Nonprofit public benefit corporations.

Existing law prohibits a nonprofit public benefit corporation from lending money or property to a director or officer, or guaranteeing the obligation of a director or officer, without the approval of the Attorney General. However, a nonprofit public benefit corporation is authorized to pay life insurance premiums for insurance on the life of a director or officer if repayment is secured by the proceeds of the policy and its cash surrender value. This bill would revise the above-described exception to allow the nonprofit public benefit corporation to pay life insurance premiums if repayment is secured by either the policy's death benefit proceeds or its cash surrender value, or both. The bill would provide that when repayment is secured only by a policy's death benefit, the contract between the corporation and director or officer that secures the loan must include terms sufficient to ensure that any policy fees and charges, withdrawals of the cash value, or loans taken against it do not impair the value of the death benefit to repay the cost of the loan, for the life of the policy. The bill would also provide that when repayment is secured only by the policy's cash surrender value, the contract between the corporation and director or officer that secures the loan must include terms sufficient to ensure that the cash surrender value is sufficient to repay the cost of the loan, for the life of the policy.