Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The provisions of this section apply to
the provisions of Section
25102(f) of the
Code.
(b) Integration. The term
"transaction" does not include
(1) any offer
or sale of a security made more than 6 months before the start of an offering
under the exemption or made more than six months after completion of an
offering under the exemption, so long as during those six month periods there
are no offers or sales of securities by or for the issuer that are of the same
or a similar class as those offered or sold pursuant to the exemption, other
than those offers or sales of securities under any purchase, savings, option,
bonus, appreciation, profit-sharing, thrift, incentive, pension or similar plan
solely for employees, directors, trustees or officers of the issuer or a
subsidiary of the issuer (note: Section
25102(f) is not
available for an offer or sale of a security to a pension or profit-sharing
trust of the issuer),
(2) any offer
or sale of a security pursuant to a qualification under Section
25110 or
25120 which became effective after
the filing of the notice of the transaction pursuant to Rule 260.102.14, or in
which the application for qualification discloses the transaction under the
exemption, whether past, current or proposed. This subsection does not create
any presumption that offers and sales not excluded from the transaction by its
provisions are to be integrated for the purposes of the exemption and that
determination shall be made without reference to this
subsection.
(c)
Purchaser. The term "purchaser" means a person who acquires the beneficial
ownership of the security, whether individually or in joint ownership, in the
transaction under the exemption. Each person who takes in joint ownership with
another is to be counted as one except as otherwise provided in Section
25102(f).
(d) Relationship.
(1) The term "preexisting personal or
business relationship" includes any relationship consisting of personal or
business contacts of a nature and duration such as would enable a reasonably
prudent purchaser to be aware of the character, business acumen and general
business and financial circumstances of the person with whom such relationship
exists. A relationship of employer-employee, or as a security holder of the
issuer, or as a customer of a broker-dealer, investment adviser or other
person, does not necessarily involve contacts of a nature which are sufficient
to establish a "preexisting personal or business relationship" within the
meaning of Section
25102(f). This
subsection does not create any presumption that relationships not falling
within its terms are not within the statutory language, and the determination
of whether or not such a relationship is within the statutory language shall be
made without reference to this subsection.
(2) The phrase "all purchasers" used in
Section 25102(f)(2) of
the Code does not include purchasers excluded from the count of purchasers by
virtue of Section
25102(f)(4) or
Rule 260.102.13.
(e)
Partners. The term "partners" in Section
25102(f)(2) means
general partners.
(f) Controlling
Person. The term "controlling person of the offeror" includes but is not
limited to a person who, in connection with transactions within one year of the
formation of the issuer, is a "promoter" of the issuer. "Promoter" means a
person who, acting alone or in conjunction with one or more other persons,
takes the initiative in founding and organizing the business or enterprise of
an issuer.
(g) Professional
Advisor. The term "professional advisor" means a person who, as a regular part
of such person's business, is customarily relied upon by others for investment
recommendations or decisions, and who is customarily compensated for such
services, either specifically or by way of compensation for related
professional services, and attorneys and certified public accountants.
(1) The foregoing includes but is not limited
to persons licensed or registered as broker-dealers, agents, investment
advisers, banks and savings and loan associations. The foregoing also includes
licensed real estate brokers with respect to those securities referred to in
Section 25206 of the Code.
(2) A person is not the professional advisor
of a purchaser unless designated as such by the purchaser.
(h) Unaffiliated. The relationships which
will render a person not "unaffiliated" include
(1) a present or intended relationship of
employment, either as an employee, employer, independent contractor or
principal,
(2) any relationship
within the definition of the term "affiliate" or as an officer or director of
an affiliate and
(3) the beneficial
ownership by the professional advisor of securities of the issuer or its
affiliates or selling agent, except that the ownership of 1% or less of such
securities shall not render a professional advisor not
unaffiliated.
(i)
Affiliate. "Affiliate" of the issuer means a person controlling, controlled by
or under common control with, the issuer. A person controls another person
within the meaning of this subsection through the possession, direct or
indirect, of the power to direct or cause the direction of the management,
policies or actions of such other person.
(j) Publication of Advertising. Section
25102(f)(4) of
the Code is to be interpreted so as to facilitate the circulation of disclosure
materials to offerees and purchasers, so long as such materials are not
disseminated to the public (see Sections
25002 and
25014 of the Code). Private
placement memoranda, offering circulars and similar disclosure documents are
not "disseminated to the public" for the purposes of Section
25102(f) of the
Code if the issuer limits such circulation
(1) to persons reasonably believed to be
interested in purchasing the securities or
(2) to persons whom the issuer believes may
meet the qualifications required of purchasers pursuant to such section and the
rules thereunder, provided with respect to clause (1) and clause (2) that
neither the issuer nor any person acting on its behalf shall offer or sell the
securities by any form of general solicitation or general advertising,
including, but not limited to, the following:
(A) Any advertisement, article, notice or
other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio; and
(B) Any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. The
preceding sentence does not create any presumption that a dissemination of
materials otherwise than as described therein is a "publication of
advertising," and the determination of that question shall be made without
reference to that sentence.
(k) Institutional Investors. The reference in
Section 25102(f) of the
Code to purchasers described in Section
25102(i) includes
those persons designated in Rule 260.102.10.
(l) For purposes of Section
25102(f), when a
person is both an "affiliate of the issuer" or a purchaser excluded by Rule
260.102.13 and a partnership, corporation or other organization which was
specifically formed for the purpose of purchasing the security offered in
reliance upon the exemption, each beneficial holder of its securities shall be
counted or excluded from the count in accordance with the provisions of Section
25102(f).
1. New
section filed 10-26-81 as an emergency; designated effective 11-1-81 (Register
81, No. 44). A Certificate of Compliance must be transmitted to OAL within 120
days or emergency language will be repealed on 2-23-82.
2.
Certificate of Compliance including amendment transmitted to OAL 2-22-82 and
filed 3-24-82 (Register 82, No. 13).
3. Amendment of subsections
(b), (d), and (j) filed 9-21-84; effective thirtieth day thereafter (Register
84, No. 38).
Note: Authority cited: Section
25610,
Corporations Code. Reference: Section
25102(f),
Corporations Code.
