Laws and Regulations, California Codes
Financial Code, Division 1.2, Chapter 3, Section 2040

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(a) A licensee under this chapter shall maintain tangible shareholders' equity in an amount determined to be adequate by the commissioner from time to time, but in no event shall tangible shareholders' equity be less than five hundred thousand dollars ($500,000). "Tangible shareholders' equity" means shareholders' or members' equity minus intangible assets as determined in accordance with United States generally accepted accounting principles.

(b) The commissioner at any time may require a licensee to write down any asset held by it to a valuation that will represent its then fair market value. Any receivable or debt due to a licensee that is past due and unpaid for the period of one year shall be charged off, unless it is well secured or is in process of collection.

(c) The aggregate value of a licensee's accounts receivable, excluding money transmission receivables, loans or extensions of credit to any one person, or that person's affiliates, cannot exceed 50 percent of the licensee's tangible shareholders' equity without the advanced written approval of the commissioner. Whenever such amount equals or exceeds 20 percent of the licensee's tangible shareholders' equity, the licensee shall maintain records evidencing such amount and any security or other source of payment for the amount owed, and such other records as the commissioner may require by order or regulation.

July 1, 2012 Edition Export XML
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Aaron Greenspan

Aaron Greenspan / October 16, 2012 at 3:38 AM DT

in an amount determined to be adequate by the commissioner from time to time

Deputy Commissioner Robert Venchiarutti stated in Think Computer Corporation's mandatory pre-filing interview that he required anywhere from $1 million to $80 million in capital as "adequate" funding because according to his experience all financial startups were guaranteed to be unprofitable for three years. When asked later by California Senate Banking and Finance Committee Staff Director Eileen Newhall what the actual requirement was, she was told $1.5 million.

Think Computer Corp v. Venchiarutti et al


Aaron Greenspan

Aaron Greenspan / October 16, 2012 at 4:40 AM DT

in no event shall tangible shareholders' equity be less than five hundred thousand dollars ($500,000)

Money transmitters must have tangible net worth of at least $500,000 to hold $1 of another person's money, even though they don't make loans. What this really means is that there are no new money transmitters.

Think Computer Corp v. Venchiarutti et al


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