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 12 - Nonissuer Qualifications
Section 260.140.138 - Non-Qualifiable Securities
Current through Register 2024 Notice Reg. No. 38, September 20, 2024
Ordinarily, securities which are subject to any of the limitations described below will not be qualified for nonissuer transactions:
(a) Common shares which are nonvoting or whose voting rights are disproportionate to other classes of common shares in relation to market price or equity interest.
(b) Securities which are not freely transferable. Securities which are subject to an escrow or legend condition or to a right of first refusal, and stock purchased for investment (letter stock) are considered to be not freely transferable within the meaning of this provision. If only some but not all securities of the class sought to be qualified are subject to such limitations, the application will not be denied solely on this ground if adequate assurances are established against a distribution of the securities subject to the limitations.
1.
Editorial correction adding NOTE filed 3-9-83 (Register 83, No.
11).
2. Amendment filed 8-7-85; effective thirtieth day thereafter
(Register 85, No. 32).
Note: Authority cited: Section 25610, Corporations Code. Reference: Sections 25131 and 25140, Corporations Code.
