or personal property or any interest in real or personal property, including, but not limited to, a leasehold, or any contract arising from the sale of real or personal property or any note or bond in which any officer, director, or employee of the credit union is personally or financially interested, directly or indirectly, for that person's own account or as the partner or agent of others, without first obtaining the written consent of the commissioner.


14765. No officer, director, or employee of a credit union shall purchase, directly or indirectly, or be interested in the purchase of, any of the credit union's assets for an amount less than the then current market value thereof. Every person violating this section shall be liable to the people of this state for each offense in the amount of twice the market value of the assets so purchased.


14766. No officer, director, or employee of a credit union, directly or indirectly, shall purchase or be interested in the purchase of, any of the credit union's obligations or assets for an amount less than the book value thereof, unless all the directors of the credit union previously approve the purchase by resolution and a copy of the resolution is delivered to the commissioner immediately after adoption. Every person violating this section shall be liable to the people of this state for each offense in the amount of twice the book value of the assets so purchased.


14767. It is unlawful for any person willfully to make any untrue statement of a material fact in any document filed with the commissioner under this division, or willfully to omit to state in any document any material fact which is required to be stated therein.


14768. Any officer, director, employee, or agent of any credit union who abstracts or willfully misapplies any of the money, funds, or property of the credit union, or willfully misapplies its credit, is guilty of a felony. Upon conviction, the court shall, in addition to any other punishment imposed, order the person to make full restitution to the credit union. Nothing in this section shall be deemed or construed to repeal, amend, or impair any existing provision of law prescribing a punishment for such an offense.


Chapter 5. Members

Ca Codes (fin:14800-14822) Financial Code Section 14800-14822



14800. (a) Every credit union may admit to membership those persons qualified for membership upon the occurrence of any of the following: (1) Upon the purchase of a membership in the credit union as provided in the credit union's bylaws. (2) Upon the payment of an entrance fee established from time to time by the board of directors. (3) Upon the purchase of one or more shares in the credit union as provided in the credit union's bylaws. (b) No officer, director, committee member, or employee of any credit union shall approve a person for admission to membership or admit an applicant for membership in the credit union or extend any benefit or service of the credit union to any person, unless that person is admitted to membership in the credit union pursuant to subdivision (a). (c) Nothing in subdivisions (a) and (b) shall be construed to limit the powers of a credit union to engage in joint service programs or business relationships for the benefit of their members where some incidental benefit may flow to third parties to the transaction or the authority for a credit union to engage in joint loan programs pursuant to Section 14959. (d) Nothing in this section prohibits a credit union from admitting to membership a corporation in which the credit union holds shares pursuant to Section 14650 or a corporation formed to provide services to credit unions or to credit union members in which the credit union holds shares or a limited liability company formed to provide services to credit unions or to credit union members in which the credit union holds membership or economic interests pursuant to Section 14651.

14801. Every credit union may expel members as provided in Section 14456 of this division and Section 7341 of the Corporations Code.


14802. Each member shall keep the credit union informed of his current address. In the event a member fails to do this, a charge may be made to the member's share account for the actual cost of necessary locator service incurred in determining such an address; provided, however, that such charge shall not exceed five dollars ($5). Such charge shall be made only for amounts paid to a person or concern normally engaged in providing such service and shall be made against the account or accounts of any one member no more than once in any 12-month period.

14803. (a) No credit union shall pay any commission or compensation to any person for securing a new member or for getting an existing member to make an additional deposit. (b) Notwithstanding subdivision (a), a credit union may, pursuant to an incentive policy approved by the board of directors, offer and pay a reasonable incentive or inducement to (1) a nonmember for becoming a member of the credit union, (2) an existing member for depositing additional funds, and (3) an employee or member who assists in getting a nonmember to become a new member of the credit union or who assists in getting an existing member to make an additional deposit. (c) Nothing in subdivision (a) limits a credit union from using growth in the number of members in the credit union as part of its compensation program for its employees.


14804. The members of a credit union shall hold an annual meeting for the election of directors and a supervisory committee and, if provided for in its bylaws, the election of a credit committee, upon such notice and at such time and place as the bylaws provide.


14805. Special meetings of members may be held upon order of the board of directors. Special meetings of members shall be held upon the written request of 10 members or 3 percent of the membership, whichever is greater. Notice of special meetings shall be given to all members specifying the date, time, place, and purpose of the meeting.


14806. In credit unions formed on or after September 15, 1945, no member shall have more than one vote irrespective of the number of shares held by the member.


14807. Any member may withdraw from membership in the credit union at any time. A withdrawing member may be required to give 60 days' notice of intention to withdraw shares and 30 days' notice of intention to withdraw certificates for funds except when a different period of notice is required by the commissioner for the withdrawal of shares or share certificates that may be established by the board of directors pursuant to Section 14862.


14808. All amounts paid on shares or on certificates for funds of an expelled or withdrawn member, with any dividends or interest credited thereto to the date of withdrawal or expulsion, shall be paid to such members as funds become available, and after deducting all amounts due from the member to the credit union. Withdrawing or expelled members have no further rights in the credit union, but are not by expulsion or withdrawal released from any liability to the credit union or its creditors.


14809. Members who leave the field of membership may be permitted to retain their membership in the credit union unless otherwise provided in the credit union's bylaws.


14811. (a) A member who has no outstanding obligations with the credit union and whose share account is below the amount established by the bylaws may be transferred to inactive member status. (b) An inactive member has no voting rights, has no right to notice of meetings of members, shall not be considered a member for purposes of determination of a quorum or a required vote and need not be sent the annual report or financial statements except upon request. (c) When one or more of the conditions in subdivision (a) cease to be applicable, an inactive member may be transferred back to regular member status.

14812. Unless otherwise provided in the bylaws, a quorum for a meeting of members shall be 10 percent of the members or 50 members, whichever is less.

14820. (a) Any member of a credit union may authorize another person or persons to act by proxy with respect to such membership, subject to subdivision (e). Any proxy purported to be executed in accordance with Section 14821 shall be presumptively valid. (b) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy, except that the maximum term of any proxy shall be three years from the date of execution. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed. (c) A proxy is not revoked by the death or incapacity of the maker or the termination of a membership as a result thereof unless, before the vote is counted, written notice of such death or incapacity is received by the corporation. (d) Notwithstanding subdivisions (b) and (c), whenever any credit union which is subject to the provisions of this division is insolvent or its capital is impaired, or, when the commissioner determines that a credit union is in danger of insolvency or an impairment of its capital and the board of the directors of the credit union presents a reorganization plan to the commissioner and such plan is approved, the board of directors may, subject to the provisions of this division, solicit irrevocable proxies for a proxyholder who qualifies pursuant to this section. Unless otherwise provided in the articles or bylaws, the proxy of a member which states that it is irrevocable is irrevocable for the period specified therein when it is held by any of the following or a nominee of any of the following: (1) A person who has purchased or who has agreed to purchase the membership. (2) A creditor or creditors of the credit union who extended or continued credit or contracted to perform services to the corporation in consideration of the proxy if the proxy states that it was given in consideration of the extension or continuation of credit or services and the name of the person extending or continuing the credit or performing the service. (3) A person who has contracted to perform services as an employee of the credit union, if the proxy is required by the contract of employment and if the proxy states that it was given in consideration of such contract of employment, the name of the employee, and the period of employment for which the employee has contracted. Notwithstanding the period of irrevocability specified, the proxy becomes revocable when the agreement to purchase is terminated, the debt of the credit union or the member is paid, or the period of employment provided for in the contract of employment or the contract to perform services has terminated. In addition to paragraphs (1) through (3), a proxy of a member may be made irrevocable notwithstanding subdivision (c) if it is given to secure the performance of a duty or to protect a title, either legal or equitable, until the happening of events which by its terms, discharge the obligations secured by it. (e) Subdivision (a) notwithstanding: (1) No amendment of the articles or bylaws repealing, restricting, creating or expanding proxy rights may be adopted without approval by the members. (2) No amendment of the articles or bylaws restricting or limiting the use of proxies may affect the validity of a previously issued irrevocable proxy during the term of its irrevocability, so long as it complied with applicable provisions, if any, of the articles or bylaws at the time of issuance, and is otherwise valid under this section. (f) Anything to the contrary notwithstanding, any revocable proxy covering matters requiring a vote of the members pursuant to Section 7222, Section 7224, Section 7233, Section 7812, paragraph (2) of subdivision (a) of Section 7911, Section 8012, subdivision (a) of Section 8015, Section 8610, or subdivision (a) of Section 8719 of the Nonprofit Mutual Benefit Corporation Law, Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code, or subdivision (e) is not valid as to such matters unless it sets forth the general nature of the matter to be voted on.


14821. (a) Except for solicited proxies which on their face provide for a period of validity of three years from the date of execution of the proxy, any form of proxy or written ballot distributed to 10 or more members of a credit union shall afford an opportunity on the proxy or form of written ballot to specify at the time the written ballot or proxy is distributed, a choice between approval and disapproval of each matter or group of related matters intended to be acted upon at the meeting for which the proxy is solicited or by such written ballot, and shall provide, subject to reasonable specified conditions, that where the person solicited specifies a choice with respect to any such matter the vote shall be cast in accordance therewith. (b) In any election of directors, any form of proxy or written ballot in which the directors to be voted upon are named therein as candidates and which is marked by a member "withhold" or otherwise marked in a manner indicating that the authority to vote for the election of directors is withheld, shall not be voted either for or against the election of a director. (c) In the case of any solicited proxy which on its face provides for a period of validity of three years from the date of execution of the proxy, the credit union shall provide to the person executing the proxy a written notice at the time of solicitation and in each succeeding year of validity thereof, which shall advise the member of the nature of each matter or group of related matters on which the proxy may be voted. Notice pursuant to this subdivision may be sent with notice to the members of the date, time, and place of the annual meeting. (d) Failure to comply with this section shall not invalidate any corporate action taken, but may be the basis for challenging any proxy at a meeting or written ballot and the superior court may compel compliance therewith at the suit of any member.


14822. Notwithstanding any other provision to the contrary, no member shall vote by proxy on any matter submitted by mail to all members of a credit union in a written ballot pursuant to Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code, and the powers of any previously issued or outstanding valid, revocable proxy are suspended when any matter is submitted by mail to all members in a written ballot pursuant to Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code.


Chapter 6. Share Accounts And Certificates For Funds

Article 1. General

Ca Codes (fin:14850-14868) Financial Code Section 14850-14868



14850. The Corporate Securities Law relating to the necessity of qualification of the sale of securities does not apply to the sale and issue of membership shares, certificates for funds, and other securities, by credit unions organized under this division or lawfully doing business in this state. No credit union lawfully doing business in this state shall be required to file a certificate for determination of preference with the office of the Secretary of State in connection with any share offering so long as it complies with all applicable provisions of this division and the rules of the commissioner.

14851. (a) Every credit union may issue shares (1) to any member qualified pursuant to the credit union's bylaws; (2) to an officer, employee, or agent of nonmember units of federal, Indian tribal, state, or local governments, and political subdivisions thereof when acting in his or her official capacity; and (3) in coownership to a member and any person designated by the member. Coownership, as used herein, includes, but is not limited to, joint tenancy, tenancy in common, or community property forms of ownership. No membership privilege, including voting and obtaining a loan, may be made available to any nonmember as a result of ownership of shares solely as coowner of shares with a member, and any certificate or other evidence of shares which may be issued, shall contain the words "No transfer of voting rights or other membership privilege is permitted by virtue of transfer of shares." Shares may be transferred to a public agency lawfully entitled to receive the shares when designated by a member as assignee of an account pledged as a surety deposit to the public agency by the member. (b) A credit union that has a low-income designation pursuant to Section 701.34 of the regulations of the National Credit Union Administration (12 C.F.R. Sec. 701.34) may issue shares to nonmembers. Except with the written approval of the commissioner, the total number of shares issued by the credit union to nonmembers pursuant to this subdivision shall not exceed 20 percent of the unimpaired capital and surplus of the credit union.


14852. Every credit union may charge a reasonable fee for the transfer of its shares.


14853. A credit union may issue shares or certificates for funds to a minor of any age or maintain any other account authorized for credit union members for a minor, and receive payments thereon by or for the minor. The minor is entitled to withdraw, transfer, or pledge any shares or certificates or other moneys owned by him or her and to receive from the credit union all dividends, interest, or other money due thereon in the same manner and subject to the same conditions as an adult. The receipt or acquittance of a minor constitutes a valid release and discharge of the credit union for the payment of dividends, interest, or other money due to the minor.


14854. Subject to Section 14860, a credit union share account that is a multiple-party account, as defined in Section 5132 of the Probate Code, is governed by Part 2 (commencing with Section 5100) of Division 5 of the Probate Code.

14855. Every credit union may receive money and accumulate funds to be loaned and execute certificates for funds for the money received. The certificates for funds shall specify the date, amount, rate of interest, and when the principal and interest are payable.


14856. Every credit union may impress a lien upon the shares and dividends of any member to the extent of any obligations entered into with that member and for any dues or charges payable by that member.


14857. Every credit union may cancel the shares of any member who withdraws or is expelled, and apply the value of the shares to the liquidation of the member's indebtedness to the credit union.


14858. Every credit union shall apply for and obtain insurance as provided for by Title II of the Federal Credit Union Act (12 U.S.C. Sec. 1781 and following), or other insurance or guaranty of shares that is not unsatisfactory to the commissioner. In seeking and retaining this insurance or guaranty, a credit union may do all things and assume and discharge all obligations required of it when not in conflict with the laws of this state.


14860. Except as provided in this section and Part 2 (commencing with Section 5100) of Division 5 of the Probate Code, no credit union shall exercise trust powers except upon qualifying as a trust company pursuant to Division 1 (commencing with Section 99). (a) Notwithstanding any other provisions of law relating to trusts and trust authority, subject to the regulations of the commissioner, a credit union may act as a trustee or custodian, and may receive reasonable compensation for so acting, under any written trust instrument or custodial agreement created or organized in the United States which is a part of a pension, education, or medical plan for its members or groups or organizations of its members, which qualifies or has qualified for specific tax treatment under Section 220, 223, 401, 408, 408A, 457, or 530 of the Internal Revenue Code, Title 26 of the United States Code, or any deferred compensation plan for the benefit of the credit union's employees, provided the funds received pursuant to these plans are invested as provided in Section 16040 of the Probate Code. All funds held by a credit union as trustee or in a custodial capacity shall be maintained in accordance with applicable laws and rules and regulations as may be promulgated by the Secretary of Labor, the Secretary of the Treasury, or any other authority exercising jurisdiction over the trust or custodial accounts. The credit union shall maintain individual records for each participant or beneficiary that show in detail all transactions relating to the funds of each participant or beneficiary. The trust instrument or agreement shall provide for the appointment of a successor trustee or custodian by a person, committee, corporation, or organization other than the credit union or any person acting in his or her capacity as a director, employee, or agent of the credit union, upon notice from the credit union or the commissioner that the credit union is unwilling or unable to continue to act as trustee or custodian. (b) Shares may be issued in a revocable or irrevocable trust subject to the following: (1) When shares are issued in a revocable trust, the settlor shall be a member of the credit union issuing the shares in his or her own right. If the trust has joint settlers, who are husband and wife, then only one settlor need be a member of the credit union. (2) When shares are issued in an irrevocable trust, the settlor or the beneficiary shall be a member of this credit union in his or her own right. For purposes of this section, shares issued pursuant to a pension plan authorized by this section shall be treated as an irrevocable trust unless otherwise indicated in rules and regulations issued by the commissioner. (3) This subdivision does not apply to trust accounts established prior to the effective date of this subdivision.


14861. No credit union shall issue shares to anyone not qualified for membership under its bylaws, except shares issued in coownership as provided in Section 14851.


14862. The board of directors shall establish from time to time a written savings capital structure policy which shall set out the various terms and conditions upon which credit union shares may be issued, paid for, transferred, and withdrawn. The savings capital structure policy may provide for different rates, maturities and minimum share account balances, subject to the rules of the commissioner for the credit union's savings capital and the terms and conditions on which dividends may be calculated and paid to member's purchasing credit union shares. The savings capital structure policy shall have as its goal avoiding instability in the credit union's savings capital and thereby providing that credit union members have an adequate source of funds for loans and receive a fair return on member savings capital.


14863. (a) A credit union shall not impose any charge on a member or depositor holding a periodic certificate for funds for the failure of such member or depositor to invest, or for the late investment of, any agreed periodic installment investment in such a periodic certificate for funds. A credit union shall pay interest on periodic certificates for funds at the same rate of interest per annum as is paid on certificates for funds as to which a member or depositor has not agreed to make periodic installment investments. (b) As used in this section "periodic certificate for funds" means a certificate for funds under which a member or depositor undertakes to make periodic investments of a specified amount into one account, except, however, a periodic certificate for funds shall not mean an impound account established for the purpose of payment of taxes or other expenses and obligations in connection with a loan secured by real property.

14865. Shares issued by a credit union to a member shall be evidenced in monetary amounts rather than by numbers of shares. The shares owned by a member also may be referred to as a "share account" . There shall be no limit to the amount of shares which a credit union may issue.


14866. The evidence of credit union shares issued shall be a certificate, a passbook, a statement or other evidence approved by regulation of the commissioner. The evidence of any credit union shares shall not constitute an "investment security" under Division 8 (commencing with Section 8101) of the Commercial Code.


14867. (a) Shares, including special shares, and certificates for funds may be withdrawn for payment to the owner or for any third party, in the manner and in accordance with written procedures which shall be established by the board of directors. (b) The board of directors may waive any requirement of notice of intent to withdraw or provide that there is no requirement of notice of intent to withdraw or to transfer funds, except when requirement of the notice is imposed by applicable law. (c) Unless otherwise provided by written agreement of the parties, the rights, responsibilities, and liabilities of a person regarding an item withdrawn from a credit union, or transferred to a credit union or otherwise handled by a credit union are defined in and determined by the provisions of Division 3 (commencing with Section 3101) and Division 4 (commencing with Section 4101) of the Commercial Code, as if the credit union were a bank.


14868. (a) As used in this section: (1) "Beneficiary" has the meaning given that term in Section 5126 of the Probate Code. (2) "Totten trust account" has the meaning given that term in Section 80 of the Probate Code. (b) In the case of a Totten trust account, the deposit agreement shall indicate the current address of each beneficiary.


Article 2. Dividends

Ca Codes (fin:14900-14905) Financial Code Section 14900-14905



14900. (a) The board of directors of any credit union may declare dividends at such intervals, in accordance with such formula, and for such periods as provided in the written savings capital structure policy. (b) Dividends need not be paid on a share account having less than the minimum balance prescribed in the bylaws.


14901. The rates of dividends and terms of payment may be established in advance by action of the board of directors. However, nothing in this section shall be construed to permit any credit union to pay a dividend except as provided in Section 14902.


14902. The directors of any credit union may, for the dividend period, declare dividends from its undivided profits as provided by law, but no credit union shall credit or pay any dividends or pay loan interest refunds to its members until it has transferred to its regular reserve such part of its gross income as is required by Section 14700. However, nothing in this division shall be construed to permit the credit union to credit or pay a dividend from its undivided profits account when the credit or payment would result in a deficit in the undivided profits account.


14905. Amounts paid or credited by a credit union to its members or depositors on or before the 30th day after the close of its income year shall be deemed for all purposes as paid or credited by the credit union upon the last day of the income year. This section is applicable only to credit unions as entities and does not apply to the members or depositors thereof.


Chapter 7. Loans

Article 1. General

Ca Codes (fin:14950-14961) Financial Code Section 14950-14961



14950. (a) Every credit union may enter into obligations with its members upon the approval of the credit committee or, in the alternative, the credit manager, subject to the terms and conditions established by the board of directors pursuant to Section 15100. (b) (1) The board of directors of a credit union shall adopt a policy governing the acceptance by the credit union of notes receivable from nonmembers as consideration for the sale of assets owned by the credit union through bona fide transactions. (2) No credit union may accept notes receivable from nonmembers as consideration for the sale of assets owned by the credit union except in accordance with a policy adopted by the board of directors pursuant to paragraph (1). (3) Transactions subject to this subdivision shall not be deemed to be loans to nonmembers for purposes of Section 14750. (c) Notwithstanding subdivision (a), a credit union may permit a nonmember to participate in an obligation or extension of credit to a member as a joint applicant or co-obligor. An obligation or extension of credit made pursuant to this subdivision shall not be deemed a violation of subdivision (b) of Section 14800. Except as otherwise permitted by statute or regulation, the credit union shall not extend any other benefit or service of the credit union to the nonmember solely as a result of participation as a joint applicant or co-obligor unless the nonmember is thereafter admitted to membership.


14951. Any application for any loan or extension or guarantee of credit, except an application for an extension of a loan, shall be in writing, shall state the purpose for which the loan or extension or guarantee of credit is desired, and, if applicable, shall describe the property that is proposed to secure the loan or extension or guarantee of credit.


14952. (a) The board of directors of a credit union shall establish the maximum amount that the credit union may lend to a member under 18 years of age in any case other than a case (1) where the member is an emancipated minor or (2) where the loan is secured in the manner provided for in Section 14955. (b) No credit union shall make a loan to a member under 18 years of age that will result in the member being obligated to the credit union in excess of the maximum amount established by the board of directors pursuant to subdivision (a) unless the member is an emancipated minor or the loan is secured in the manner provided for in Section 14955.


14953. (a) Any extension of credit in excess of the unsecured loan limit set by the board of directors pursuant to Section 15100 shall be secured either (1) by real or personal property to the extent that the extension of credit exceeds such limit, or (2) in the manner provided in Section 14955. (b) If the security offered is an endorsed note as provided in subdivision (a) of Section 14955, a signed and dated financial statement shall be taken from each person who endorses the note and the sufficiency of the financial responsibility of every such endorser shall be verified by a majority of the credit committee. Obligations secured by the signatures of a borrower and endorser or endorsers shall not exceed the amount that may be extended to the borrower without security pursuant to Section 15100, plus an equivalent amount for each endorser; plus the amount of shares or certificates for funds pledged to secure the obligation.


14954. For the purposes of this chapter, a person who is not an applicant for an extension of credit or the creation of an obligation with the credit union but guarantees performance of the underlying obligation is a surety. A surety may act as security pursuant to subdivision (a) of Section 14955.


14955. "Security" includes, but is not limited to, the following: (a) A note endorsed by any member of the credit union or by any other person. (b) Any obligation wherein the payment of interest and principal is guaranteed by any municipal government, state government, the government of the United States, or by any instrumentality of the United States. (c) The amounts which a member has invested in the credit union, either in the form of shares or in funds received. If the amount invested by a member is equal to the loan made to that member, he shall not be required to give further security.


14957. Whenever the directors, the credit committee, or if applicable, the credit manager, deem any loan unsafe, they may require additional security to be given by the borrower, and if such security is not furnished as required, they may declare the loan due and take action to collect the same.


14958. A credit union may participate in guaranteed loan programs of the federal or state governments, subject to the limitations on loans set forth in this division.


14959. (a) A credit union may participate in loans made to its members jointly with other credit unions, corporations or financial organizations. (b) A credit union may participate in a loan originated by another credit union which is made to a member of the originating credit union even though the member is not also a member of the credit union participating in the loan. A loan participation that is authorized by this subdivision shall not be deemed to be an obligation or a participation in an obligation with a nonmember within the meaning of Section 14750.


14960. (a) Any credit union that makes a refund anticipation loan to a covered borrower, as defined in Section 232 of Title 32 of the Code of Federal Regulations, as published on August 31, 2007, in Volume 72 of the Federal Register, shall comply with the provisions of Section 670 of Public Law 109-364 and Section 232 of Title 32 of the Code of Federal Regulations, as published on August 31, 2007, in Volume 72 of the Federal Register pertaining to refund anticipation loans. (b) With respect to any refund anticipation loan covered by Section 670 of Public Law 109-364 and Section 232 of Title 32 of the Code of Federal Regulations, as published on August 31, 2007, in Volume 72 of the Federal Register, a person that does not market or extend those loans to covered borrowers shall not be in violation of Section 394 of the Military and Veterans Code.


14961. Any licensee that violates any provision of any of the following federal acts or regulations violates this division: (a) The federal Real Estate Settlement Procedures Act, as amended (12 U.S.C. Sec. 2601 et seq.). (b) The federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.). (c) The federal Home Ownership Equity Protection Act (15 U.S.C. Sec. 1639). (d) Any regulation promulgated under any of the federal acts in subdivision (a), (b), or (c).


Article 2. Maximum Charges And Fees

Ca Codes (fin:15001) Financial Code Section 15001



15001. Every credit union may assess charges as approved by the board of directors for failure to meet punctually obligations to the credit union. Any late charge shall be made only once for each delinquent payment and shall be subject to Section 2954.5 of the Civil Code, Division 1.1 (commencing with Section 4000) of this code, and any other applicable law.


Article 3. Loans To Directors, Officers And Committee Members 15050-15051

Ca Codes (fin:15050-15051) Financial Code Section 15050-15051



15050. (a) For purposes of this section, "official" means a director, officer, or member of the supervisory committee or the credit committee of a credit union. (b) No credit union shall enter into any obligation with any official, directly or indirectly, unless the obligation complies with all lawful requirements of this division with respect to obligations permitted for other members of the credit union and is not on terms more favorable than those extended to other members of the credit union, and the obligation is entered into in accordance with a written policy adopted by the directors establishing that all officials shall have an equal opportunity to enter into obligations with the credit union. (c) No credit union shall enter into any obligation with any official, directly or indirectly, not fully secured by shares or certificates for funds unless all of the following requirements are satisfied: (1) Upon the making of the obligation, the aggregate amount of obligations outstanding, except obligations fully secured by shares, to all officials and alternate members of the credit committee will not exceed 10 percent of the aggregate dollar amount of all savings capital of the credit union, except that in credit unions whose aggregate savings capital is five million dollars ($5,000,000) or more but less than ten million dollars ($10,000,000), the aggregate amount of obligations outstanding, except obligations fully secured by shares, to all officials and alternate members of the credit committee shall not exceed 15 percent of the aggregate dollar amount of all savings capital of the credit union, and in credit unions whose aggregate savings capital is less than five million dollars ($5,000,000), the aggregate amount of obligations outstanding, except obligations fully secured by shares, to all officials and alternate members of the credit committee shall not exceed 20 percent of the aggregate dollar amount of all savings capital of the credit union. (2) The obligation, except any portion of an obligation fully secured by shares, does not exceed 1 percent of the aggregate dollar amount of all savings capital of the credit union, or the maximum obligation to the credit union prescribed by subdivisions (b) and (c) of Section 15100, whichever is less, except that in credit unions whose aggregate savings capital is five million dollars ($5,000,000) or more but less than ten million dollars ($10,000,000), the obligation, except any portion of an obligation fully secured by shares, shall not exceed 3 percent of the aggregate dollar amount of all savings capital of the credit union, or the maximum obligation to the credit union prescribed by subdivisions (b) and (c) of Section 15100, whichever is less, and in credit unions whose aggregate savings capital is less than five million dollars ($5,000,000), the obligation, except any portion of an obligation fully secured by shares, shall not exceed 5 percent of the aggregate dollar amount of all savings capital of the credit union, or the maximum obligation to the credit union prescribed by subdivisions (b) and (c) of Section 15100, whichever is less. (3) (A) The obligation is approved by the credit committee, or in the alternative the credit manager, and by the board of directors, except that the credit manager shall not take part in any credit decision directly or indirectly for his or her benefit. The board of directors may select a loan officer to prepare a report and recommendation as to any extension of credit or other obligation requested by the credit manager. (B) Subparagraph (A) does not apply to the creation of an obligation on which an official is a direct obligor or an endorser, cosigner, or guarantor, if the aggregate of all of the following does not exceed fifty thousand dollars ($50,000) plus the amount of shares, if any, that are pledged or will be pledged as collateral by the official: (i) The amount of the proposed obligation. (ii) The outstanding balances of obligations, including the used portion of any approved line of credit, extended to, or endorsed, cosigned, or guaranteed by, the official. (iii) The total unused portion of approved lines of credit extended to, or endorsed, cosigned, or guaranteed by, the official. (4) The credit union member entering into the obligation takes no part in the consideration of his or her application and does not attend any committee or board meeting while his or her application is under consideration. (5) The names of members of the credit committee, or in the alternative, the credit manager, and board of directors who voted to authorize or ratify the obligation shall be entered in their respective minutes. (d) No credit union shall permit an official or the credit manager to become surety for any obligation created by the credit union for anyone other than a member of their immediate family. (e) No credit union shall enter into any obligation with any credit manager or any officer employed by the credit union, directly or indirectly, unless the obligation is in compliance with all requirements of this division with respect to obligations permitted for other members, and not on terms more favorable than those extended to other employees, and approved by the board of directors.


15051. The board of directors shall declare the office of any director, officer, committee member, or the credit manager vacant if the person fails to reduce any obligation to the credit union for which he or she is liable in a timely manner according to the terms of the obligation.


Article 4. Limitations

Ca Codes (fin:15100-15103) Financial Code Section 15100-15103



15100. (a) The board of directors shall establish written policies which shall set forth the policies of the credit union with respect to any obligation that is offered to the members of the credit union. The written policies shall set forth the maximum amounts and terms for any obligation offered to the members, including, but not limited to, the following information: (1) For loans, the written policies shall set out the terms for unsecured loans, the maximum amount and terms for secured loans, the schedule of interest rates established pursuant to Section 15000 for each type or class of unsecured and secured loan offered to members, the maximum maturity for any loan, or, in the case of an open-end loan, the rate of repayment for any type or class of open-end loan, the limitations, if any, which shall be placed on the authority of any loan officer appointed pursuant to Sections 14602 and 14603, and, subject to the provisions of subdivisions (b) and (c), the individual limits on obligations that are applicable to all members of the credit union. Any policy developed pursuant to this section by the board of directors shall, insofar as possible, and, subject to individual creditworthiness, ensure equal access to funds available for obligations with credit union members. (2) For obligations other than those set out in paragraph (1), the board of directors shall set out the interest rates and essential terms of the obligations offered to the members and any other information as may be required pursuant to regulations that may be adopted by the commissioner. (b) Notwithstanding subdivision (a), no credit union policy shall permit a credit union to enter into obligations with an individual credit union member whereby the total obligations of that member, exclusive of amounts secured by shares or certificates for funds, exceed 10 percent of the aggregate dollar amount of the credit union' s savings capital. (c) Notwithstanding subdivision (b), no credit union policy shall permit a credit union to enter into obligations with any one family whereby the total obligations of the family would be greater than the amount permitted by subdivision (b). For purposes of this article, "family" means the marital couple or any head of household together with those dependents residing with the marital couple or the head of household and those dependents attending school away from the principal residence of the marital couple or head of household. (d) Notwithstanding subdivisions (a), (b) and (c), any obligation with a member which is not a natural person shall not result in liability to the credit union in excess of that member's investment in the credit union unless an exception is authorized in the credit union's bylaws and approved by the commissioner. Any lending activity permitted pursuant to this subdivision may be terminated by an order issued by the commissioner pursuant to Sections 14200 and 14204.


15101. Notwithstanding the provisions of Section 15100, if a loan is made for educational purposes and such loan would cause the aggregate of loans to an individual or to any one family to exceed the limitations imposed by subdivision (b) or (c) of Section 15100, such educational loan shall not be included in computing the aggregate of loans pursuant to Section 15100, provided (1) that such educational loan is secured in accordance with subdivision (b) or (c) of Section 14955, and (2) that the aggregate amount of such educational loan exempted by this subdivision from subdivision (c) of Section 15100 shall not exceed ten thousand dollars ($10,000).


15102. (a) Notwithstanding Section 726 of the Code of Civil Procedure or any other provision of law to the contrary, a credit union, an affiliate of a credit union, a credit union service organization, or any successor in interest thereto, that originates, acquires, or purchases, in whole or in part, any loan secured directly or collaterally, in whole or in part, by a mortgage or deed of trust on real property, or any interest therein, may bring an action for recovery of damages, including exemplary damages not to exceed 50 percent of the actual damages, against a borrower where the action is based on fraud under Section 1572 of the Civil Code and the fraudulent conduct by the borrower induced the original lender to make that loan. (b) The provisions of this section shall not apply to loans secured by single-family, owner-occupied residential real property, when the property is actually occupied by the borrower as represented to the lender in order to obtain the loan and the loan is for an amount of one hundred fifty thousand dollars ($150,000) or less, as adjusted annually, commencing on January 1, 1987, to the Consumer Price Index as published by the United States Department of Labor. (c) Any action maintained under this section for damages shall not constitute a money judgment for deficiency or a deficiency judgment within the meaning of Section 580a, 580b, or 580d of the Code of Civil Procedure.

15103. A credit union, or the agent of a credit union, that has received a notice pursuant to Section 7507.6 of the Business and Professions Code, shall not make a subsequent assignment to skip trace, locate, or repossess a vehicle without simultaneously, and in the same manner by which the assignment is given, advising the assignee of the assignment of the information contained in the notice. As used in this section, "assignment" has the same meaning set forth in Section 7500.1 of the Business and Professions Code.


Chapter 9. Merger, Dissolution And Conversion

Article 1. Merger

Ca Codes (fin:15200-15204) Financial Code Section 15200-15204



15200. Any credit union may, with the approval of the commissioner, merge with another credit union or with a central credit union.


15201. (a) The merger shall be made pursuant to any plan agreed upon by the majority of the board of directors of each credit union joining in the merger, and approved by the affirmative vote of at least a majority of the members of the disappearing credit union, in person or by proxy, at a meeting of the members called for that purpose or by written consent of a majority of the members of the disappearing credit union. Notice of the meeting shall be given to the members, either personally or by first-class mail, not less than 30 nor more than 90 days prior to the date of the meeting. (b) The commissioner may approve a merger according to the plan agreed upon by the majority of the board of directors of each credit union, as set forth in subdivision (a), if the plan of merger is approved by less than a majority of the membership as provided in subdivision (a) if the commissioner finds, upon the written and verified application filed by the board of directors, that (1) notice of the meeting called to consider the merger or the ballot for written vote on the merger was mailed to each member entitled to vote upon the question, (2) the notice or ballot disclosed the purpose of the meeting or the written vote, (3) the notice or ballot informed the membership that approval of the merger might be sought pursuant to this section, and (4) a majority of the votes cast upon the question were in favor of the merger. (c) Notwithstanding subdivisions (a) and (b), the commissioner may approve a merger without a vote of the membership of the disappearing credit union if a majority of the members of the board of directors of the surviving credit union approves the merger, the disappearing credit union is in danger of insolvency and the merger would reduce the risk or avoid a threatened loss to the National Credit Union Share Insurance Fund or other form of share guaranty or insurance that is acceptable to the commissioner. For purposes of this chapter, a credit union is insolvent when, from the most recent available financial statements, it can be shown that the total amount of its shares exceeds the present cash value of its assets after providing for liabilities unless the commissioner finds all of the following: (1) The facts that caused the deficient share-asset ratio no longer exist. (2) Further decline in the share-asset ratio is not probable. (3) The return of the share-asset ratio to its normal limits within a reasonable time for the credit union concerned is probable. (4) The probability of a further potential loss is negligible to the National Credit Union Share Insurance Fund or other form of share guaranty or insurance that is acceptable to the commissioner.


15202. (a) After the requirement of approval as provided in Section 15201 is satisfied, each credit union shall execute a certificate of merger as an officers' certificate pursuant to Section 5062 of the Corporations Code that shall set forth: (1) That the plan of merger has been approved by the board of directors. (2) That the plan of merger has been duly approved by any required vote of the members pursuant to Section 15201. (3) The total number of members of the credit union. (b) A copy of the plan of merger and of the written approval thereof by the commissioner shall be annexed to the certificate of merger. (c) Nothing in this section requires a federal credit union to execute or file the certificate of merger called for in subdivision (a).

15203. Each certificate of merger called for in Section 15202 shall be filed in the office of the Secretary of State. After the filing in the office of the Secretary of State, a copy of each certificate of merger, certified by the Secretary of State, shall be filed with the commissioner, and at that time the merger shall become effective for all purposes.


15204. (a) Upon any merger effectuated as provided in this article, all property, property rights, and interests of the merged credit union shall vest in the surviving credit union, without deed, endorsement or other instruments of transfer, and all debts, obligations and liabilities of the merged credit union are assumed by the surviving credit union under whose charter the merger has been effected. Thereafter the charter of the merged credit union is void, and the existence of the merged credit union as a legal entity separate from the surviving credit union terminates. (b) Whenever a credit union having any real property in this state merges with another credit union and vests that real property in the surviving credit union, the filing for record in the office of the county recorder of any county in this state in which any of the real property of the disappearing credit union is located of the certificates of merger and requisite attachments, as required by Section 15202, shall evidence record ownership in the surviving credit union of all interest of the disappearing credit union in and to the real property located in that county.


Article 2. Dissolution

Ca Codes (fin:15250-15260) Financial Code Section 15250-15260



15250. (a) Whenever the board of directors of a credit union recommends by a vote of a majority of all its members the dissolution of the credit union, the members of the credit union, at any meeting specially called to consider the subject, may elect to dissolve the credit union, by the vote or written consent of a majority of all members of the credit union. (b) The commissioner may approve the dissolution of a credit union which is recommended by the vote of a majority of the board members of the credit union, even if the dissolution is approved by less than a majority of all members of the credit union, if the commissioner finds, upon the written and verified application filed by the board of directors, that (1) notice of the meeting called to consider the dissolution or the written ballot for written vote on the dissolution was mailed to each member entitled to vote upon the question, (2) the notice or the written ballot disclosed the purpose of the meeting or the written vote and informed the membership that approval of the dissolution might be sought pursuant to this section, and (3) a majority of the votes cast upon the question were in favor of the dissolution. (c) Whenever the members of the board of directors vote to recommend the dissolution of any credit union, the credit union shall not make any loans, withdrawal of shares, or withdrawal of certificates for funds until the members approve or disapprove the recommendation of the board of directors.


15251. If the dissolution of the credit union is approved pursuant to subdivision (a) or (b) of Section 15250, the board of directors of the credit union shall elect a committee of three members or may by resolution appoint a liquidating agent to liquidate the assets of the credit union. If the commissioner is appointed liquidating agent, the commissioner may act as liquidating agent or appoint the National Credit Union Administration or other person to act as liquidating agent. Whenever the commissioner is appointed liquidating agent, the credit union shall surrender its certificate to act as a credit union.

15252. Promptly thereafter the president or vice president and secretary or assistant secretary, or a majority of the committee or the liquidating agent in charge of liquidation, shall sign and verify a certificate stating that the credit union has elected to wind up and dissolve and showing by what vote or consent such election was made. The certificate shall be filed in the office of the Secretary of State, and copies of the certificate certified by the Secretary of State shall be filed with the commissioner.


15253. After a vote to dissolve a credit union no business may be carried on by the credit union except in the proper course of liquidation.

15254. The committee or the liquidating agent in charge of liquidation may sue in the name and on behalf of the credit union, and may sell or otherwise dispose of the assets of the credit union, in whole or in part, at public or private sale.


15255. After determining that all known debts and liabilities of the credit union have been paid or adequately provided for, the committee or the liquidating agent in charge of liquidation shall distribute all the remaining assets of the credit union among the members or shareholders. Each share is entitled to its proportionate amount of the assets according to the amount paid on that share.


15257. When a credit union has completely wound up, all of its known debts and liabilities actually paid or adequately provided for or paid as far as its assets permit, and its known assets distributed, a majority of the committee or the liquidating agent in charge of liquidation shall sign and acknowledge a certificate stating that the credit union has been completely wound up, its known assets distributed, any tax or penalty due under the Bank and Corporation Franchise Tax Law paid, and its other known debts and liabilities actually paid or adequately provided for or paid as far as its assets permit and that the credit union is dissolved.


15258. The certificate of dissolution shall be filed in the office of the Secretary of State and copies, certified by him, shall be filed in the office of the commissioner.


15259. At any time during the liquidation process, the committee or the liquidating agent in charge of liquidation may be relieved of their duties at the discretion of the commissioner and the commissioner shall thereafter act as the liquidating agent or appoint a liquidating agent to complete the dissolution of the credit union.


15260. Where the commissioner finds that on the date of filing with the Secretary of State of the certificate of election to wind up and dissolve, the credit union does not have sufficient assets to return to its shareholders their investment in full, the credit union shall not be liable for the costs of administration assessed under Article 4 (commencing with Section 14350) of Chapter 3.


Article 3. Conversion Into Federal Credit Unions

Ca Codes (fin:15300-15306) Financial Code Section 15300-15306



15300. A credit union may convert itself into a federal credit union by following the procedure contained in this article.


15301. Upon recommendation of the board of directors the members of any credit union may by an affirmative majority vote of such members resolve to convert such credit union into a federal credit union. For the purposes of this article, an "affirmative majority vote of such members" means that the vote by the members to convert the credit union into a federal credit union is approved or ratified by the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which a quorum is present (which affirmative votes also constitute a majority of the required quorum) or written ballot in conformity with Section 7513 of the Corporations Code or by the affirmative vote or written ballot as may be provided in the bylaws pursuant to subdivision (e) of Section 7151 of the Corporations Code.


15302. Within 10 days after the meeting or written vote at which the members determine to convert into a federal credit union, the credit union shall file with the commissioner a certificate verified by the board of directors of such credit union. The certificate shall contain a copy of the minutes of the meeting or a copy of the written ballot and the results of the written vote and a statement that the members have approved the determination to convert such credit union into a federal credit union. A copy of such certificate shall be filed with the Secretary of State.


15303. A certified copy of the certificate required by Section 15302 filed in the office of the Secretary of State is presumptive evidence of the holding of the meeting or written vote and the action taken thereat.

15304. After the meeting or the written vote of the members, the credit union shall take such action as is necessary to make it a federal credit union, and within 10 days after receipt of the federal charter, the credit union shall file with the commissioner and with the Secretary of State, a copy of the charter issued to such credit union by the National Credit Union Administration or a certificate showing the organization of such credit union as a federal credit union certified by or on behalf of the National Credit Union Administration. Upon the filing of such instrument with the Secretary of State the credit union ceases to be a state credit union and is a federal credit union.


15305. At the time the conversion into a federal credit union becomes effective, the credit union ceases to be supervised by this state and all of the property of the credit union, including all of its right, title, and interest in and to all property of every kind and character immediately, by operation of law and without any conveyance, or transfer and without any further act or deed, is vested in the credit union under its new name and style as a federal credit union and under its new jurisdiction.


15306. The converted federal credit union shall have, hold, and enjoy the property mentioned in Section 15305 in its own right as fully and to the same extent as the property was possessed, held, and enjoyed by it as a state credit union and the federal credit union shall continue responsible for all of the obligations of the state credit union to the same extent as though the conversion had not taken place. The federal credit union shall be merely a continuation of the state credit union under a new name and new jurisdiction and such revision of its corporate structure as is considered necessary for its proper operation under the new jurisdiction.


Article 4. Conversion Of Federal Credit Union

Ca Codes (fin:15350-15359) Financial Code Section 15350-15359



15350. Upon recommendation of its board of directors, any federal credit union may convert into a credit union under the laws of this state by complying with the requirements of the Federal Credit Union Act (12 U.S.C. Sec. 1771) and on obtaining a certificate pursuant to Chapter 2 (commencing with Section 14100) of this division.


15351. The officers and directors of the federal credit union shall be the officers and directors of the credit union after conversion takes effect, to hold office until their successors are elected and qualified.

15352. The commissioner may conduct a joint audit of the federal credit union with federal auditors. Upon completion of such audit, he shall issue a certificate to the National Credit Union Administration showing the results of such audit. The commissioner may also certify that the transfer of the assets and liabilities from the federal credit union to a credit union subject to the laws of this state has been effected in compliance with the applicable laws of this state. The costs of the audit mentioned in this section shall constitute a charge against the credit union.


15353. Copies of the minutes of the proceedings of the meeting of the members or the written ballot and the record of written vote of the members in which they voted to convert into a state credit union, verified by the board of directors of the credit union, shall be filed within 10 days after the meeting or written vote with the commissioner, and, in duplicate, with the National Credit Union Administration.


15354. The verified copies of the minutes of the meeting or the record of written vote, when filed as required by Section 15353, are presumptive evidence of the holding of, and the action taken at, the meeting or the written vote.

15355. After an affirmative vote as provided in Section 15350, the federal credit union shall take or cause to be taken such action in the manner prescribed and authorized by this division as shall make it a credit union of this state. The directors shall file the documents and take such proceedings as are required by this division in the case of the original incorporation of a credit union.


15356. The directors of a credit union converted from a federal credit union may insert in the articles of incorporation the following statement: "This credit union is incorporated by conversion from a federal credit union."

15357. Within 10 days after the filing of the articles of incorporation with the Secretary of State, there shall be filed, with the National Credit Union Administration, two copies of the articles of incorporation, certified by the Secretary of State.


15358. Upon the filing of the articles of incorporation with the Secretary of State and the issuance of a certificate by the commissioner authorizing the federal credit union to act as a credit union under the laws of this state, the credit union ceases to be a federal credit union and is a credit union under the laws of this state. All of the property of the credit union immediately, by operation of law and without any further act, is vested in the credit union under its new name and existence as a credit union under the laws of this state.

15359. The converted credit union shall have, hold, and enjoy the property mentioned in Section 15358 in its own right as fully and to the same extent as the property was possessed, held, and enjoyed by it as a federal credit union and the converted credit union continues responsible for all of the obligations of the federal credit union to the same extent as though conversion had not taken place. The converted credit union is merely a continuation of the federal credit union under a new name and new jurisdiction and such revision of its corporate structure as is considered necessary for its proper operation under the new jurisdiction.


Chapter 10. Central Credit Union

Article 1. Definition

Ca Codes (fin:15400) Financial Code Section 15400



15400. "Central credit union" means a credit union whose membership includes, but is not limited to, other credit unions, members of credit unions, credit union employees, employees of organizations serving credit unions, and the families of such members and any common bond set out in subdivision (a) of Section 14155.



Article 2. General

Ca Codes (fin:15450-15451) Financial Code Section 15450-15451



15450. Central credit unions may be organized and operated under this division. Each such credit union shall use the word "central" in its official name.

15451. (a) A central credit union may, with the approval of the commissioner and under such regulations as he shall prescribe, admit to membership groups of employees of a common employer, including the employer, whose place of employment is located within 25 miles of the principal office of the central credit union, or is located within the boundaries of a greater or lesser geographic area prescribed by the commissioner, upon application made by the employer and approval of the board of directors of the central credit union. (b) In the event the employee group qualifies under the provisions of Section 14154, these employees may organize a separate credit union. The central credit union may, upon a plan approved by the commissioner, transfer the member accounts of these employees to any credit union formed by them.


Chapter 11. Foreign (other State) Credit Unions

Article 1. General Provisions

Ca Codes (fin:16000-16013) Financial Code Section 16000-16013



16000. This chapter may be cited as the "Foreign (Other State) Credit Union Law."


16001. In this chapter: (a) "Branch business" means the business of issuing share accounts, certificates for funds, and share drafts, receiving deposits, paying checks, making loans and other obligations, and other activities that the commissioner may specify by order or regulation. (b) "California branch office," when used with respect to a foreign (other state) credit union, means an office in this state at which the foreign (other state) credit union engages in branch business. (c) (1) "California facility," when used with respect to a foreign (other state) credit union, means an office in this state at which the foreign (other state) credit union engages in business other than branch business. (2) In the case of an employer-supported foreign (other state) credit union, a "California facility" does not include a table, counter, or booth on the premises of the employer's place of business at which a volunteer of the foreign (other state) credit union provides information or services to members but does not engage in branch business. (d) "Foreign nation" means any nation other than the United States, including, without limitation, any subdivision, territory, trust territory, dependency, colony, or possession of any nation other than the United States. (e) "Foreign (other nation) credit union" means any credit union or similar institution that is organized under the laws of a foreign nation. (f) "Foreign (other state) credit union" means a credit union that is organized under the laws of any state of the United States other than this state. (g) "Home state," when used with respect to a foreign (other state) credit union, means the state of the United States under which the foreign (other state) credit union is organized. (h) "Home state regulator," when used with respect to a foreign (other state) credit union, means the state regulatory agency in the home state of the foreign (other state) credit union which has primary regulatory authority over the foreign (other state) credit union. (i) "State of the United States" means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands.

16002. Nothing in this chapter shall be deemed to authorize a foreign (other nation) credit union to transact business in this state.

16003. No foreign (other state) credit union may establish or maintain a California branch office or California facility unless it is qualified to transact intrastate business under Chapter 21 (commencing with Section 2100) of Division 1 of Title 1 of the Corporations Code, except as provided in Section 8910 of the Corporations Code.


16004. No foreign (other state) credit union may establish a California branch office or California facility unless its deposit or share accounts are insured by the National Credit Union Administration or other insurer that is not unsatisfactory to the commissioner.


16005. Each application filed with the commissioner under this chapter or under any regulation or order issued under this chapter shall be in the form, shall contain the information, shall be signed in the manner, and shall (if the commissioner requires by regulation or order) be verified in the manner that the commissioner may by regulation or order require.


16006. Fees shall be paid to and collected by the commissioner as follows: (a) The fee for an application by a foreign (other state) credit union that is not licensed to transact business in this state for approval to establish a branch office is one thousand dollars ($1,000). (b) The fee for an application by a foreign (other state) credit union that is licensed to transact business in this state for approval to establish a California branch office is five hundred dollars ($500). (c) The fee for issuing a license to establish and maintain a California branch office or California facility is twenty-five dollars ($25). (d) Each foreign (other state) credit union that on June 1 of any year maintains one or more California branch offices or California facilities shall pay, on or before the following July 1, a fee of two hundred fifty dollars ($250) per California branch office and one hundred dollars ($100) per California facility. However, the maximum fee shall be not more than one thousand dollars ($1,000). (e) If the commissioner makes an examination in connection with a pending application, the foreign (other state) credit union making the application shall pay a fee for the examination at the rate of seventy-five dollars ($75) per hour for each examiner engaged in the examination plus, if in the opinion of the commissioner it is necessary for any examiner engaged in the examination to travel outside this state, the travel expenses of the examiner. (f) If the commissioner makes an examination of a foreign (other state) credit union that maintains a California branch office or California facility, the foreign (other state) credit union shall pay a fee for the examination at the rate of seventy-five dollars ($75) per hour for each examiner engaged in the examination plus, if in the opinion of the commissioner it is necessary for any examiner engaged in the examination to travel outside this state, the travel expenses of the examiner.

16007. (a) Not less than 30 days before a foreign (other state) credit union establishes a California branch office or a California facility, the foreign (other state) credit union shall file with the commissioner, in the form that the commissioner may by regulation or order require, an appointment irrevocably appointing the commissioner and the commissioner's successor from time to time in office to be the foreign (other state) credit union's attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the foreign (other state) credit union or any of its successors that arises out of the activities of the California branch office or California facility after the appointment has been filed, with the same force and validity as if served personally on the foreign (other state) credit union or its successors, as the case may be. (b) Any foreign (other state) credit union that maintains a California branch office or California facility that has not filed with the commissioner an appointment pursuant to subdivision (a) is deemed by the maintenance of the branch office or facility to have appointed the commissioner as its attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the foreign (other state) credit union or any of its successors that arises out of the activities of the California branch office or California facility, with the same force and validity as if served personally on the credit union or its successor, as the case may be. (c) Service may be made on a foreign (other state) credit union that has appointed or is deemed to have appointed the commissioner as its attorney for service of process by leaving a copy of the process at any office of the commissioner. However, the service is not effective unless (1) the party making the service, who may be the commissioner, forthwith sends notice of the service and a copy of the process by registered or certified mail to the foreign (other state) credit union served at the last address on file with the commissioner for any of the foreign (other state) credit union's offices in this state or at its head office, and (2) an affidavit of compliance with this subdivision by the party making the service is filed in the case on or before the return date if any, or within any further time that the court, in the case of a judicial proceeding, or the administrative agency, in the case of an administrative proceeding, allows.


16008. In administering the provisions of this chapter, the commissioner may share information with federal and home state regulators of foreign (other state) credit unions.


16009. A foreign (other state) credit union that is licensed to establish an office shall post at a conspicuous place at the office a notice to the public which states the name of the foreign (other state) credit union, the type of office it is, and the state of the United States under whose laws it was organized or chartered.


16010. No license shall be transferable or assignable.


16011. Whenever a foreign (other state) credit union is licensed to establish more than one office, it shall designate one of its offices as its primary office.


16012. Each foreign (other state) credit union that is licensed to establish an office shall conduct all of the business of the office in a single building or in adjoining buildings. However, with prior to notice to the commissioner, the foreign (other state) credit union may conduct part of the business of the office elsewhere in the same vicinity.


16013. Whenever any provision of this chapter or of any regulation or order issued under this chapter which is applicable to or with respect to a foreign (other state) credit union that maintains a California branch office or California facility is inconsistent with any provision of any other chapter of this division, the provision of the other chapter applies, and the latter provision does not apply.



Article 2. Establishment Of A California Branch Office Or California Facility

Ca Codes (fin:16020-16024) Financial Code Section 16020-16024



16020. (a) Except for the activities described in paragraph (2) of subdivision (c) of Section 16001, no foreign (other state) credit union shall transact business in this state except at a branch office or facility that it is licensed to maintain and at which it is permitted by this chapter to transact the business transacted. (b) Subdivision (a) shall not be deemed to prohibit any of the following: (1) Any foreign (other state) credit union from carrying on the activities described in subdivision (d) of Section 191 of the Corporations Code. (2) The advertising or solicitation of shares or deposits in this state by a foreign (other state) credit union made through the media of the mail, radio, television, magazines, newspapers, the Internet, or similar media, provided that shares or deposits are not accepted or received in this state. (3) The acceptance of loan applications through agents in this state, provided the loan applications are approved or rejected, and the loans are funded, outside of this state. (c) For the purposes of subdivision (a), no foreign (other state) credit union shall be deemed to be transacting business in this state merely because a majority-owned subsidiary transacts business in this state.

16021. (a) No foreign (other state) credit union shall establish or maintain a California branch office unless the commissioner shall have first approved its establishment and issued a license authorizing the foreign (other state) credit union to maintain the California branch office. (b) Notwithstanding subdivision (a), this article does not apply to any branch office or other office in this state of a foreign (other state) credit union that was established prior to January 1, 2001, in compliance with existing law.


16022. (a) If the commissioner finds all of the following with respect to an application by a foreign (other state) credit union for approval to establish a California branch office, the commissioner shall approve the application: (1) That the foreign (other state) credit union, the directors and officers of the foreign (other state) credit union, and the proposed management of the branch office are each of good character and sound financial standing. (2) That the financial history and condition of the foreign (other state) credit union are satisfactory. (3) That the management of the foreign (other state) credit union and the proposed management of the branch office are adequate. (4) That it is reasonable to believe that, if licensed to maintain the branch office, the foreign (other state) credit union will operate the branch office in a safe and sound manner and in compliance with all applicable laws, regulations, and orders. (5) That the foreign (other state) credit union's plan to establish and to maintain the branch office affords reasonable promise of successful operation. (6) That the foreign (other state) credit union's establishment and maintenance of the branch office will promote the convenience and advantage of its members, and is necessary or convenient to meet the needs of the foreign (other state) credit union's members. (7) Not more than 50 percent of the members of the foreign (other state) credit union are or will be residents of this state. If the commissioner finds otherwise, the commissioner shall deny the application. (b) Whenever an application by a foreign (other state) credit union for approval to establish a California branch office has been approved and all conditions precedent to the issuance of a license authorizing the foreign (other state) credit union to maintain the California branch office have been fulfilled, the commissioner shall issue the license.


16023. The approval of an application for approval to establish a California branch office shall be revoked by operation of law if the applicant foreign (other state) credit union does not establish and maintain the California branch office within one year after the date of the approval, unless prior to the expiration of the one-year period the commissioner extends the time within which the foreign (other state) credit union may establish the California branch office.

16024. (a) Within 30 days of establishing a California facility, a foreign (other state) credit union shall notify the commissioner in writing of its intent to establish a California facility. The notice shall identify the proposed location of the facility, describe its proposed activities, and contain any other information which the commissioner may by regulation or order specify. (b) A foreign (other state) credit union shall not commence business at a proposed facility without a license having been issued by the commissioner.


Article 5. Relocation Or Discontinuance Of California Branch Office Or California Facility

Ca Codes (fin:16075-16077) Financial Code Section 16075-16077



16075. Within 10 days of relocating a California branch office or California facility, a foreign (other state) credit union shall file a report with the commissioner which contains the information specified by the commissioner by regulation or order. The foreign (other state) credit union shall not conduct business at the new location of the California branch office or California facility without a license issued by the commissioner for the new location.


16076. Not less than 30 days before a foreign (other state) credit union discontinues a California branch office or California facility, it shall file a report with the commissioner which contains the information specified by the commissioner by regulation or order.


16077. Promptly after a foreign (other state) credit union relocates or discontinues a California branch office or California facility pursuant to this article, the foreign (other state) credit union shall surrender to the commissioner the license which authorized the foreign (other state) credit union to maintain the California branch office or California facility at the old or discontinued site.


Article 6. Conduct Of Credit Union Business

Ca Codes (fin:16100-16103) Financial Code Section 16100-16103



16100. (a) A foreign (other state) credit union that has a license to establish and maintain an office in this state may engage in activities at such office as may be authorized under the laws of its home state and the laws of this state that are applicable to credit unions. (b) Nothing in subdivision (a) authorizes a foreign (other state) credit union to engage in any activity at a California branch office or California facility that it is not authorized to transact or is prohibited from transacting under the law of its home state or that credit unions organized under the laws of this state are not authorized to transact or are prohibited from transacting.


16101. (a) The following provisions of this division apply to a foreign (other state) credit union that maintains a California branch office or California facility with respect to its business in this state as if the foreign (other state) credit union were a credit union organized under the laws of this state: (1) Section 14203. (2) Section 14204. (3) Section 14208. (4) Section 14210. (5) Section 14256. (6) Section 14409. (7) Section 14409.2. (8) Section 14602. (9) Section 14652.5. (10) Section 14655, to the extent promissory notes of the type described in this section are carried on the books of a branch office of a foreign (other state) credit union. (11) Section 14656, to the extent promissory notes of the type described in this section are carried on the books of a branch office of a foreign (other state) credit union. (12) Article 8 (commencing with Section 14750) of Chapter 4. (13) Article 1 (commencing with Section 14850) of Chapter 6. (14) Article 1 (commencing with Section 14950) of Chapter 7. (15) Article 2 (commencing with Section 15001) of Chapter 7. (16) Article 3 (commencing with Section 15050) of Chapter 7, to the extent loans of the type described in that article are carried on the books of a branch office of a foreign (other state) credit union. (17) Section 15102. (b) The laws of this state that are applicable to the activities, operations, and transactions of credit unions organized under the laws of this state, other than the laws in this division, similarly shall apply to the activities, operations, and transactions of a foreign (other state) credit union in this state. Those laws include, but are not limited to, consumer protection laws and laws relating to creditor rights and remedies, mortgages and deeds of trust, bank deposits and collections, and negotiable instruments.


16102. (a) Any foreign (other state) credit union that is authorized to and does maintain a California branch office or California facility is exempted from the restrictions of Section 1 of Article XV of the California Constitution relating to rates of interest upon the loan or forbearance of any money, goods, or things in action or on accounts after demand. (b) This section does not exempt a foreign (other state) credit union or any subsidiary from complying with all other laws and regulations governing the business in which the foreign (other state) credit union or subsidiary is engaged. (c) This section creates and authorizes an exempt class of persons pursuant to Section 1 of Article XV of the California Constitution. (d) This section does not authorize a foreign (other state) credit union or any subsidiary to charge an interest rate on a loan or forbearance in excess of any limitation that exists under the laws of its home state.

16103. (a) A foreign (other state) credit union that is licensed to establish and maintain an office or offices in this state shall keep the assets of the offices separate and apart from the assets of its business outside this state, if required by written order of the commissioner. (b) Persons who are creditors of a foreign (other state) credit union as a result of the business of an office of the foreign (other state) credit union in this state shall be entitled to priority over other creditors with respect to the assets of the business in this state of the foreign (other state) credit union.


Article 7. Examination, Reports, And Records

Ca Codes (fin:16150-16154) Financial Code Section 16150-16154



16150. (a) The commissioner may at any time investigate into the affairs and examine the books, accounts, and other records of a foreign (other state) credit union and of any subsidiary thereof. (b) The commissioner and any person designated by him or her shall have free access to any office of the foreign (other state) credit union and to its books, accounts, and other records.


16151. The commissioner may make any examination of a foreign (other state) credit union at any office of the commissioner. The commissioner may make an examination of any office, within or outside of this state, of a foreign (other state) credit union that maintains an office in this state.


16152. (a) Each foreign (other state) credit union shall, within 10 days after receipt or within any extended time that the commissioner may specify, file with the commissioner a copy of any audit report obtained by, and of any examination report prepared for or of, the foreign (other state) credit union. (b) Each foreign (other state) credit union shall file with the commissioner a copy of any response made by the foreign (other state) credit union to an audit or examination report referred to in subdivision (a) within 10 days after making the response or within any extended time that the commissioner may specify.


16153. A foreign (other state) credit union shall file with the commissioner any other report as the commissioner may from time to time require. Each report shall be in the form, contain the information, and be filed on the date, as may be prescribed by the commissioner.


16154. A foreign (other state) credit union that maintains a California branch office or California facility, if required by the commissioner, shall make, keep, and preserve, at the branch office, facility, or at any other place that the commissioner may by regulation or order approve, the books, accounts, and other records relating to the business of the California branch office or California facility, in the form, in the manner, and for the time that the commissioner may by regulation or order require.


Article 9. Enforcement

Ca Codes (fin:16200-16206) Financial Code Section 16200-16206



16200. (a) The commissioner may bring an action in the name of the people of this state in the superior court to enjoin any violation of, to enforce compliance with, or to collect any penalty or other liability imposed under this division or any regulation or order issued under this chapter. Upon a proper showing, a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted, and a monitor, receiver, conservator, or other designated fiduciary or officer of the court may be granted as appropriate. (b) A receiver, monitor, conservator, or other designated fiduciary officer of the court appointed by the court pursuant to this section may, with the approval of the court, exercise all of the powers of the defendant's officers, directors, partners, trustees, or persons who exercise similar powers and perform similar duties, including the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the commissioner, or a receiver, monitor, conservator, or other designated fiduciary or officer of the court by reason of their exercising these powers or performing these duties pursuant to the order of, or with the approval of, the court. (c) If the commissioner finds that it is in the public interest, the commissioner may include in a claim for restitution, disgorgement, or damages on behalf of the person injured by the act or practice constituting the subject matter of the action, and the court shall have jurisdiction to award ancillary relief. (d) The provisions of this section that authorize the commissioner to bring actions and seek relief are not intended to, and do not, affect any right that any other person may have to bring the same or similar actions or to seek the same or similar relief.


16200.5. (a) If the commissioner finds that any person has violated, or that there is reasonable cause to believe that any person is about to violate, Section 16020, the commissioner may order the person to cease and desist from the violation unless and until the person is issued a license. (b) (1) Within 30 days after an order is issued pursuant to subdivision (a), the person to whom the order is directed may file with the commissioner an application for a hearing on the order. If the commissioner fails to commence a hearing within 15 business days after the application is filed with him or her (or within such longer period to which the person consents), the order shall be deemed rescinded. At the hearing the commissioner shall affirm, modify, or rescind the order. (2) The right of any person, to whom an order is issued under subdivision (a), to petition for judicial review of the order shall not be affected by the failure of the person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).


16201. If, after notice and hearing, the commissioner finds that any person has violated any provision of this chapter or of any regulation or order issued under this chapter, the commissioner may order the person to pay to the commissioner a civil penalty imposed pursuant to Section 216.3.


16202. If, after notice and hearing, the commissioner finds any of the following with respect to a foreign (other state) credit union that is licensed to maintain an office in this state, the commissioner may issue an order suspending or revoking the license of the foreign (other state) credit union: (a) That the foreign (other state) credit union has violated a provision of this division or of any regulation or order issued under this division or a provision of any other applicable law, regulation, or order. (b) That the foreign (other state) credit union is transacting the business in this state or elsewhere in an unsafe or unsound manner. (c) That the foreign (other state) credit union is in unsafe or unsound condition. (d) That the foreign (other state) credit union has ceased to operate its office. (e) That the foreign (other state) credit union is insolvent in that it has ceased to pay its debts in the ordinary course of business, it cannot pay its debts as they become due, or its liabilities, including share accounts and certificates for funds, exceed its assets. (f) That the foreign (other state) credit union has suspended payment of its obligations, has made an assignment for the benefit of its creditors, or has admitted in writing its inability to pay its debts as they become due. (g) That the foreign (other state) credit union is the subject of an order for relief in bankruptcy or has sought other relief under any bankruptcy, reorganization, insolvency, or moratorium law, or that any person has applied for such relief under any such law against the foreign (other state) credit union, and the foreign (other state) credit union has by any affirmative act approved of or consented to the action or the relief has been granted. (h) That a receiver, liquidator, or conservator has been appointed for the foreign (other state) credit union or that any proceeding for an appointment or any similar proceeding has been initiated in the home state of the foreign (other state) credit union. (i) That the existence of the foreign (other state) credit union or the authority of the foreign (other state) credit union to transact banking business under the laws of the home state of the foreign (other state) credit union has been suspended or terminated. (j) That any fact or condition exists that, if it had existed at the time when the foreign (other state) credit union applied for approval to transact business in this state, would have been grounds for denying the application.

16203. (a) If the commissioner finds that any of the factors set forth in Section 16202 is true with respect to any foreign (other state) credit union that is licensed to maintain an office in this state and that it is necessary for the protection of the interests of creditors of the foreign (other state) credit union's business in this state or, in any case, for the protection of the public interest that the commissioner immediately suspend or revoke the license of the foreign (other state) credit union, the commissioner may issue an order suspending or revoking the license of the foreign (other state) credit union. (b) (1) Within 30 days after an order is issued pursuant to subdivision (a), the foreign (other state) credit union to which the order is issued may file with the commissioner an application for a hearing on the order. If the commissioner fails to commence the hearing within 15 business days after the application is filed with the commissioner (or within any longer period to which the foreign (other state) credit union consents), the order shall be deemed rescinded. Within 30 days after the hearing, the commissioner shall affirm, modify, or rescind the order; otherwise, the order shall be deemed rescinded. (2) The right of any foreign (other state) credit union to which an order is issued under subdivision (a) to petition for judicial review of the order shall not be affected by the failure of the foreign (other state) credit union to apply to the commissioner for a hearing on the order pursuant to paragraph (1).


16204. Any foreign (other state) credit union whose license to maintain an office is suspended or revoked shall immediately surrender the license to the commissioner.


16205. (a) Any foreign (other state) credit union to which an order is issued under Section 16202 or 16203 may apply to the commissioner to modify or rescind the order. The commissioner shall not grant the application unless the commissioner finds that it is in the public interest to do so and that it is reasonable to believe that the foreign (other state) credit union will, if and when it is again authorized to maintain an office, comply with all applicable provisions of this division and of any regulation or order issued under this division. (b) The right of any foreign (other state) credit union to which an order is issued under Section 16202 or 16203 to petition for judicial review of the order shall not be affected by the failure of the foreign (other state) credit union to apply to the commissioner pursuant to subdivision (a) to modify or rescind the order.


16206. (a) If the commissioner finds that any of the factors set forth in Section 16202 is true with respect to any foreign (other state) credit union which is authorized to transact business in this state and that it is necessary for the protection of the interests of the creditors of the business of the foreign (other state) credit union in this state or for the protection of the public interest that he or she take immediate possession of the property and business of the foreign (other state) credit union, the commissioner may by order forthwith take possession of the property and business of the foreign (other state) credit union and retain possession until the foreign (other state) credit union resumes business in this state or is finally liquidated. The foreign (other state) credit union may, with the consent of the commissioner, resume business in this state under the conditions as the commissioner may prescribe. (b) (1) Whenever the commissioner takes possession of the property and business of a foreign (other state) credit union pursuant to subdivision (a), the foreign (other state) credit union may, within 10 days, apply to the superior court in the county in which the primary office in this state of the foreign (other state) credit union is located to enjoin further proceedings. The court may, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing, dismiss the application or enjoin the commissioner from further proceedings and order him or her to surrender the property and business of the foreign (other state) credit union to the foreign (other state) credit union or make any further order as may be just. (2) The judgment of the court may be appealed by the commissioner or by the foreign (other state) credit union in the manner provided by law for appeals from the judgment of a superior court to the court of appeal. In case the commissioner appeals the judgment of the court, the appeal shall operate as a stay of the judgment, and the commissioner shall not be required to post any bond. (c) Whenever the commissioner takes possession of the property and business of a foreign (other state) credit union pursuant to subdivision (a), the commissioner shall conserve or liquidate the property and business of the foreign (other state) credit union in accordance with Sections 14301 to 14304, inclusive. (d) When the commissioner has completed the liquidation of the property and business of a foreign (other state) credit union in this state, the commissioner shall transfer any remaining assets to the foreign (other state) credit union in accordance with any order the court may issue. However, in case the foreign (other state) credit union has an office in another state of the United States which is in liquidation and the assets of that office appear to be insufficient to pay in full the creditors of that office, the court shall order the commissioner to transfer to the liquidator of that office the amount of any remaining assets as appears to be necessary to cover the insufficiency. If there are two or more offices and the amount of remaining assets is less than the aggregate amount of insufficiencies with respect to those offices, the court shall order the commissioner to distribute the remaining assets among the liquidators of the offices in the manner as the court determines.


Chapter 12. Foreign (other Nation) Credit Unions

Article 1. General Provisions

Ca Codes (fin:16500-16512) Financial Code Section 16500-16512



16500. This chapter may be cited as the "Foreign (Other Nation) Credit Union Law."


16501. In this chapter: (a) "Agency," when used with respect to a foreign (other nation) credit union, means an office in this state at which the foreign (other nation) credit union transacts credit union business, other than branch business. (b) "Branch business" means the business of issuing shares or certificates, receiving deposits, paying checks, making loans, and other activities that the commissioner may specify by order or regulation. (c) "Branch office," when used with respect to a foreign (other nation) credit union, means an office in this state at which the foreign (other nation) credit union engages in branch business. (d) "Business in this state," when used with respect to a foreign (other nation) credit union that is licensed to maintain one or more offices, includes the aggregate business of all of the offices. (e) "Foreign nation" means any nation other than the United States, including, without limitation, any subdivision, territory, trust territory, dependency, colony, or possession of any nation other than the United States. (f) "Foreign (other nation) credit union" means any credit union or similar institution that is organized under the laws of a foreign nation. (g) "Foreign (other state) state credit union" means a credit union that is organized under the laws of a state of the United States other than California. (h) "Home country," when used with respect to a foreign (other nation) credit union, means the foreign nation under whose laws the foreign (other nation) credit union is organized. (i) "Home country regulator," when used with respect to a foreign (other nation) credit union, means the regulatory agency in the home country of the foreign (other nation) credit union that has primary regulatory authority over the foreign (other nation) credit union. (j) (1) "License" means a license issued under this chapter, authorizing a foreign (other nation) credit union to maintain an office. (2) To be "licensed" means to be issued or to hold a license. (3) To be "licensed to transact business in this state," when used with respect to a foreign (other nation) credit union, means that the foreign (other nation) credit union is licensed to maintain an agency or branch office. (k) "Office," when used with respect to a foreign (other nation) credit union, means a branch office, an agency, or a representative office maintained by the foreign (other nation) credit union. (l) "Representative office," when used with respect to a foreign (other nation) credit union, means an office in this state at which the foreign (other nation) credit union engages in representational functions but at which it does not transact business. (m) "State of the United States" means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands.


16502. Nothing in this chapter shall apply to a foreign (other state) state credit union or be deemed to authorize a foreign (other state) state credit union to transact business in this state.


16503. No foreign (other nation) credit union may establish a branch office unless its deposit or share accounts are insured by the National Credit Union Administration or other insurer that is not unsatisfactory to the commissioner.

16504. Each application filed with the commissioner under this chapter or under any regulation or order issued under this chapter shall be in the form, shall contain the information, shall be signed in the manner, and shall (if the commissioner requires by regulation or order) be verified in the manner that the commissioner may by regulation or order require.


16505. Fees shall be paid to and collected by the commissioner as follows: (a) The fee for filing with the commissioner an application by a foreign (other nation) credit union that is not licensed to transact business in this state for approval to establish a branch office shall be one thousand dollars ($1,000). (b) The fee for filing with the commissioner an application by a foreign (other nation) credit union that is not licensed to transact business in this state for approval to establish an agency shall be five hundred dollars ($500). (c) The fee for filing with the commissioner an application by a foreign (other nation) credit union that is licensed to transact business in this state for approval to establish a branch office shall be five hundred dollars ($500). (d) The fee for filing with the commissioner an application by a foreign (other nation) credit union that is licensed to transact business in this state for approval to establish an agency shall be two hundred fifty dollars ($250). (e) The fee for filing with the commissioner an application by a foreign (other nation) credit union for approval to establish a representative office shall be two hundred fifty dollars ($250). (f) The fee for filing with the commissioner an application by a foreign (other nation) credit union for approval to relocate or to close an office shall be one hundred fifty dollars ($150). (g) The fee for issuing a license shall be twenty-five dollars ($25). (h) Each foreign (other nation) credit union that on June 1 of any year maintains one or more offices shall pay, on or before the following July 1, a fee of two hundred fifty dollars ($250) per branch office, one hundred dollars ($100) per agency, and fifty dollars ($50) per representative office. (i) If the commissioner makes an examination in connection with a pending application, the foreign (other nation) credit union making the application shall pay a fee for the examination at the rate of seventy-five dollars ($75) per hour for each examiner engaged in the examination plus, if in the opinion of the commissioner it is necessary for any examiner engaged in the examination to travel outside this state, the travel expenses of the examiner. (j) If the commissioner makes an examination of a foreign (other nation) credit union that is licensed to maintain an office, the foreign (other nation) credit union shall pay a fee for the examination at the rate of seventy-five dollars ($75) per hour for each examiner engaged in the examination plus, if in the opinion of the commissioner it is necessary for any examiner engaged in the examination to travel outside this state, the travel expenses of the examiner.

16506. (a) (1) No foreign (other nation) credit union shall be issued a license to maintain an office unless it shall have first filed with the commissioner, in the form that the commissioner may by regulation or order require, an appointment irrevocably appointing the commissioner and the commissioner's successor from time to time in office to be the foreign (other nation) credit union's attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the foreign (other nation) credit union or any of its successors that arises out of the activities in this state after the appointment has been filed, with the same force and validity as if served personally on the foreign (other nation) credit union or its successor, as the case may be. (2) Any foreign (other nation) credit union that maintains an office in this state and that has not filed with the commissioner an appointment pursuant to paragraph (1) shall be deemed by the maintenance of that office to have appointed the commissioner as its attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the foreign (other nation) credit union or any of its successors that arises out of the activities in this state with the same force and validity as if served personally on the foreign (other nation) credit union or its successor, as the case may be. (b) Service may be made on a foreign (other nation) credit union that has appointed or is deemed to have appointed the commissioner as its attorney for service of process by leaving a copy of the process at any office of the commissioner. However, the service is not effective unless (1) the party making the service, who may be the commissioner, forthwith sends notice of the service and a copy of the process by registered or certified mail to the foreign (other nation) credit union served at its last address on file with the commissioner at any of its offices in this state or at its head office, and (2) an affidavit of compliance with this subdivision by the party making service is filed in the case on or before the return date, if any, or within any further time that the court, in the case of a judicial proceeding, or the administrative agency, in the case of an administrative proceeding, allows.


16507. In administering the provisions of this chapter, the commissioner may share information with federal and home country regulators of foreign (other nation) credit unions.


16508. No license shall be transferable or assignable.


16509. A foreign (other nation) credit union that is licensed to establish an office shall post at a conspicuous place at the office a notice to the public which states the name of the foreign (other nation) credit union, the type of office it is, and the foreign country under whose laws it was organized or chartered.


16510. Whenever a foreign (other nation) credit union is licensed to establish more than one office, it shall designate one of its offices as its primary office.


16511. Each foreign (other nation) credit union that is licensed to establish an office shall conduct all of the business of the office in a single building or in adjoining buildings. However, with the approval of the commissioner, the foreign (other nation) credit union may conduct part of the business of the office elsewhere in the same vicinity.


16512. Whenever any provision of this chapter or of any regulation or order issued under this chapter that is applicable to or with respect to a foreign (other nation) credit union that maintains a branch office or facility is inconsistent with any provision of any other chapter of this division, the former provision applies, and the latter provision does not apply.


Article 2. Representative Offices

Ca Codes (fin:16525-16530) Financial Code Section 16525-16530



16525. (a) No foreign (other nation) credit union shall establish or maintain an office in this state at which it engages in representational functions unless it is licensed to maintain a representative office, agency, or branch office at that place. (b) (1) No person shall establish or maintain an office in this state as representative of a foreign (other nation) credit union unless the foreign (other nation) credit union is licensed to maintain the office as a representative office. (2) For purposes of this chapter, if any person establishes or maintains an office in this state as representative of a foreign (other nation) credit union, the foreign (other nation) credit union shall be deemed to establish and maintain the office as a representative office.

16526. (a) No foreign (other nation) credit union shall establish or maintain a representative office unless the commissioner shall have first approved the establishment of the office and issued a license authorizing the foreign (other nation) credit union to maintain the office. (b) If the commissioner finds the following with respect to an application by a foreign (other nation) credit union for approval to establish a representative office, the commissioner shall approve the application: (1) That the foreign (other nation) credit union, the directors and executive officers of the foreign (other nation) credit union, and the proposed management of the office are each of good character and sound financial standing. (2) That the financial history and condition of the foreign (other nation) credit union are satisfactory. (3) That the management of the foreign (other nation) credit union and the proposed management of the office are adequate. (4) That it is reasonable to believe that, if licensed to maintain the office, the foreign (other nation) credit union will operate the office in compliance with all applicable laws, regulations, and orders. If the commissioner finds otherwise, the commissioner shall deny the application. (c) Whenever an application by a foreign (other nation) credit union for approval to establish a representative office has been approved and all conditions precedent to the issuance of a license authorizing the foreign (other nation) credit union to maintain the office have been fulfilled, the commissioner shall issue the license.


16527. (a) No foreign (other nation) credit union that is licensed to maintain a representative office shall relocate the office unless the commissioner shall have first approved the relocation and issued a license authorizing the credit union to maintain the office at the new site. (b) (1) In case the new site of a representative office is in the same vicinity as the old site, the commissioner shall approve an application by a foreign (other nation) credit union for approval to relocate the representative office if the commissioner finds that the relocation of the office will not be substantially detrimental to the public convenience and advantage. (2) In case the new site of a representative office is not in the same vicinity as the old site, the commissioner shall approve an application by a foreign (other nation) credit union for approval to relocate the representative office if the commissioner finds both of the following: (i) The relocation of the office from the old site will not be substantially detrimental to the public convenience and advantage in the area that is primarily served by the office at the old site. (ii) The relocation of the office to the new site will promote the public convenience and advantage. If the commissioner does not make the findings required under either paragraph (1) or (2), the commissioner shall deny the application. (c) Whenever an application by a foreign (other nation) credit union for approval to relocate a representative office has been approved and all conditions precedent to the issuance of a license authorizing the foreign (other nation) credit union to maintain the office at the new site have been fulfilled, the commissioner shall issue the license. (d) Promptly after a foreign (other nation) credit union that is licensed to maintain a representative office relocates the office, the foreign (other nation) credit union shall surrender to the commissioner the license that authorized it to maintain the office at the old site.


16528. A foreign (other nation) credit union that is licensed to maintain a representative office may, subject to any regulations that the commissioner may prescribe, engage in representational functions at the office but shall not solicit or accept share accounts or deposits or otherwise transact business at the office.


16529. (a) (1) No foreign (other nation) credit union that is licensed to maintain a representative office shall close the office unless the commissioner shall have first approved the closing. (2) Paragraph (1) shall not be deemed to prohibit a foreign (other nation) credit union that is licensed to maintain a representative office from closing the office in accordance with Article 8 (commencing with Section 16800). (b) If the commissioner finds, with respect to an application by a foreign (other nation) credit union for approval to close a representative office, that the closing of the office will not be substantially detrimental to the public convenience and advantage, the commissioner shall approve the application. If the commissioner finds otherwise, the commissioner shall deny the application. (c) Whenever an application by a foreign (other nation) credit union for approval to close a representative office has been approved and all conditions precedent to the closing have been fulfilled, the foreign (other nation) credit union may close the office and shall promptly thereafter surrender to the commissioner the license that authorized it to maintain the office.

16530. The approval of an application for approval to establish a representative office shall be revoked by operation of law if the applicant foreign (other nation) credit union does not establish and maintain the office within one year after the date of the approval, unless prior to the expiration of the one-year period the commissioner extends the time within which the foreign (other nation) credit union may establish the representative office.


Article 3. Branch Offices And Agencies

Ca Codes (fin:16550-16555) Financial Code Section 16550-16555



16550. (a) No foreign (other nation) credit union shall transact business in this state except at a branch office or agency that it is licensed to maintain and at which it is permitted by this chapter to transact the business transacted. (b) Subdivision (a) shall not be deemed to prohibit any of the following: (1) Any foreign (other nation) credit union from carrying on the activities described in subdivision (d) of Section 191 of the Corporations Code. (2) The advertising or solicitation of shares or deposits in this state by a foreign (other nation) credit union made through the media of the mail, radio, television, magazines, newspapers, the Internet, or similar media, provided that shares or deposits are not accepted or received in this state. (3) The acceptance of loan applications through agents in this state, provided the loan applications are approved or rejected, and the loans are funded, outside of this state. (c) For the purposes of subdivision (a), no foreign (other nation) credit union shall be deemed to be transacting business in this state merely because a majority-owned subsidiary transacts business in this state.


16551. No foreign (other nation) credit union shall be licensed to maintain a branch office or agency unless it is qualified to transact intrastate business in this state under Chapter 21 (commencing with Section 2100) of Division 1 of Title 1 of the Corporations Code, except as provided in Section 8910 of the Corporations Code.


16552. (a) No foreign (other nation) credit union shall establish or maintain a branch office or agency unless the commissioner shall have first approved its establishment and issued a license authorizing the foreign (other nation) credit union to maintain the branch office or agency. (b) If the commissioner finds all of the following with respect to an application by a foreign (other nation) credit union for approval to establish a branch office or agency, the commissioner shall approve the application: (1) That the foreign (other nation) credit union, the directors and officers of the foreign (other nation) credit union, and the proposed management of the office are each of good character and sound financial standing. (2) That the financial history and condition of the foreign (other nation) credit union are satisfactory. (3) That the management of the foreign (other nation) credit union and the proposed management of the office are adequate. (4) That it is reasonable to believe that, if licensed to maintain the office, the foreign (other nation) credit union will operate the office in a safe and sound manner and in compliance with all applicable laws, regulations, and orders. (5) That the foreign (other nation) credit union's plan to establish and to maintain the office affords reasonable promise of successful operation. (6) That the foreign (other nation) credit union's establishment and maintenance of the office will promote the public convenience and advantage, and is necessary or convenient to meet the needs of the foreign (other nation) credit union's members. (7) Not more than 50 percent of the members of the foreign (other nation) credit union are or will be residents of this state. If the commissioner finds otherwise, the commissioner shall deny the application. (c) Whenever an application by a foreign (other nation) credit union for approval to establish a branch office or agency has been approved and all conditions precedent to the issuance of a license authorizing the foreign (other nation) credit union to maintain the branch office or agency have been fulfilled, the commissioner shall issue the license.


16553. The approval of an application for approval to establish a branch office or agency shall be revoked by operation of law if the applicant foreign (other nation) credit union does not establish and maintain the office within one year after the date of the approval, unless prior to the expiration of the one-year period the commissioner extends the time within which the foreign (other nation) credit union may establish the branch office or agency.


16554. (a) No foreign (other nation) credit union which is licensed to maintain a branch office or agency shall relocate the office unless the commissioner shall have first approved the relocation and issued a license authorizing the foreign (other nation) credit union to maintain the office at the new site. (b) (1) In case the new site of the office is in the same vicinity as the old site, the commissioner shall approve an application by a foreign (other nation) credit union for approval to relocate a branch office or agency if the commissioner finds all of the following: (A) That it will not be unsafe or unsound for the foreign (other nation) credit union to relocate the office. (B) That the relocation of the office will not be substantially detrimental to the public convenience and advantage, or that the relocation is necessary in the interests of the safety and soundness of the foreign (other nation) credit union. (2) In case the new site of the office is not in the same vicinity as the old site, the commissioner shall approve an application by a foreign (other nation) credit union for approval to relocate a branch office or agency if the commissioner finds all of the following: (A) That the foreign (other nation) credit union's plan to relocate the office and to maintain the office at the new site affords reasonable promise of successful operation. (B) That the relocation of the office from the old site will not be substantially detrimental to the public convenience and advantage in the area which is primarily served by the office at the old site, or that the relocation is necessary in the interests of the safety and soundness of the foreign (other nation) credit union. (C) That the relocation of the office to the new site will promote the public convenience and advantage. If the commissioner finds otherwise, the commissioner shall deny the application. (c) Whenever an application by a foreign (other nation) credit union for approval to relocate a branch office or agency has been approved and all conditions precedent to the issuance of a license authorizing the foreign (other nation) credit union to maintain the office at the new site have been fulfilled, the commissioner shall issue the license. (d) Promptly after a foreign (other nation) credit union that is licensed to maintain a branch office or agency relocates the office, the foreign (other nation) credit union shall surrender to the commissioner the license which authorized it to maintain the office at the old site.

16555. (a) (1) No foreign (other nation) credit union that is licensed to maintain a branch office or agency shall close the office unless the commissioner shall have first approved the closing. (2) Paragraph (1) shall not be deemed to prohibit a foreign (other nation) credit union that is licensed to maintain a branch office or agency from closing an office in accordance with Article 8 (commencing with Section 16800). (b) If the commissioner finds the following with respect to an application by a foreign (other nation) credit union for approval to close a branch office or agency, the commissioner shall approve the application: (1) That it will not be unsafe or unsound for the foreign (other nation) credit union to close the office. (2) That the closing of the office will not be substantially detrimental to the public convenience and advantage or that the closing of the office is necessary in the interests of the safety and soundness of the foreign (other nation) credit union. If the commissioner finds otherwise, the commissioner shall deny the application. (c) Whenever an application by a foreign (other nation) credit union for approval to close a branch office or agency has been approved and all conditions precedent to the closing have been fulfilled, the foreign (other nation) credit union may close the office and shall promptly thereafter surrender to the commissioner the license which authorized it to maintain the office.


Article 6. Conduct Of Credit Union Business

Ca Codes (fin:16600-16607) Financial Code Section 16600-16607



16600. (a) A foreign (other nation) credit union that has a license to establish and maintain an office may engage in activities at the office as may be authorized under applicable laws of its home country and the laws of this state. (b) Nothing in subdivision (a) authorizes a foreign (other nation) credit union to engage in any activity at an office that it is not authorized to engage in or is prohibited from engaging in under the law of its home country, or that credit unions organized under the laws of this state are not authorized to engage in or are prohibited from engaging in under the laws of this state.


16601. (a) A foreign (other nation) credit union may not expand its field of membership in this state without first obtaining the commissioner's approval. (b) An application for the commissioner's approval of an expansion of the field of membership in this state by a foreign (other nation) credit union shall be in the form and contain the information as may be specified, by order or regulation, by the commissioner.


16602. (a) The following provisions of this code apply to a foreign (other nation) credit union that maintains a branch office or agency with respect to its business in this state as if the foreign (other nation) credit union were a credit union organized under the laws of this state: (1) Section 14203. (2) Section 14204. (3) Section 14208. (4) Section 14210. (5) Section 14256. (6) Section 14409. (7) Section 14409.2. (8) Section 14602. (9) Section 14652.5. (10) Section 14655, to the extent promissory notes of the type described in this section are carried on the books of a branch office of a foreign (other nation) credit union. (11) Section 14656, to the extent promissory notes of the type described in this section are carried on the books of a branch office of a foreign (other nation) credit union. (12) Article 8 (commencing with Section 14750) of Chapter 4. (13) Section 14800. (14) Section 14802. (15) Section 14803. (16) Section 14807. (17) Section 14808. (18) Section 14809. (19) Article 1 (commencing with Section 14850) of Chapter 6. (20) Article 1 (commencing with Section 14950) of Chapter 7. (21) Article 2 (commencing with Section 15001) of Chapter 7. (22) Article 3 (commencing with Section 15050) of Chapter 7, to the extent loans of the type described in that article are carried on the books of a branch office of a foreign (other nation) credit union. (23) Section 15102. (b) In addition to the laws specified in subdivision (a), the laws of this state applicable to transactions between a credit union organized under the laws of this state and its members and creditors shall similarly apply to the transactions of a foreign (other nation) credit union in this state. These laws include, but are not limited to, consumer protection laws and laws relating to creditor rights and remedies, commercial transactions, mortgages and deeds of trust, bank deposits and collections, and negotiable instruments.


16603. (a) Any foreign (other nation) credit union that is authorized to and does maintain a branch office or agency is exempted from the restrictions of Section 1 of Article XV of the California Constitution relating to rates of interest upon the loan or forbearance of any money, goods, or things in action or on accounts after demand. (b) This section does not exempt a foreign (other nation) credit union or any subsidiary from complying with all other laws and regulations governing the business in which the foreign (other nation) credit union or subsidiary is engaged. (c) This section creates and authorizes an exempt class of persons pursuant to Section 1 of Article XV of the California Constitution.


16604. (a) A foreign (other nation) credit union which is licensed to establish and maintain an office or offices shall keep the assets of the offices separate and apart from the assets of its business outside this state. (b) Persons who are creditors of a foreign (other nation) credit union as a result of the business of an office of the foreign (other nation) credit union in this state shall be entitled to priority over other creditors with respect to the assets of the business in this state of the foreign (other nation) credit union.


16605. (a) In this section: (1) "Adjusted liabilities," when used with respect to a foreign (other nation) credit union, means the liabilities of the foreign (other nation) credit union's business in this state, determined in accordance with generally accepted accounting principles, but excluding (A) accrued expenses, (B) any liability to an office (whether in or outside of this state) or majority-owned subsidiary of the foreign (other nation) credit union, and (C) other liabilities as the commissioner may by regulation or order exclude. (2) "Applicable minimum," when used with respect to eligible assets deposited or to be deposited with an approved depository by a foreign (other nation) credit union, means the amount as the commissioner may from time to time by regulation or order determine to be necessary for the maintenance of sound financial condition, for the protection of the interests of creditors of the foreign (other nation) credit union's business in this state, or for the protection of the public interest. However, in the case of a foreign (other nation) credit union which is licensed to maintain a branch office, the applicable minimum shall not be less than 5 percent of the adjusted liabilities of the foreign (other nation) credit union. (3) "Approved depository," when used with respect to a foreign (other nation) credit union, means a bank or credit union organized under the laws of this state or a national bank headquartered in this state that has been selected by the foreign (other nation) credit union and approved by the commissioner for the purpose of acting as the approved depository of the foreign (other nation) credit union and that has filed with the commissioner, in the form as the commissioner may by regulation or order prescribe, an agreement to comply with all applicable provisions of this section and of any regulation or order issued under this section. (4) "Eligible assets" when used with respect to a foreign (other nation) credit union, means any of the following: (A) Cash. (B) Any negotiable certificate of deposit that (i) has a maturity of not more than one year, (ii) is payable in the United States, and (iii) is issued by a bank organized under the laws of a state of the United States, by a national bank, or by a branch office of a foreign (other nation) bank that is located in the United States. (C) Any banker's acceptance that is payable in the United States and that is eligible for discount with a federal reserve bank. (D) Any other asset that the commissioner by regulation or order determines to be eligible. Notwithstanding the foregoing provisions of this paragraph, "eligible asset," when used with respect to a foreign (other nation) credit union, does not include any instrument the issuer of which (i) is, or is affiliated with, the foreign (other nation) credit union, (ii) is domiciled in, or controlled by a person domiciled in, the same foreign nation as the foreign (other nation) credit union, or (iii) is, or is controlled by, the foreign nation. For purposes of the foregoing provision, to be "affiliated" means to control, to be controlled by, or to be under common control with; and to "control" has the meaning set forth in subdivision (b) of Section 700. (b) For purposes of this section: (1) The amount of adjusted liabilities of a foreign (other nation) credit union's business in this state shall be computed for the period of time and in the manner as the commissioner may by regulation or order prescribe. (2) An eligible asset shall be valued at the lesser of market or par. (c) (1) Before a foreign (other nation) credit union is authorized to transact business in this state, the foreign (other nation) credit union shall deposit, and each foreign (other nation) credit union that is licensed to transact business in this state shall maintain on deposit, with an approved depository eligible assets having a value in an amount not less than the applicable minimum. (2) Whenever a foreign (other nation) credit union that is licensed to transact business in this state ceases to be so licensed, the foreign (other nation) credit union shall thereafter maintain on deposit with an approved depository eligible assets having a value in an amount not less than the applicable minimum for the period of time as the commissioner may determine to be necessary for the protection of creditors of the foreign (other nation) credit union's business in this state or for the protection of the public interest. (d) (1) No foreign (other nation) credit union that maintains eligible assets on deposit with an approved depository pursuant to this section shall withdraw any eligible asset except with the prior approval of the commissioner. (2) No approved depository that holds eligible assets on deposit from a foreign (other nation) credit union pursuant to this section shall release any eligible asset except with the prior approval of the commissioner or as otherwise provided in subdivision (h). (e) Any foreign (other nation) credit union that maintains eligible assets on deposit with an approved depository pursuant to this section shall, unless the commissioner shall have suspended or revoked its authorization to transact business in this state or taken possession of its property and business in this state, be entitled to receive any income paid on eligible assets. (f) (1) Whenever a foreign (other nation) credit union deposits eligible assets with, or withdraws eligible assets from, an approved depository pursuant to this section, the foreign (other nation) credit union shall do so in accordance with the procedures and requirements as the commissioner may by regulation or order prescribe. (2) Whenever an approved depository receives, holds, or releases eligible assets pursuant to this section, the approved depository shall do so in accordance with the procedures and requirements as the commissioner may by regulation or order prescribe and shall file with the commissioner reports as and when the commissioner may by regulation or order require. (g) Whenever a foreign (other nation) credit union maintains eligible assets on deposit with an approved depository pursuant to this section: (1) The eligible assets shall be deemed to be pledged to the commissioner for the benefit of the creditors of the foreign (other nation) credit union's business in the state; and, notwithstanding any provision of the Uniform Commercial Code to the contrary, the commissioner, for the benefit of these creditors, shall be deemed to have a security interest in the eligible assets. (2) The eligible assets shall be free from any lien, charge, right of setoff, credit, or preference in connection with any claim of the approved depository against the foreign (other nation) credit union. (h) (1) In case the commissioner takes possession of the property and business of a foreign (other nation) credit union that maintains eligible assets on deposit with an approved depository pursuant to this section, the approved depository shall, upon order of the commissioner, release the eligible assets to the commissioner, as liquidator of the property and business of the foreign (other nation) credit union. (2) In case a foreign (other nation) credit union that maintains eligible assets on deposit with an approved depository pursuant to this section fails to pay any judgment creditor of its business in this state and the commissioner has not taken possession of the property and business of the foreign (other nation) credit union, the approved depository shall release the eligible assets to the commissioner, and the commissioner shall dispose of the eligible assets, as a court of competent jurisdiction of this state or of the United States may order for the benefit of the judgment creditor. For purposes of this paragraph, "judgment creditor of its business in this state" means a person to whom the foreign (other nation) credit union is required to pay money under a judgment that (A) arose out of the foreign (other nation) credit union's business in this state, (B) has been entered by a court of this state or of the United States, (C) has become final, in that all possibility of direct attack on the judgment by way of appeal, motion for new trial, motion to vacate, or petition for extraordinary writ has been exhausted, and (D) has remained unpaid for a period of not less than 60 days after becoming final.


16607. (a) In this section: (1) "Adjusted liabilities," when used with respect to a foreign (other nation) credit union that is licensed to maintain a branch office, means the liabilities of the foreign (other nation) credit union's business in this state, excluding (A) accrued expenses, (B) any liability to an office (whether in or outside of this state) or majority-owned subsidiary of the foreign (other nation) credit union, and (C) other liabilities as the commissioner may by regulation or order exclude. (2) "Eligible assets" means any asset which the commissioner by regulation or order determines to be eligible for purposes of this section. However, "eligible asset," when used with respect to a foreign (other nation) credit union that is licensed to maintain a branch office, includes any asset which the foreign (other nation) credit union maintains on deposit pursuant to Section 16606. (b) For purposes of this section, the amount of eligible assets and the amount of adjusted liabilities of a foreign (other nation) credit union that is licensed to maintain a branch office each be computed for the period of time and in the manner as the commissioner may by regulation or order prescribe. (c) A foreign (other nation) credit union licensed to maintain a branch office shall hold at its branch offices in this state or at any other place as the commissioner may approve, eligible assets in the amount, if any, as the commissioner may from time to time by regulation or order determine to be necessary for the maintenance of sound financial condition, for the protection of the interests of creditors of the foreign (other nation) credit union's business in this state, or for the protection of the public interest. However, in no event shall the amount exceed 108 percent of the adjusted liabilities of the foreign (other nation) credit union's business in this state. (d) If the commissioner finds, with respect to a foreign (other nation) credit union licensed to maintain a branch office in this state, that the action is necessary for the maintenance of sound financial condition, for the protection of the interests of creditors of the foreign (other nation) credit union's business in this state, or for the protection of the public interest, the commissioner may order the foreign (other nation) credit union to place all or part of the eligible assets which the foreign (other nation) credit union is required to hold under subdivision (c) in the custody of a bank organized under the laws of this state or a national bank headquartered in this state as the commissioner may designate, and such assets shall be subject to the order of the commissioner.


Article 7. Examination, Reports, And Records

Ca Codes (fin:16700-16704) Financial Code Section 16700-16704



16700. (a) The commissioner may at any time investigate into the affairs and examine the books, accounts, and other records of a foreign (other nation) credit union and of any subsidiary thereof. (b) The commissioner and any person designated by the commissioner shall have free access to any office of the foreign (other nation) credit union and to its books, accounts, and other records.


16701. The commissioner may make an examination of a foreign (other nation) credit union at any office of the commissioner. The commissioner may make an examination of any office, within or outside of this state, of a foreign (other nation) credit union that maintains an office in this state.


16702. (a) Each foreign (other nation) credit union shall, within 10 days after receipt or within any extended time that the commissioner may specify, file with the commissioner a copy of any audit report obtained by, and of any examination report prepared for, the foreign (other nation) credit union. (b) Each foreign (other nation) credit union shall file with the commissioner a copy of any response made by the foreign (other nation) credit union to an audit or examination report referred to in subdivision (a) within 10 days after making the response or within any extended time that the commissioner may specify.


16703. A foreign (other nation) credit union shall file with the commissioner any other report as the commissioner may from time to time require. Each report shall be in the form, contain the information, and be filed on the date, as may be prescribed by the commissioner.


16704. Each foreign (other nation) credit union that maintains an office shall make, keep, and preserve at that office, or at any other place that the commissioner may by regulation or order approve, the books, accounts, and other records relating to the business of the office, in the form, in the manner, and for the time that the commissioner may, by regulation or order, require.


Article 8. Voluntary Surrender Of License

Ca Codes (fin:16800) Financial Code Section 16800



16800. (a) A foreign (other nation) credit union that is licensed to maintain an office may voluntarily surrender the license for the office by filing the license and a report with the commissioner. However, a foreign (other nation) credit union that holds licenses to maintain two or more offices may not voluntarily surrender less than all of its licenses. (b) (1) Except as otherwise provided in paragraph (2), a voluntary surrender of a license shall be effective on the 30th day after the license and the report called for in subdivision (a) are filed with the commissioner or on an earlier date as the commissioner may by order specify. (2) If a proceeding to revoke or suspend a license is pending at the time when the license and the report called for in subdivision (a) are filed with the commissioner or if a proceeding to revoke or suspend a license or to impose conditions upon the surrender of a license is instituted before the 30th day after the license and the report called for in subdivision (a) are filed with the commissioner, the voluntary surrender of the license shall become effective at the time and upon the conditions that the commissioner may by order specify.


Article 9. Enforcement

Ca Codes (fin:16900-16906) Financial Code Section 16900-16906



16900. (a) The commissioner may bring an action in the name of the people of this state in the superior court to enjoin any violation of, to enforce compliance with, or to collect any penalty or other liability imposed under this division or any regulation or order issued under this chapter. Upon a proper showing, a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted, and a monitor, receiver, conservator, or other designated fiduciary or officer of the court may be granted as appropriate. (b) A receiver, monitor, conservator, or other designated fiduciary officer of the court appointed by the court pursuant to this section may, with the approval of the court, exercise all of the powers of the defendant's officers, directors, partners, trustees, or persons who exercise similar powers and perform similar duties, including the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the commissioner, or a receiver, monitor, conservator, or other designated fiduciary or officer of the court by reason of their exercising these powers or performing these duties pursuant to the order of, or with the approval of, the court. (c) If the commissioner finds that it is in the public interest, the commissioner may include in a claim for restitution, disgorgement, or damages on behalf of the person injured by the act or practice constituting the subject matter of the action, and the court shall have jurisdiction to award ancillary relief. (d) The provisions of this section that authorize the commissioner to bring actions and seek relief are not intended to, and do not, affect any right that any other person may have to bring the same or similar actions or to seek the same or similar relief.


16900.5. (a) If the commissioner finds that any person has violated, or that there is reasonable cause to believe that any person is about to violate, Section 16020, the commissioner may order the person to cease and desist from the violation unless and until the person is issued a license. (b) (1) Within 30 days after an order is issued pursuant to subdivision (a), the person to whom the order is directed may file with the commissioner an application for a hearing on the order. If the commissioner fails to commence a hearing within 15 business days after the application is filed with him or her (or within such longer period to which the person consents), the order shall be deemed rescinded. At the hearing the commissioner shall affirm, modify, or rescind the order. (2) The right of any person, to whom an order is issued under subdivision (a), to petition for judicial review of the order shall not be affected by the failure of the person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).


16901. If, after notice and hearing, the commissioner finds that any person has violated any provision of this chapter or of any regulation or order issued under this chapter, the commissioner may order the person to pay to the commissioner a civil penalty imposed pursuant to Section 216.3.


16902. If, after notice and hearing, the commissioner finds any of the following with respect to a foreign (other nation) credit union that is licensed to maintain an office, the commissioner may issue an order suspending or revoking the license of the foreign (other nation) credit union. (a) That the foreign (other nation) credit union has violated a provision of this division or of any regulation or order issued under this division or a provision of any other applicable law, regulation, or order. (b) That the foreign (other nation) credit union is transacting the business in this state or elsewhere in an unsafe or unsound manner. (c) That the foreign (other nation) credit union is in unsafe or unsound condition. (d) That the foreign (other nation) credit union has ceased to operate its office. (e) That the foreign (other nation) credit union is insolvent in that it has ceased to pay its debts in the ordinary course of business, it cannot pay its debts as they become due, or its liabilities exceed its assets. (f) That the foreign (other nation) credit union has suspended payment of its obligations, has made an assignment for the benefit of its creditors, or has admitted in writing its inability to pay its debts as they become due. (g) That the foreign (other nation) credit union is the subject of an order for relief in bankruptcy or has sought other relief under any bankruptcy, reorganization, insolvency, or moratorium law, or that any person has applied for such relief under any such law against the foreign (other nation) credit union, and the foreign (other nation) credit union has by any affirmative act approved of or consented to the action or the relief has been granted. (h) That a receiver, liquidator, or conservator has been appointed for the foreign (other nation) credit union or that any proceeding for an appointment or any similar proceeding has been initiated in the home country of the foreign (other nation) credit union. (i) That the existence of the foreign (other nation) credit union or the authority of the foreign (other nation) credit union to transact banking business under the laws of the home country of the foreign (other nation) credit union has been suspended or terminated. (j) That any fact or condition exists that, if it had existed at the time when the foreign (other nation) credit union applied for approval to transact business in this state, would have been grounds for denying the application.


16903. (a) If the commissioner finds that any of the factors set forth in Section 16902 is true with respect to any foreign (other nation) credit union that is licensed to maintain an office and that it is necessary for the protection of the interests of creditors of the foreign (other nation) credit union's business in this state or, in any case, for the protection of the public interest that the commissioner immediately suspend or revoke the license of the foreign (other nation) credit union, the commissioner may issue an order suspending or revoking the license of the foreign (other nation) credit union. (b) (1) Within 30 days after an order is issued pursuant to subdivision (a), the foreign (other nation) credit union to which the order is issued may file with the commissioner an application for a hearing on the order. If the commissioner fails to commence the hearing within 15 business days after the application is filed with the commissioner (or within any longer period to which the foreign (other nation) credit union consents), the order shall be deemed rescinded. Within 30 days after the hearing, the commissioner shall affirm, modify, or rescind the order; otherwise, the order shall be deemed rescinded. (2) The right of any foreign (other nation) credit union to which an order is issued under subdivision (a) to petition for judicial review of the order shall not be affected by the failure of the foreign (other nation) credit union to apply to the commissioner for a hearing on the order pursuant to paragraph (1).


16904. Any foreign (other nation) credit union whose license to maintain an office is suspended or revoked shall immediately surrender the license to the commissioner.


16905. (a) Any foreign (other nation) credit union to which an order is issued under Section 16902 and 16903 may apply to the commissioner to modify or rescind the order. The commissioner shall not grant the application unless the commissioner finds that it is in the public interest to do so and that it is reasonable to believe that the foreign (other nation) credit union will, if and when it is again authorized to maintain an office, comply with all applicable provisions of this division and of any regulation or order issued under this division. (b) The right of any foreign (other nation) credit union to which an order is issued under Section 16902 or 16903 to petition for judicial review of the order shall not be affected by the failure of the foreign (other nation) credit union to apply to the commissioner pursuant to subdivision (a) to modify or rescind the order.


16906. (a) If the commissioner finds that any of the factors set forth in Section 16902 is true with respect to any foreign (other nation) credit union which is authorized to transact business in this state and that it is necessary for the protection of the interests of the creditors of the business of the foreign (other nation) credit union in this state or for the protection of the public interest that he or she take immediate possession of the property and business of the foreign (other nation) credit union, the commissioner may by order forthwith take possession of the property and business of the foreign (other nation) credit union and retain possession until the foreign (other nation) credit union resumes business in this state or is finally liquidated. The foreign (other nation) credit union may, with the consent of the commissioner, resume business in this state under the conditions as the commissioner may prescribe. (b) (1) Whenever the commissioner takes possession of the property and business of a foreign (other nation) credit union pursuant to subdivision (a), the foreign (other nation) credit union may, within 10 days, apply to the superior court in the county in which the primary office in this state of the foreign (other nation) credit union is located to enjoin further proceedings. The court may, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing, dismiss the application or enjoin the commissioner from further proceedings and order him or her to surrender the property and business of the foreign (other nation) credit union to the foreign (other nation) credit union or make any further order as may be just. (2) The judgment of the court may be appealed by the commissioner or by the foreign (other nation) credit union in the manner provided by law for appeals from the judgment of a superior court to the court of appeal. In case the commissioner appeals the judgment of the court, the appeal shall operate as a stay of the judgment, and the commissioner shall not be required to post any bond. (c) Whenever the commissioner takes possession of the property and business of a foreign (other nation) credit union pursuant to subdivision (a), the commissioner shall conserve or liquidate the property and business of the foreign (other nation) credit union in accordance with Sections 14301 to 14304, inclusive. (d) When the commissioner has completed the liquidation of the property and business of a foreign (other nation) credit union in this state, the commissioner shall transfer any remaining assets to the foreign (other nation) credit union in accordance with any order the court may issue. However, in case the foreign (other nation) credit union has an office in another state of the United States which is in liquidation and the assets of that office appear to be insufficient to pay in full the creditors of that office, the court shall order the commissioner to transfer to the liquidator of that office the amount of any remaining assets as appears to be necessary to cover the insufficiency. If there are two or more offices and the amount of remaining assets is less than the aggregate amount of insufficiencies with respect to those offices, the court shall order the commissioner to distribute the remaining assets among the liquidators of the offices in the manner as the court determines is equitable.


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