California Code of Regulations
Title 10 - Investment
Chapter 3 - Commissioner of Financial Protection and Innovation
Subchapter 2 - Corporate Securities
Article 4 - Standards for the Exercise of the Commissioner's Authority
Subarticle 10 - Real Estate Programs
Conflicts of Interest and Investment Restrictions
Section 260.140.114.2 - Exchange of Limited Partnership Interests
Current through Register 2024 Notice Reg. No. 38, September 20, 2024
Ordinarily, a program may not acquire property in exchange for limited partnership interests. Such an exchange will be permitted if the property and specific terms of the transaction are identified in the prospectus and the property will be exchanged immediately upon effectiveness of the qualification. In addition, such exchange shall meet the following conditions:
(a) A provision for such exchange must be set forth in the partnership agreement, and appropriate disclosure as to tax effects of such exchange must be set forth in the prospectus;
(b) The property to be acquired must come within the objectives of the program;
(c) The purchase price assigned to the property shall be no higher than its appraised value;
(d) Each program interest must be valued at no less than market value if there is a market or if there is no market, at the fair market value of the program's assets as determined by an independent appraiser within the last 90 days, less its liabilities, divided by the number of program interests outstanding;
(e) No more than one-half of the interests issued by the program shall be issued in exchange for property;
(f) No securities sales or underwriting commissions shall be paid in connection with such exchange.
1.
Amendment filed 1-27-84; effective thirtieth day thereafter (Register 84, No.
4).
2. Amendment and new subsections (a)-(f) filed 5-18-92;
operative 6-17-92 (Register 92, No. 22).
3. Editorial correction of
HISTORY 2 (Register 95, No. 12).
4. Change without regulatory effect
amending subsection (e) filed 9-25-2002 pursuant to section
100, title 1, California Code of
Regulations (Register 2002, No. 39).
Note: Authority cited: Section 25610, Corporations Code. Reference: Section 25140, Corporations Code.
