California Code of Regulations
Title 10 - Investment
Chapter 3 - Commissioner of Financial Protection and Innovation
Subchapter 2.3 - Capital Access Companies
Article 8 - Unsafe and Unsound Acts
Section 280.450
Current through Register 2024 Notice Reg. No. 38, September 20, 2024
For purposes of Sections 28551, 28604 and 28703 of the Corporations Code, unsafe and unsound acts include, but are not limited, to the following activities:
(a) Failing to maintain adequate working capital to provide reasonable assurance that the licensee will be able to operate actively and in accordance with its Articles and within the context of the business plan;
(b) Operating at variance with the basic organizational documents as filed pursuant to Commissioner's Rule 280.151.
(c) Amending the organizational documents in a manner that is inconsistent with Section 28200 of the Code.
(d) Any officer, director, employee, agent, or other participant in the management or conduct of the affairs of a licensee engages in any act or practice, or omits any act, in breach of his or her fiduciary duty as such officer, director, employee, agent, or participant, if, as a result thereof, the licensee has suffered or is in imminent danger of suffering financial loss or other damage.
(e) Engaging in any conduct which constitutes fraud of dishonest dealing or unfair competition, as defined by Section 17200 of the Business and Professions Code.
(f) Permitting any person other than the officers, directors, partners, members, trustees, or employees listed in Item 4 of the application to have access to or responsibility for the funds of the capital access company.
(g) Failing to maintain a tangible net worth of $250,000.
(h) Failing to maintain the required fidelity bond coverage.
(i) Failing to obtain a majority vote of the board of directors, executive committee or other policy body approving the appointment or change in the accountant certifying the licensee's financial statements.
(j) Commingling the general funds of the capital access company with the investment funds.
1. New article 8 (section 280.450) and section filed 6-24-99; operative 7-1-99 pursuant to Government Code section 11343.4(d) (Register 99, No. 26).
Note: Authority cited: Section 28951, Corporations Code. Reference: Sections 28551, 28604, and 28703, Corporations Code.
