§ 1122 Bank Share Issuance Restrictions

Financial Code·California

AI SummaryVerified

This law says a bank can’t give out shares as payment for help setting up the bank or for any kind of loan or promise to pay from the buyer.

Key Takeaways

•Banks cannot issue shares in exchange for services used to organize the bank.
•Banks cannot issue shares in exchange for any note, loan, or promise to pay from the buyer.
•The rule applies to every bank, no matter how big or small.

Example

A group of friends helps start a new bank and asks to get shares in the bank as thanks for their work.

Because the law says banks can’t issue shares for services, the bank can’t give those friends shares as payment for their help.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source

View on CA.gov

§ 1122 Bank Share Issuance Restrictions

No bank shall issue any shares in consideration of: (a) Services rendered in the organization of such bank; or (b) Any note (whether or not negotiable and whether or not secured) made by the purchaser of such shares. (Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Last verified: January 10, 2026

Key Terms

shares services rendered note negotiable secured purchaser

References

Official text at leginfo.legislature.ca.gov
California Legislature. Financial Code. Section 1122.

Key Takeaways

Example

Key Terms

Related Statutes

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Key Takeaways

Example

Key Terms

Related Statutes

References