Added by Stats. 1977, Ch. 1164.
(a)Each licensee shall transact its business in a safe and sound manner and shall maintain itself in a safe and sound condition.
(b)No licensee shall commit any unsafe or unsound act.
Chapter 6 - Transaction of Business
California Financial Code — §§ 31400-31410
Sections (10)
Amended by Stats. 1987, Ch. 867, Sec. 21.
No licensee shall engage in any business other than one or more of the following:
(a)The business of providing financing assistance and management assistance to business firms.
(b)The business of a state development company in accordance with all applicable provisions of the Small Business Investment Act of 1958 and of the regulations of the Small Business Administration.
(c)The business of a local development company in accordance with all applicable
provisions of the Small Business Investment Act of 1958 and of the regulations of the Small Business Administration.
(d)The business of a small business investment company in accordance with all applicable provisions of the Small Business Investment Act of 1958 and of the regulations of the Small Business Administration.
Added by Stats. 1977, Ch. 1164.
Each licensee shall use its best efforts:
(a)To provide financing assistance to business firms in this state in cooperation with the Small Business Administration pursuant to Section 7(a) of the Small Business Act;
(b)To obtain loans from the Small Business Administration pursuant to Sections 501 and 502 of the Small Business Investment Act of 1958; and
(c)Otherwise to cooperate with, and meet the requirements of, the Small Business Administration for the purpose of providing
financing assistance and management assistance to business firms in this state.
Amended by Stats. 1987, Ch. 867, Sec. 22.
(a)Except as provided in subdivision (b), no licensee shall provide financing assistance or management assistance to any person other than a business firm in this state.
(b)(1) If a licensee provides financing assistance to a business firm in this state, the licensee may also provide financing assistance and management assistance to the business firm with respect to business transacted in any other state of the United States or the District of Columbia.
(2)If a licensee provides
financing assistance to a business firm in this state which is a franchisor, the licensee may also provide financing assistance and management assistance to any business firm in another state which is a franchisee of the franchisor.
(3)If a licensee provides financing assistance to a business firm in this state which is a franchisee of a franchisor, the licensee may also provide financing assistance and management assistance to any business firm in another state which is a franchisee of the franchisor.
Amended by Stats. 1987, Ch. 867, Sec. 23.
Except as otherwise provided in subdivision (b) of Section 31403, no licensee shall provide financing assistance or management assistance for use outside this state.
Amended by Stats. 1987, Ch. 867, Sec. 24.
Except as otherwise provided in subdivisions (b), (c), and (d) of Section 31406:
(a)No licensee shall provide financing assistance or management assistance to any business firm the primary business of which is to provide financing assistance or management assistance.
(b)No licensee shall provide financing assistance to any business firm for the purpose of providing financing assistance to other persons or discharging, in whole or in part, any obligation incurred for such purpose.
Amended by Stats. 1996, Ch. 1064, Sec. 658. Effective January 1, 1997. Operative July 1, 1997.
No licensee shall, either by itself or in concert with any of its directors, officers, principal shareholders, or affiliates, any other licensee, or any of the directors, officers, principal shareholders, or affiliates of any other licensee, acquire or hold control of any business firm, except as follows:
(a)Any licensee which has provided financing assistance to a business firm may, if and to the extent necessary to protect its interests as a creditor of, or investor in, such business firm,
acquire and hold control of such business firm; provided, however, that such licensee shall divest itself of such control as soon as practicable and in any event within three years after acquiring such control or such longer period as the commissioner may approve.
(b)Any licensee may, with the prior approval of the commissioner, acquire and hold control of a corporation which is licensed as a small business investment company under the Small Business Investment Act of 1958.
(c)Any licensee may, with the prior approval of the commissioner, acquire and hold control of a corporation which is licensed as a personal property broker under Division 9 (commencing with Section 22000).
(d)Any licensee may, with the prior approval of the commissioner, acquire and hold control of a corporation which transacts business as a
local development company in accordance with all applicable provisions of the Small Business Investment Act of 1958 and of the regulations of the Small Business Administration.
Amended by Stats. 1996, Ch. 1064, Sec. 659. Effective January 1, 1997. Operative July 1, 1997.
No licensee shall, except with the prior approval of the commissioner, guarantee the debt of any other person or otherwise lend its credit to any other person; provided, however, that, whenever a licensee sells to another person an obligation to pay money, which obligation is owned by such licensee, such licensee may guarantee the payment of such obligation.
Amended by Stats. 1996, Ch. 1064, Sec. 660. Effective January 1, 1997. Operative July 1, 1997.
No licensee shall, except with the prior approval of the commissioner, provide a lien or security interest in any of its property for the purpose of securing an obligation of, or an obligation incurred for the benefit of, any other person.
Added by renumbering Section 31953 by Stats. 1987, Ch. 867, Sec. 31.
This section creates and authorizes an exempt class of persons pursuant to Section 1 of Article XV of the State Constitution. The restrictions upon rates of interest contained in Section 1 of Article XV of the State Constitution shall not apply to any loans made by, or forbearances of, any licensee. This section shall apply retroactively to any such loans or forbearances.