§ 1100 Bank Purpose Statements

This law says that every bank must write a clear purpose statement in its founding papers, and the wording has to match the kind of bank it is and what services it’s allowed to offer.

Key Takeaways

•Banks have to put a purpose statement in their articles of incorporation.
•The exact wording depends on whether the bank is commercial, industrial, a trust company, or a public bank, and whether it can do trust business.
•Public banks must use the special purpose wording listed in another government code section.

Example

A new commercial bank that is not allowed to do trust services wants to start operating.

When the bank files its articles, it must include a line that says its purpose is to do commercial banking and any other legal activities that aren’t banned for a commercial bank without trust powers. If it later tries to offer trust services, it would be breaking this rule because the purpose statement didn’t include trust business.

The articles of each bank shall contain the applicable one of the following statements: (a) Except as provided in subdivision (f), if the bank is, or is proposed to be, a commercial bank not authorized to engage in trust business, that the purpose of the corporation is to engage in commercial banking business and any other lawful activities which are not, by applicable laws or regulations, prohibited to a commercial bank. (b) Except as provided in subdivision (f), if the bank is, or is proposed to be, a commercial bank authorized to engage in trust business, that the purpose of the corporation is to engage in commercial banking business and trust business and any other lawful activities which are not, by applicable laws or regulations, prohibited to a commercial bank authorized to engage in trust business. (c) Except as provided in subdivision (f), if the bank is, or is proposed to be, an industrial bank not authorized to engage in trust business, that the purpose of the corporation is to engage in industrial banking business and any other lawful activities which are not, by applicable laws or regulations, prohibited to an industrial bank. (d) Except as provided in paragraph (f), if the bank is, or is proposed to be, an industrial bank authorized to engage in trust business, that the purpose of the corporation is to engage in industrial banking business and trust business and any other lawful activities which are not, by applicable laws or regulations, prohibited to an industrial bank authorized to engage in trust business. (e) In case the bank is, or is proposed to be, a trust company (other than a commercial bank authorized to engage in trust business), that the purpose of the corporation is to engage in trust business and any other lawful activities which are not, by applicable laws or regulations, prohibited to a trust company. (f) If the bank is, or is proposed to be, a public bank, the articles shall set forth a statement of purpose that is prescribed in subdivision (a) or (b) of Section 57601 of the Government Code. (Amended by Stats. 2019, Ch. 442, Sec. 7. (AB 857) Effective January 1, 2020.)

This law says that every bank must write a clear purpose statement in its founding papers, and the wording has to match the kind of bank it is and what services it’s allowed to offer.

Key Takeaways

•Banks have to put a purpose statement in their articles of incorporation.
•The exact wording depends on whether the bank is commercial, industrial, a trust company, or a public bank, and whether it can do trust business.
•Public banks must use the special purpose wording listed in another government code section.

Example

A new commercial bank that is not allowed to do trust services wants to start operating.

Key Takeaways

Example

Key Terms

References

§ 1100 Bank Purpose Statements

Key Takeaways

Example

Key Terms

References

Key Takeaways

Example

Key Terms

Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References