California Code of Regulations
Title 10 - Investment
Chapter 1 - Commissioner of Business Oversight, Division of Financial Institutions
Subchapter 40 - Industrial Loans
Article 6 - Loans and Obligations Receivable
Section 40.603 - Factoring and Accounts Receivable Financing
Current through Register 2024 Notice Reg. No. 38, September 20, 2024
No industrial loan company which has investment certificates outstanding shall engage in factoring or accounts receivable financing with any borrower or client unless all of the following requirements are met:
(a) It shall have within its organization as officer or employee at least one person possessing no less than five years of responsible experience in factoring or accounts receivable financing.
(b) It shall establish a program for field audits or examinations of client borrowers to establish the validity, quality, and quantity of the collateral assigned to it as security, and shall conduct such an audit or examination of each client borrower at least once every three months.
(c) It shall require that all payments be made to a lock box or a post office box which is under its control and management if the accounts receivable debtor is not notified of the assignment of its account to the industrial loan company (nonnotification), unless the amount advanced to the client borrower is less than $20,000 and is also secured 100% by real property or personal property of a kind or class listed in Section 40.612 of these regulations and it requires that any payments made to the client borrower be forwarded in kind to it.
1. Change without regulatory effect renumbering and amending former section 1157.1 to new section 40.603 filed 8-19-97 pursuant to section 100, title 1, California Code of Regulations (Register 97, No. 34).
Note: Authority cited: Section 18347, Financial Code. Reference: Section 18190, Financial Code.
