I spent most of last week discussing California Corporations Code Section 315. As a reminder, that statute prohibits a corporation (Section 162) from making a loan of money or property to, or guaranteeing the obligation of, an officer or director without specified shareholder approval. Section 315, however, isn't concerned only with loans to officers and directors. In fact, it proscribes one category of loans regardless of whether the borrower is an officer or a director
Under Section 315(c), a corporation may not make any loan of money or property to, or guarantee the obligation of, any person upon the security of shares of the corporation or of its parent if the corporation’s recourse in the event of default is limited to the security for the loan or guaranty, unless the loan or guaranty is adequately secured without considering these shares, or the loan or guaranty is approved by a majority of the shareholders entitled to act thereon.
Section 315(c) does not apply to any of the following:
Cal. Corp. Code § 315(f). However, the fact that the corporation has 100 or more shareholders and a shareholder approved bylaw authorizing the board to make loans is no excuse because the exception in Section 315(b) applies only to the ban on loans to officers and directors found in Section 315(a).