Financial transactions: corporate entities, securities, loans, and deposits.

(1) The Nonprofit Corporation Law requires every corporation, during any period that the corporation is considered to be a "private foundation" as defined by the Internal Revenue Code, to distribute its income for each taxable year so as not to subject it to specified taxes for failure to distribute income under federal law. Existing law also prohibits a corporation from engaging in any act of self-dealing, as defined under federal law, and from engaging in other specified activities including retaining excess business holdings and making certain taxable expenditures. Existing law governing unincorporated associations defines "real estate investment trust" to mean any unincorporated association or trust formed to engage in business and that meets certain tests. This bill would update references to the Internal Revenue Code contained in those provisions and would make other nonsubstantive changes. (2) Existing law abolished the Department of Corporations, and also the office of Commissioner of Corporations, and transferred their powers, duties, responsibilities, and functions to the Department of Business Oversight and the Commissioner of Business Oversight. This bill would make technical, nonsubstantive changes to update references from the abolished office to the successor Commissioner of Business Oversight. (3) The Corporate Securities Law of 1968 regulates corporate securities in California. This law exempts certain types of securities from its provisions addressing unlawful sale of securities in an issuer transaction, an exchange of securities by the issuer with its existing security holders exclusively, an exchange in connection with a merger or consolidation or purchase of assets, an entity conversion transaction, or a nonissuer transaction, as specified. Among these exemptions is one for a security issued or guaranteed by any railroad, other common carrier, public utility, or public utility holding company that is subject to the jurisdiction of the Interstate Commerce Commission or its successor, or a holding company registered with the Securities and Exchange Commission under the federal Public Utility Holding Company Act of 1935 or a subsidiary of that company within the meaning of that act. The federal Interstate Commerce Commission Termination Act of 1995 abolished the Interstate Commerce Commission. The federal Public Utility Holding Company Act of 1935 was repealed by Congress in 2005. This bill would delete these obsolete federal references from the above securities exemption for railroads, common carriers, public utilities, or public utility holding companies. The bill also would update related cross-references to federal securities law. (4) The Corporate Securities Law of 1968 prohibits a person from publishing any advertisement concerning any security in this state after the commissioner finds that the advertisement contains any statement that is false, misleading, or omits necessary statements, as specified. This provision does not apply to any advertisement for a security that is subject to the supervision, regulation, or examination, of specified entities or officers, including the Office of Thrift Supervision. Under federal law, the Office of Thrift Supervision was an agency under the United States Department of the Treasury that regulated federally chartered and state-chartered savings banks and savings and loans that was dissolved in 2011. This bill would delete that obsolete reference to the office. (5) Existing law, the California Finance Lenders Law, provides for the licensure and regulation of finance lenders and brokers by the Commissioner of Business Oversight. Existing law, until January 1, 2022, provides that the law does not apply to any person who makes one loan in a specified period if that loan is a commercial loan, as defined. This bill would instead apply that exemption to a person who does not make more than one such loan in that specified period. (6) Existing law governing state funds provides that security is not required for that portion of any bank deposit or savings and loan association deposit that is insured under any law of the United States. Under existing law, to be eligible to receive and retain deposits, a bank or savings and loan association and credit union is required to deposit with the Treasurer as security for those deposits certain securities approved by the Treasurer in an amount in value of at least 10% in excess of the amount deposited with the bank or savings and loan association and credit union. This bill would provide that those provisions do not apply to deposits held by the Trustees of the California State University in one or more depository institutions located outside of the United States, if certain conditions are met. (7) Existing law, for purposes of a bank being able to receive demand or time deposits of state funds, specifies which securities may be received, and includes within that list of eligible securities a letter of credit issued by the Federal Home Loan Bank of San Francisco that includes specified terms. This bill would require, in order for a letter of credit issued by the Federal Home Loan Bank of San Francisco to qualify as an eligible security for the purposes described above, that the letter of credit be in an amount in value of at least 100% of the amount deposited with the bank.