California Code of Regulations
Title 10 - Investment
Chapter 2 - Savings and Loan Commissioner
Subchapter 5 - Operations-Accounting
Article 1 - Accounting
Section 105.104 - Accounting for Associations on Notice

Section 8202 of the law provides that the obligation of an association, which has matured withdrawal claims or is on notice, to pay matured withdrawal claims, and the right of shareholders and certificate holders of such an association to receive payment of matured withdrawal claims, shall be secondary and subsequent to the right of such association to pay and to provide a reasonable fund for the payment of the items enumerated in the subdivisions of Section 8202 of the law.

This provision of the law is interpreted to mean that unless an association actually sets aside a fund to meet such requirements, it will be liable for payment of matured claims, and that the right of an association to set up such a fund is not restricted to liabilities already accrued or incurred, but includes anticipated amounts of the character enumerated which will have to be met during a reasonable future period.

At any time when an association has matured withdrawal claims, or becomes "an association on notice," as defined in Section 8150 of the law, it should immediately determine the amount of such find required by summarizing all matured or accrued liabilities of the nature described in the law, and also make an estimate of similar liabilities for such reasonable future period, anticipating at lest the next regular interest or dividend period.

Such amount should be set aside in a special cash fund designated as being established under Section 8202 and thereafter all payments made for any of the purposes hereinbefore set forth should be paid out of such fund until such time as the association shall no longer be on notice or has no matured withdrawal claims unpaid, then such "Special Cash Fund" may be discontinued. Such find shall be increased from time to time as further liabilities mature or accrue, and adequate memorandum records must be preserved showing at all times how the amount of such fund has been arrived at, and that the amount thereof is no more than adequate for the purposes set forth in the law.

1. Change without regulatory effect renumbering former Section 105 to Section 105.104 (Register 87, No. 14). For prior history, see Register 83, No. 49.

Note: Authority cited: Section 5255, Financial Code. Reference: Sections 8150, 8201 and 8701, Financial Code.