July 3, 2022

Volume XII, Number 184

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July 01, 2022

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June 30, 2022

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Will California's De Minimis Exemption Return?

In this early January post, I noted the passing of one of the de minimis exemptions under the California Financing Law.  This exemption was available to any person who makes no more than one loan in a 12-month period if that loan is a commercial loan as defined in Financial Code Section 22502.  I am pleased to report that the legislature may soon reinstate the exemption by enacting SB 577 ( Limón).  The bill was amended in the Assembly last month to add an urgency clause so that it could take effect immediately rather than on January 1, 2023.  The urgency clause does come with a price tag, however.  Urgency measures must be passed by a 2/3 vote in each house of the legislature. 

Here is some background on the bill from the analysis prepared for the Assembly Banking and Finance Committee hearing on January 6, 2022:

As originally introduced in 2020, this bill would have removed the existing January 1, 2022 sunset date for CFL exemption described in Comment #2, thereby making the exemption permanent.  This exemption is widely understood to have worked as intended.  However, the author did not proceed with the bill because of the impact of the COVID-19 pandemic on the legislative process.  The exemption has now expired and the committee has received feedback that this is hindering certain complicated commercial financial transactions.

As proposed to be amended, this bill reinstates the exemption without a sunset, which mirrors what the bill would have done if it had been signed into law in 2020, and adds an urgency clause to allow the bill’s provisions to take effect immediately.

So far, the bill has engendered no registered opposition and is now before the Assembly Committee on Appropriations.

P.S. - If you are curious as to why de minimis is correct and de minimus is not, see this post.

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 56
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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