Cal. Code Regs. Tit. 10, § 30.306 - Investments in Fixed Assets and Service Corporations

Current through Register 2022 Notice Reg. No. 16, April 25, 2022

(a) In this Section:
(1) "Section 14402 investment" means an investment in real property which is made pursuant to Section 14402 of the Financial Code.
(2) "Section 14403 investment" means an investment in personal property which is made pursuant to Section 14403 of the Financial Code.
(3) "Section 14650 investment" means an investment in shares of a corporation which is made pursuant to Section 14650 of the Financial Code.
(4) "Section 14651 investment" means either of the following:
(A) An investment in the shares of a corporation, or in the membership or economic interests of a limited liability company, which is made pursuant to Section 14651(a) of the Financial Code.
(B) An investment in the securities of a corporation or in the membership or economic interests of a limited liability company, which is made pursuant to Section 14651(b) of the Financial Code.
(b) A credit union shall not make a Section 14402 investment, a Section 14403 investment, a Section 14650 investment, or a Section 14651 investment, if the aggregate of all proposed and current Section 14402 investments, Section 14403 investments, Section 14650 investments and Section 14651 investments exceeds ten percent of unimpaired capital and surplus, unless a greater amount is authorized in writing by the Commissioner.
(c) In requesting the written approval of the Commissioner to exceed the limitation in Subdivision (b), a credit union shall set forth in writing the following information:
(1) The total amount of Section 14402 investments, the total amount of Section 14403 investments, the total amount of Section 14650 investments, and the total amount of Section 14651 investments held by the credit union.
(2) The aggregate of such investments.
(3) The amount, if any, by which the aggregate exceeds the limitation in Subdivision (b).
(4) In the case of Section 14650 investments, the name of each corporation in which the credit union owns shares and the percentage of outstanding shares owned by the credit union.
(5) In the case of Section 14651 investments:
(A) The name of each corporation in which the credit union owns shares and the percentage of outstanding shares owned by the credit union.
(B) The name of each corporation in which the credit union owns securities, other than shares, and the percentage of such securities currently outstanding which are owned by the credit union.
(C) The name of each limited liability company in which the credit union owns a membership or economic interest and the percentage of outstanding membership or economic interests of such limited liability company which is owned by the credit union.
(6) The amount the credit union proposes to invest in Section 14402 investments, in Section 14403 investments, in Section 14650 investments, and in Section 14651 investments.
(7) The amount by which the sum of the proposed Section14402 investments, Section 14403 investments, Section 14650 investments and Section 14651 investments, plus amounts currently invested in Section 14402 investments, Section 14403 investments, Section 14650 investments, and Section 14651 investments, will exceed the limitation in Subdivision (b).
(8) In the case of Section 14650 investments, the name of each corporation in which the credit union proposes to purchase shares and the percentage of outstanding shares the credit union will own after the proposed transaction.
(9) In the case of Section 14651 investments, the name of each corporation or limited liability company in which the credit union proposes to purchase securities, or membership or economic interests, and the percentage of outstanding securities or membership or economic interests the credit union will own after the proposed transaction.
(10) A statement of the necessity for exceeding the limitation in Subdivision (b). In setting forth the necessity for the excess investments, a credit union shall do all the following:
(A) In case of a Section 14402 investment or a Section 14403 investment, describe the real or personal property to be acquired.
(B) In case of a Section 14650 investment or a Section144651 investment, describe the corporation or limited liability company in which the credit union is purchasing securities or membership or economic interests.
(C) Analyze the cost and benefits of the proposed investment.
(D) Describe alternatives to making the investment, such as leasing, renting, otherwise periodically paying for or not acquiring the use of the property.
(11)
(A) In case of a Section 14402 investment or Section 14403 investment, the percentage of the property to be initially occupied or used by the credit union, and, if applicable, the name of the person or persons, if known, who the credit union anticipates will occupy or use any portion of the real or personal property.
(B) The name of the person or persons from whom the credit union proposes to acquire the real or personal property or shares.
(12) Confirmation that the investment will not impair the credit union's ability to pay normal dividends on shares or to enter into obligations.
(d) Within forty-five (45) days of receipt of a complete request for approval to exceed the limitation in Subdivision (b) of this Section, the Commissioner shall approve or disapprove the request. Within forty-five (45) days of a receipt of an incomplete request, the Commissioner shall notify the credit union that the request is incomplete and shall specify the information needed to complete the request.
(e) In case a credit union has investments, as of the effective date of the amendment to this Section, which exceed the limitations provided for in this Section but which were made in conformity with the law in effect at the time the investment was made, the credit union shall not be deemed to be in violation of this Section. However, the credit union shall not make any additional investment subject to this Section without first complying with Subdivision (b) of this Section.

Notes

Cal. Code Regs. Tit. 10, § 30.306

Note: Authority cited: Section 14201, Financial Code. Reference: Sections 14402,14403, 14650 and 14651, Financial Code.

1. Change without regulatory effect renumbering and amending former section 932 to new section 30.306 filed 8-19-97 pursuant to section 100, title 1, California Code of Regulations (Register 97, No. 34).
2. Amendment of section and Note filed 2-27-2003; operative 3-29-2003 (Register 2003, No. 9).

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