§ 1131 Bank Shareholder Distribution Exemption

Financial Code·California

AI SummaryVerified

This law says banks and their main subsidiaries can give money to their owners without having to follow the normal corporate rules that usually limit such payouts.

Key Takeaways

•Banks and their majority‑owned subsidiaries are exempt from Section 500 of the Corporations Code.
•The exemption applies to any distribution (like dividends) they make to their shareholders.
•The rule took effect on January 1 2012.

Example

A big bank decides to pay a $5 million dividend to the people who own its stock.

Even though regular corporate law would restrict that payment, this special rule lets the bank do it anyway.

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

Official Source

View on CA.gov

§ 1131 Bank Shareholder Distribution Exemption

Section 500 of the Corporations Code does not apply to the making by a bank or by any majority-owned subsidiary of a bank of any distribution to the shareholders of such bank. (Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Last verified: January 10, 2026

Key Terms

Section 500 Corporations Code bank majority-owned subsidiary distribution shareholders

References

Official text at leginfo.legislature.ca.gov
California Legislature. Financial Code. Section 1131.

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Key Takeaways

Example

Key Terms

Related Statutes

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