Article 4. Issuance Of Stock And Certificates of California Financial Code >> Division 2. >> Chapter 2. >> Article 4.
(a) A stock association may issue shares of common stock and
preferred stock, with or without par value, and common and preferred
stock may be divided into classes and the classes into series.
(b) Stock associations which have withdrawable shares outstanding
as of the effective date of this section may continue to issue
savings accounts in that form and the holders of these accounts shall
have the same rights as they had before this section became law.
(a) With the approval of the commissioner, a mutual
association may amend its articles of incorporation to authorize the
issuance of stock and may issue stock. Any amendment to the articles
of incorporation and bylaws of an association which for the first
time authorizes it to issue stock shall be approved by the vote or
written assent of a majority of the total votes of members
outstanding, except that the amendment shall require approval only of
the commissioner and board of directors of an association if the
commissioner finds that grounds exist for the appointment of a
conservator for the association pursuant to subdivision (a) of
(b) An amendment to the articles of incorporation of an
association pursuant to this section may include provisions with
respect to the surplus, reserves, and undivided profits of the
association and in that case the surplus, reserves, and undivided
profits shall be retained and disposed of in accordance with those
(c) The corporate existence of a mutual association which amends
its articles of incorporation pursuant to this section to authorize
the issuance of stock and which issues stock shall continue to be,
and the resulting stock association shall be deemed to be, a
continuation of the mutual association. The Legislature finds and
declares that Section 563b.41 (d)(3) of Title 12 of the Code of
Federal Regulations sets forth the law of this state with regard to
the continuity of corporate existence in mutual association to stock
association conversions and that this section has reflected that law
from the time of the original adoption of Section 563b.41 of Title 12
of the Code of Federal Regulations.
Capital stock of a stock association shall be issued pursuant
to the following requirements:
(a) Except for stock issued pursuant to a stock dividend, stock
split, reverse stock split, reclassification of outstanding stock
into stock of another class, exchange of outstanding stock for stock
of another class or other change affecting outstanding stock or an
employee stock option plan or a plan of merger, consolidation,
conversion from a mutual to a stock association, or other type of
reorganization that has been approved by the commissioner, the
consideration for the issuance of capital stock shall be money paid,
debts or securities canceled or tangible or intangible property
actually received either by the association or by a wholly owned
subsidiary. The par value or stated value of stock shall be
maintained as the permanent capital of the association and any
additional amount paid in shall be credited to paid-in surplus.
(b) The aggregate par value or stated value of all outstanding
shares of capital stock shall be the permanent capital of the
association and except as otherwise specifically provided by this
division, capital stock shall not be retired until final liquidation
of the association.
(c) No association shall reduce the par or stated value of its
outstanding capital stock without first obtaining the written
approval of the commissioner, and approval shall be withheld if the
reduction would cause the par or stated value of outstanding capital
stock to be less than the minimum required by this division or would
result in less than adequate statutory net worth as the commissioner
may determine under Section 6475.
(d) No association shall retire any part of its capital stock
unless the retirement is approved by the commissioner.
(e) No association shall make loans secured by its capital stock.
(f) With the written approval of the commissioner, an association
may purchase its capital stock or may contract with a stockholder for
purchase of stock upon the stockholder's death. However, the
purchase shall not reduce the net worth accounts of the association,
or any of them, to an amount less than required by applicable law. An
association which agrees with a stockholder to purchase that
stockholder's capital stock upon death may purchase insurance upon
the life of the stockholder to fund or partially fund the purchase.
A mutual association may issue mutual capital certificates in
accordance with regulations of the commissioner.
An association may issue net worth certificates in accordance
with applicable regulations of the Office of Thrift Supervision or
the Federal Deposit Insurance Corporation.