“Subordinated notes and debentures,” as used in this division, means an obligation other than an investment certificate obligation that:
(a) Bears on its face, in boldface type no smaller than the largest size type used in the obligation, the following: “this obligation is not a deposit and is not insured by the Federal Deposit Insurance Corporation.”
Terms Used In California Financial Code 18018.6
- company: as used in this division means a premium finance agency as defined in Section 18560. See California Financial Code 18003
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Right of offset: Banks' legal right to seize funds that a guarantor or debtor may have on deposit to cover a loan in default. It is also known as the right of set-off. Source: OCC
(b) (1) Has a maturity of at least seven years, or (2) in the case of an obligation or issue that provides for scheduled repayments of principal, has an average maturity of at least seven years; however, the commissioner may permit the issuance of an obligation or issue with a shorter maturity or average maturity if the commissioner has determined that exigent circumstances require the issuance of that obligation or issue. This subdivision shall not apply to mandatory convertible obligations or issues.
(c) States expressly that the obligation is subordinated and junior in right of payment to the issuing industrial loan company‘s obligations to its investment certificate holders and to the industrial loan company’s other obligations to its general and secured creditors, and is ineligible as collateral for a loan by the issuing industrial loan company.
(d) Is unsecured.
(e) States expressly that the issuing industrial loan company may not retire any part of its obligation without the prior written consent of the commissioner.
(f) Includes, if the obligation is issued to a depository institution, a specific waiver of the right of offset by the lending depository institution.
(Added by Stats. 1989, Ch. 663, Sec. 1.6. Operative January 1, 1991, by Sec. 20 of Ch. 663.)