(a) Before a proposed merger or consolidation of a licensee with another person, the licensee shall submit all of the following, as applicable, to the department in a record:

(1) An application in a form and medium prescribed by the department.

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(2) The plan of merger or consolidation in accordance with subdivision (e).

(3) In the case of a licensee, the information required by Section 3203 concerning the person that would be the surviving entity in the proposed merger or consolidation.

(b) If a proposed merger or consolidation would change the control of a licensee, the licensee shall comply with Section 3309 and this section.

(c) The department shall not approve the application for a merger or consolidation unless the commissioner finds all of the following:

(1) That the merger or consolidation will not result in a monopoly and will not be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize digital financial business activity in this state.

(2) That the merger or consolidation will not have the effect in any section of this state of substantially lessening competition, tending to create a monopoly, or otherwise being in restraint of trade, or that the anticompetitive effect is clearly outweighed in the public interest by the probable effect of the merger in meeting the convenience and needs of the community to be served.

(3) That the financial condition of the surviving entity, including its capital and liquidity, will be satisfactorily based on the factors listed in subdivision (b) of Section 3207.

(4) That the executive officers of the surviving entity are of good character and sound financial standing and are competent to engage in digital financial business activity.

(d) The department, in accordance with Section 3203, shall approve, conditionally approve, or deny an application for approval of a merger or consolidation of a licensee. The department, in a record, shall send notice of its decision to the licensee and the person that would be the surviving entity. If the department denies the application, the licensee shall abandon the merger or consolidation or cease digital financial asset business activity with, or on behalf of, residents.

(e) The department may revoke or modify a determination under subdivision (c), after notice and opportunity to be heard, if, in its judgment, revocation or modification is consistent with this division.

(f) A plan of merger or consolidation of a licensee with another person shall do all of the following:

(1) Describe the effect of the proposed transaction on the licensee’s conduct of digital financial asset business activity with, or on behalf of, residents.

(2) Identify each person to be merged or consolidated and the person that would be the surviving entity.

(3) Describe the terms and conditions of the merger or consolidation and the mode of carrying it into effect.

(g) If a merger or consolidation of a licensee and another person requires approval of an agency of this state, and the action of the other agency conflicts with that of the department, the department shall confer with the other agency. If the proposed merger or consolidation cannot be completed because the conflict cannot be resolved, the licensee shall abandon the merger or consolidation or cease digital financial asset business activity with, or on behalf of, residents.

(h) The department may condition approval of an application under subdivision (a). If the department does not receive notice from the parties that the parties accept the department’s condition not later than 31 days after the department sends notice in a record of the condition, the application is deemed denied. If the application is deemed denied, the licensee shall abandon the merger or consolidation or cease digital financial asset business activity with, or on behalf of, residents.

(i) If a licensee acquires substantially all of the assets of a person, whether or not the person’s license was approved by the department, the transaction is subject to this section.

(Added by Stats. 2023, Ch. 792, Sec. 1. (AB 39) Effective January 1, 2024.)