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
Rights and Obligations of Participants
Section 260.140.116.9 - Dividend Reinvestment Plans

(a) The program interests to be issued by the program and subsequent programs in which the participants reinvest are qualified under the Corporate Securities Law of 1968 or exempted therefrom.

(b) Counsel for the program submits an opinion that the pooling of the funds for reinvestment does not create a security.

(c) The subsequent program has substantially identical investment objectives as the initial program.

(d) The participants are free to elect or revoke reinvestment within a reasonable time and such right is fully disclosed in the offering documents.

(e) Prior to each reinstatement the participants receive a current updated disclosure document which contains at a minimum the following information:

(f) Participants must be permitted to change or eliminate the designation of a securities broker-dealer in connection with the reinvestment plan. In the event no broker-dealer is designated, the program will retain amounts otherwise payable as commissions and fees for the benefit of all partners.

(g) The broker-dealer or the issuer assumes responsibility for compliance and performance of due diligence responsibilities under the Corporate Securities Law of 1968 and has contacted the participants to ascertain whether the participants continue to meet the applicable suitability standards for participation in each reinvestment.

(h) The program must demonstrate that the price of program interests to be issued upon reinvestment pursuant to the plan is fair pursuant to Section 260.140.50 of these Rules.