§ 1004 State Bank Incorporation Rules

This law says a California state bank must be set up like a regular corporation, while a public bank is set up like a nonprofit, and any special banking rules beat the regular corporate rules when they clash.

Key Takeaways

•Private (non‑public) banks are treated as regular corporations.
•Public banks are treated as nonprofit corporations.
•If a banking rule conflicts with a general corporate rule, the banking rule applies.
•If a public‑bank rule in the Government Code conflicts with nonprofit law, the public‑bank rule applies.

Example

A private bank wants to open a new branch and follows the normal corporation rules, but a banking regulation says it must keep extra reserves; the banking rule wins. A city‑owned public bank follows nonprofit rules, but if a government code rule for public banks says something different, the government code rule wins.

The private bank uses the regular corporation law, but the banking‑specific rule overrides any conflict. The public bank uses nonprofit law, but the special public‑bank rule in the Government Code overrides any conflict with nonprofit law.

(a) A California state bank is a corporation incorporated under Division 1 (commencing with Section 100) of Title 1 of the Corporations Code or, in the case of a public bank, a corporation incorporated under Part 2 (commencing with Section 5110) or Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code, that is, with the approval of the commissioner, incorporated for the purpose of engaging in, or that is authorized by the commissioner to engage in, the commercial or industrial banking business. (b) (1) All provisions of law applicable to corporations generally, including, but not limited to, the General Corporation Law (Division 1 (commencing with Section 100), Title 1 of the Corporations Code) shall apply to a bank that is not a public bank. However, whenever any provision of this division or any regulation or order issued under any provision (other than this section) of this division applicable to banks is inconsistent with any provision of law applicable to corporations generally, that provision of this division or that regulation or order shall apply and the provision of law applicable to corporations generally shall not apply. (2) All provisions of law applicable to nonprofit corporations generally, including, but not limited to, the Nonprofit Corporation Law (Division 2 (commencing with Section 5000), Title 1 of the Corporations Code) shall apply to public banks. Whenever a provision of Division 5 of Title 5 of the Government Code applicable to public banks is inconsistent with a provision of law applicable to nonprofit mutual benefit corporations or nonprofit public benefit corporations generally, the provision of Division 5 of Title 5 of the Government Code applicable to public banks shall apply, and the inconsistent provision of law applicable to nonprofit mutual benefit corporations or nonprofit public benefit corporations generally shall not apply to a public bank. (c) As used in this section, public bank has the same meaning as defined in Section 57600 of the Government Code. (Amended by Stats. 2019, Ch. 442, Sec. 5. (AB 857) Effective January 1, 2020.)

Key Takeaways

•Private (non‑public) banks are treated as regular corporations.
•Public banks are treated as nonprofit corporations.
•If a banking rule conflicts with a general corporate rule, the banking rule applies.
•If a public‑bank rule in the Government Code conflicts with nonprofit law, the public‑bank rule applies.

Key Takeaways

Example

Key Terms

References

§ 1004 State Bank Incorporation Rules

Key Takeaways

Example

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References

Key Takeaways

Example

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Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References