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HomeFinancial CodeDiv. 1.1Ch. 5Art. 3§ 1135 Bank Shareholder Distribution Limits

§ 1135 Bank Shareholder Distribution Limits

Financial Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 1135 Bank Shareholder Distribution Limits

This law lets the commissioner tell a bank and its main subsidiaries not to give any money to shareholders if the bank doesn’t have enough equity or if paying out would be unsafe.

Key Takeaways

  • •The commissioner can block any distribution to shareholders if the bank’s equity isn’t enough.
  • •The order applies to the bank and any subsidiaries it mostly owns.
  • •The commissioner can also fine the bank under another law (Section 329).

Example

A bank wants to pay a big dividend to its owners, but its equity (the cushion that protects the bank) is too low.

The commissioner can order the bank to stop the dividend because paying it could hurt the bank’s safety.

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

Official Source
View on CA.gov

§ 1135 Bank Shareholder Distribution Limits

If the commissioner finds that the shareholders’ equity of a bank is not adequate or that the making by a bank or by any majority-owned subsidiary of a bank of a distribution to the shareholders of the bank would be unsafe or unsound for the bank, the commissioner may order the bank and its majority-owned subsidiaries not to make any distribution to the shareholders of the bank. In addition to the order authorized by this section, the commissioner may levy a civil penalty against the bank pursuant to Section 329. (Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Last verified: January 10, 2026

Key Terms

shareholders’ equitydistribution to the shareholdersunsafe or unsoundcivil penalty

Related Statutes

  • § 1130 Bank Shareholder Distribution Exemption
  • § 1131 Bank Shareholder Distribution Exemption
  • § 1132 Bank Shareholder Distribution Limits
  • § 1133 Bank Shareholder Distribution Limits
  • § 1134 Bank Shareholder Distributions

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Financial Code. Section 1135.
View Official Source