reglab/statecodes huggingface dataset:
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 8 - Investment Companies › Section 260.140.83 - Selling Expenses

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The sales charges or load, including all compensation to
						distributors, brokers, dealers and agents, in connection with the sale of
						securities of an open-end investment company shall not exceed 9% of the
						offering price prior to the deduction of such charges. No sales charges may be
						imposed upon the sale of securities of an open-end investment company resulting
						from the reinvestment of distributions of capital gains.
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 8 - Investment Companies › Section 260.140.86 - Accumulation Plan

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Whenever a security holder of an investment company
						participating in an informal accumulation plan agrees to make payments for
						periodic investments out of a checking account, by power of attorney or
						otherwise, such arrangements must be subject to revocation or modification by
						the security holder at all times, until final payment of any withdrawal by the
						bank in which the account is maintained.
1.
						Amendment filed 4-23-86; effective upon filing pursuant to Government Code
						Section
						11346.2(d)
						(Register 86, No. 17).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 8 - Investment Companies › Section 260.140.87 - Insurance Plan

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The sale of securities of an investment company in
						conjunction with the sale of life insurance shall conform with the following
						conditions:
(a) Any person selling
					 such securities and insurance shall be the holder of (1) a valid certificate
					 from the Commissioner authorizing him to act as a broker-dealer or agent, and
					 (2) such authorization from the California Insurance Commissioner as may be
					 required under the Insurance Code to act as an insurance broker or
					 agent.
(b) The material features of
					 the plan shall be fully and fairly disclosed to the prospective purchaser in a
					 manner which will afford him an opportunity to make an informed
					 judgment.
(c) The purchaser shall
					 be billed on a form which shall clearly distinguish between the cost of the
					 securities and the cost of the insurance.
(d) The purchaser shall have the right to
					 cancel the insurance coverage at any time without forfeiting any securities
					 already purchased or losing the right to continue purchasing
					 securities.
(e) The purchaser shall
					 have the right to discontinue the further purchase of securities without
					 forfeiting any securities already purchased or canceling the insurance
					 coverage; provided, however, that when the insurance coverage is declining
					 balance term insurance, a requirement may be imposed that the insurance
					 coverage will be canceled whenever the purchase of securities is
					 discontinued.
(f) One or more
					 policies of insurance shall be issued in the purchaser's name and delivered to
					 him.
(g) The securities shall be
					 issued to the purchaser and the security certificates shall be delivered to
					 him, or such securities shall be issued and credited to his account or share
					 record with the investment company and a memorandum of such entry shall be
					 delivered to him.
1. 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).
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 8 - Investment Companies › Section 260.140.88 - Qualification Termination Date

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
A Qualification for the offer and sale of shares of an
						open-end investment company will have a termination date 16 months after the
						date of the audited financial statements contained in its current application
						for qualification.
1. New
						section filed 5-14-69; effective thirtieth day thereafter (Register 69, No.
						20).
Note: Authority cited: Sections
						  25114
						  and
						  25610,
						  Corporations Code.
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 8 - Investment Companies › Section 260.140.89 - Redemptions in-Kind

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
An open-end investment company reserving the right to
						redeem its shares in-kind by delivering securities from its investment
						portfolio to redeeming shareholders shall comply with these conditions:
(a) Elect to be governed by Rule 18f-1 under
					 the Investment Company Act of 1940.
(b) Disclose fully in its prospectus the Rule
					 18f-1 reservation and election, how the securities will be valued, and the
					 possibility that its shareholders will incur brokerage commissions in selling
					 the securities.
1. New
						section filed 5-3-83; effective thirtieth day thereafter (Register 83, No.
						19).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.90 - Amendment of Declaration of Trust

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The declaration of trust should provide that no amendment
						thereto may be made unless approved by the vote or written consent of the
						holders of a majority of the voting securities of the trust; except that no
						amendment which would change any rights with respect to any outstanding class
						of securities of the trust, by reducing the amount payable thereon upon
						liquidation of the trust, or by diminishing or eliminating any voting rights
						pertaining thereto, may be made unless approved by the vote or written consent
						of the holders of two-thirds of the outstanding securities of such
						class.
1.
						Repealer and renumbering and amendment of former Section
						260.140.91 to Section
						260.140.90 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No.
						5).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.91 - Minimum Net Capital

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Prior to the initial public offering, the adjusted net
						worth of the trust shall be no less than the lower of (a) 10% of the adjusted
						net worth upon completion of such public offering, or (b) $200,000. The
						adjusted net worth of the trust shall not be less than $1 million upon
						completion of the initial public offering. "Adjusted net worth" shall mean the
						amount obtained by subtracting the trust's total liabilities from its total
						assets as adjusted. The total asset figure used shall be calculated by
						deduction of any reasonable reserves but before provision for depreciation. All
						figures used shall be as shown on the trust's books in accordance with
						generally accepted accounting principles.
1.
						Renumbering and amendment of Section
						260.140.91 to Section
						260.140.90, and renumbering and
						amendment of former Section
						260.140.93 to Section
						260.140.91 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No.
						5).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.92 - Annual Expenses

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The total operating expenses of the trust during each
						fiscal year shall not exceed the greater of (i) 2% of its average invested
						assets, or (ii) 25% of its net income for such year. The investment advisor
						shall reimburse the trust within sixty days after the end of each fiscal year
						for the amount by which operating expenses of the trust for such period
						exceeded the limit permitted. "Average invested assets" shall mean the average
						of the aggregate book value of the assets of the trust invested, directly or
						indirectly, in equity interests in and loans secured by real estate, before
						reserves for depreciation or bad debts or similar non-cash reserves computed by
						taking the average of such values at the end of each month during such period.
						"Net income" shall mean the total revenues for such period, less the expenses
						applicable to such period other than additions to reserves for depreciation or
						bad debts or other similar non-cash reserves. "Total operating expenses" for
						any period shall mean all cash operating expenses, including additional
						expenses paid by third parties to the advisor and its affiliates based upon its
						relationship with the trust, including loan administration, servicing,
						engineering, inspection and all other expenses paid by the trust, except the
						expenses related to raising capital, for interest, taxes and direct property
						acquisition, operation and management costs.
1.
						Repealer and new section filed 1-28-82; effective thirtieth day thereafter
						(Register 82, No. 5).
2. Amendment filed 2-11-85; effective
						thirtieth day thereafter (Register 85, No. 7).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.93 - Investments and Activities

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The investment policy intended to be followed shall be
						stated in the declaration of trust in reasonable detail. The declaration of
						trust shall provide that the trust will not engage in any of the following
						investment practices or activities:
(a) Invest in commodities or commodity future
					 contracts.
(b) Invest more than 10%
					 of its total assets in unimproved real property or indebtedness secured by a
					 deed of trust or mortgage loans on unimproved real property.
(c) Invest in indebtedness (herein called
					 "junior debt") secured by a mortgage on real property which is subordinate to
					 the lien of other indebtedness (herein called "senior debt"), except where the
					 amount of such junior debt, plus the outstanding amount of the senior debt,
					 does not exceed 90% of the appraised value of such property, if after giving
					 effect thereto, the value of all such investments of the trust (as shown on the
					 books of the trust in accordance with generally accepted accounting principles
					 after all reasonable reserves but before provision for depreciation) would not
					 then exceed 25% of trust tangible assets. The value of all investments in
					 junior debt of the trust which does not meet the aforementioned requirements
					 would be limited to 10% of the trust's tangible assets (which would be included
					 within the 25% limitation).
(d)
					 Invest in contracts for the sale of real estate.
(e) Engage in any short sale, or borrow, on
					 an unsecured basis, if such borrowing will result in an asset coverage of less
					 than 300%, except that such borrowing limitation shall not apply to a first
					 mortgage trust. "Asset coverage," for the purpose of this section, means the
					 ratio which the value of the total assets of an issuer, less all liabilities
					 and indebtedness except indebtedness for unsecured borrowings, bears to the
					 aggregate amount of all unsecured borrowings of such issuer.
(f) Engage in trading, as compared with
					 investment activities.
(g) Acquire
					 securities in any company holding investments or engaging in activities
					 prohibited by this section.
(h)
					 Engage in underwriting or the agency distribution of securities issued by
					 others.
1.
						Renumbering and amendment of Section
						260.140.93 to Section
						260.140.91, and renumbering and
						amendment of former Section
						260.140.95 to Section
						260.140.93 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No. 5). For prior history, see
						Register 69, No. 20.
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.94 - Investment Advisory Contract

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The declaration of trust shall provide for the following.
						It is the duty of the trustees to evaluate the performance of the advisor
						before entering into or renewing an advisory contract. The criteria used in
						such evaluation shall be reflected in the minutes of such meeting. Each
						contract for the services of an advisor entered into by the trustees shall have
						a term of no more than one year. Each advisory contract shall be terminable by
						a majority of the trustees who are not affiliated with, officers, directors or
						employees of the investment advisor or any affiliated business entity of such
						advisor. Each advisory contract shall be terminable by the advisor. Termination
						may be without cause. At least 60 days written notice shall be given by the
						party wishing to terminate the contract. In the event of the termination of
						such contract, the advisor will cooperate with the trust and take all
						reasonable steps requested to assist the trustees in making an orderly
						transition of the advisory function. The qualifications of the advisor shall be
						set forth in the prospectus relating to the initial public offering of the
						shares and the trustees shall determine that any successor advisor possesses
						sufficient qualifications (i) to perform the advisory function for the trust,
						and (ii) to justify the compensation provided for in its contract with the
						trust.
1.
						Amendment filed 5-14-69; effective thirtieth day thereafter (Register 69, No.
						20).
2. Repealer and renumbering and amendment of former Section
						260.140.96 to Section
						260.140.94 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No.
						5).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.95 - Number and Election of Trustees

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
A real estate investment trust should have a minimum of
						three trustees, all of whom are elected annually by the security holders of the
						trust. A trustee may be removed from office without cause by the vote or
						written consent of the holders of a majority of the outstanding securities of
						the trust.
1.
						Amendment of subsection (e) filed 5-14-69; effective thirtieth day thereafter
						(Register 69, No. 20).
2. Renumbering and amendment of Section
						260.140.95 to Section
						260.140.93, and renumbering and
						amendment of former Section
						260.140.97 to Section
						260.140.95 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No.
						5).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.96 - Terms and Conditions of Securities

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The declaration of trust shall not permit the issuance by
						the trust of:
(a) Securities which are
					 non-voting or assessable.
(b)
					 Securities which are redeemable at the option of the holder.
(c) Warrants, options or similar evidences of
					 a right to buy its securities, unless (1) issued to all of its security holders
					 ratably, (ii) as part of a financing arrangement, or (iii) as part of a stock
					 option plan to trustees, officers or employees of the trust which meets the
					 conditions of Section
					 260.140.41 of those
					 rules.
1.
						Renumbering and amendment of Section
						260.140.96 to Section
						260.140.94, and renumbering and
						amendment of former Section
						260.140.99 to Section
						260.140.96 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No.
						5).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.97 - Meetings

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The declaration of trust shall provide that at least once
						a year, after reasonable notice has been given, the trust will hold a meeting
						of security holders at a location convenient to the security holders. This
						annual meeting shall be held on a date which is a reasonable period of time
						following the distribution of the annual report referred to in Section
						260.140.98 of these rules. Special
						meetings of the shareholders may be called at any time by a majority of the
						trustees and shall be called by the trustees upon the written request of
						shareholders holding not less than 10% of the outstanding
						shares.
1.
						Renumbering and amendment of Section
						260.140.97 to Section
						260.140.95, and renumbering and
						amendment of former Section
						260.140.100 to Section
						260.140.97 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No.
						5).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.98 - Annual Reports

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The declaration of trust should provide that at least
						once a year, within 120 days after the close of its fiscal year, the trustees
						will distribute to each security holder an annual report relating to the prior
						fiscal year.
1.
						Repealer and renumbering and amendment of former Section
						260.140.101 to Section
						260.140.98 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No.
						5).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.99 - Inspection of Records

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Inspection of books and records by shareholders shall be
						permitted to the same extent as permitted under law applicable to shareholders
						of a corporation organized in the jurisdiction in which the trust is
						organized.
1.
						Renumbering and amendment of Section
						260.140.99 to Section
						260.140.96, and renumbering and
						amendment of former Section
						260.140.102 to Section
						260.140.99 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No. 5). For prior history, see
						Register 78, No. 12.
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.100 - Disclosure on Distribution

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The declaration of trust should provide that any
						distribution to security holders of income or capital assets of the trust will
						be accompanied by a written statement disclosing the source of the funds
						distributed. If, at the time of distribution, this information is not
						available, it should be provided that a written explanation of the relevant
						circumstances will accompany the distribution and the written statement
						disclosing the source of the funds distributed will be sent to the security
						holders not later than 60 days after the close of the fiscal year in which the
						distribution was made.
1.
						Renumbering and amendment of Section
						260.140.100 to Section
						260.140.97, and renumbering and
						amendment of former Section
						260.140.103 to Section
						260.140.100 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No.
						5).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.101 - Termination of Trust

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
A trust should be subject to termination at any time by
						the vote or written consent of the holders of a majority of the securities of
						the trust.
1.
						Renumbering and amendment of Section
						260.140.101 to Section
						260.140.98, and renumbering and
						amendment of former Section
						260.140.104 to Section
						260.140.101 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No.
						5).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.102 - Transactions with Affiliates

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Trustees occupy a fiduciary relationship with respect to
						transactions entered into by the trust. Consequently, the declaration of trust
						shall provide that the trust shall not engage in transactions with any trustee,
						director, officer, or any person affiliated with such person, except to the
						extent that each such transaction has, after disclosure of such affiliation,
						been approved or ratified by the affirmative vote of a majority of the trustees
						not affiliated with the person who is party to the transaction and:
(a) The transaction is fair and reasonable to
					 the trust and its shareholders.
(b)
					 The terms of such transaction are at least as favorable as the terms of any
					 comparable transactions made on arms length basis and known to the
					 trustees.
(c) The total
					 consideration is not in excess of the appraised value of the property being
					 acquired, if an acquisition is involved.
(d) Payments to the investment advisor, its
					 affiliates and the trustees for services rendered in a capacity other than that
					 as investment advisor or trustees may only be made upon a determination that:
(1) The compensation is not in excess of
					 their compensation paid for any comparable services; and
(2) The compensation is not greater than the
					 charges for comparable services available from others who are competent and not
					 affiliated with any of the parties involved.
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 9 - Real Estate Investment Trusts › Section 260.140.103 - Limitation on Borrowing

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The declaration of trust shall provide that, unless at
						least 80% of the trust's tangible assets are comprised of first mortgage loans,
						the trust may not incur any indebtedness which would result in an aggregate
						amount of indebtedness in excess of 300% of the adjusted net worth, as defined
						in Section
						260.140.91 of these
						rules.
1.
						Renumbering and amendment of Section
						260.140.103 to Section
						260.140.100, and new Section
						260.140.103 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No.
						5).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 9 - Real Estate Investment Trusts › Section 260.140.104 - Termination of Trust. [Renumbered]

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
1.
						Renumbering and amendment to Section
						260.140.101 filed 1-28-82;
						effective thirtieth day thereafter (Register 82, No.
						5).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Section
						  25140,
						  Corporations Code.
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 › Introduction › Section 260.140.110.1 - Application

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) The guidelines
						contained in these Rules apply to qualifications of real estate programs in the
						form of limited partnerships (also referred to herein as "programs" or
						"partnerships") and will be applied by analogy to real estate programs in other
						forms. While applications not conforming to the standards contained herein
						shall be looked upon with disfavor, where good cause is shown certain
						guidelines may be modified or waived by the Commissioner.
(b) Where the individual characteristics of
						specific programs warrant modification from these standards, they will be
						accommodated, insofar as possible, while still being consistent with the spirit
						of these Rules.
(c) As part of the
						application for qualification of a real estate program, a cross reference sheet
						shall be submitted showing the location in the prospectus, partnership
						agreement or other exhibits of compliance with, or variance from, all of the
						provisions of these Rules. The cross reference sheet shall contain a concise
						statement explaining and justifying each variance from these Rules. If any of
						these Rules are inapplicable, a statement to that effect shall be made in the
						cross reference sheet.
(d) Where
						these guidelines conflict with requirements of the Securities and Exchange
						Commission, the guidelines will not apply.
1.
						  Repealer of Subarticle 10 (260.140.110 through 260.140.115) and new Subarticle
						  10 (sections
						  260.140.110.1 through
						  260.140.118.5, not consecutive)
						  filed 4-10-73; effective thirtieth day thereafter (Register 73, No.
						  15).
2. Repealer of Subarticle 10 (§§
													260.140.110.1 through
						  260.140.118.5, not consecutive)
						  and new Subarticle 10 (§§
													260.140.110.1 through
						  260.140.119.1, not consecutive)
						  filed 6-20-73 as an emergency; effective upon filing (Register 73, No.
						  25).
3. Certificate of Compliance filed 10-17-73 (Register 73, No.
						  42).
4. Amendment filed 1-27-84; effective thirtieth day thereafter
						  (Register 84, No. 4).
5. Amendment of subsections (a) and (c) filed
						  5-18-92; operative 6-17-92 (Register 92, No.
						  22).
Note: Authority cited: Section
							 25610,
							 Corporations Code. Reference: Section
							 25140,
							 Corporations Code.
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 › Introduction › Section 260.140.110.2 - Definitions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Acquisition
						Expenses--expenses including but not limited to legal fees and expenses, travel
						and communication expenses, cost of appraisals, non-refundable option payments
						on property not acquired, accounting fees and expenses, title insurance, and
						miscellaneous expenses related to selection and acquisition of properties,
						whether or not acquired.
(b)
						Acquisition Fee--the total of all fees and commissions paid by any party in
						connection with the purchase or development of property by a program, except a
						development fee paid to a person not affiliated with a sponsor, in connection
						with the actual development of a project after acquisition of the land by the
						program. Included in the computation of such fees or commissions shall be any
						real estate commission, acquisition fee, selection fee, development fee,
						non-recurring management fee, or any fee of a similar nature, however
						designated.
(c)
						Affiliate--Affiliate of a person means:
(1)
						any person directly or indirectly controlling, controlled by or under common
						control with such person,
(2) any
						person owning or controlling 10% or more of the outstanding voting securities
						or beneficial interests of such person,
(3) any officer, director, partner, or
						trustee of, anyone acting in a substantially similar capacity with respect to,
						such person,
(4) any person who is
						an officer, director, partner, trustee, or holder of 10% or more of the voting
						securities or beneficial interests of any of the foregoing; and
(5) any entity of which any of the foregoing
						is an officer, director, partner, or trustee, or with respect to which such
						person serves in a substantially similar capacity.
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 › Requirements of Sponsors › Section 260.140.111.1 - Experience

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The general partner or, if the general partner is not
						  an individual, the principal operating officer of such general partner shall
						  have at least two years relevant real estate or other experience demonstrating
						  the knowledge and experience to acquire and manage the type of properties being
						  acquired, and such persons or any affiliate providing services to the program
						  shall have had not less than four years relevant experience in the kind of
						  service being rendered or otherwise must demonstrate sufficient knowledge and
						  experience to perform the services proposed.
1.
						  Amendment filed 1-27-84; effective thirtieth day thereafter (Register 84, No.
						  4).
2. Amendment filed 5-18-92; operative 6-17-92 (Register 92, No.
						  22).
Note: Authority cited: Section
							 25610,
							 Corporations Code. Reference: Section
							 25140,
							 Corporations Code.
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 › Requirements of Sponsors › Section 260.140.111.2 - Net Worth Requirement of General Partner

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) The financial condition of the general
						partner(s) must be commensurate with any financial obligations assumed in the
						offering and in the operations of the program. At a minimum, the general
						partner(s) shall have an aggregate financial net worth of the lesser of (a)
						$1,000,000 or (b) the greater of either (1) $100,000 or (2) an amount at least
						equal to 5% of the gross amount of all offerings sold within the prior twelve
						months plus 5% of the gross amount of the current offering. The gross amount of
						offerings includes amounts to be received on account of mandatory deferred
						payments. Evaluation will be made of contingent liabilities and the use of
						promissory notes to determine the appropriateness of their inclusion in
						determining net worth. The Commissioner may require the general partner(s) to
						present evidence of ability to maintain this net worth for a period of 3 years
						after completion of the offering.
(b) If promissory notes are used to satisfy
						the net worth requirements of this Section, the application shall include a
						copy of the note(s) and financial statements of the maker demonstrating the
						maker's ability to satisfy the terms of the note. Such financial statements
						shall comply with paragraphs (b), (c) and (d) of Section
						260.140.118.4, provided that, if
						permitted by the Commissioner, the financial statements of the maker need not
						be included in the prospectus. The Commissioner may require the note(s) to
						contain such terms and conditions as may be necessary to assure that the note
						is an enforceable obligation of the maker, including requiring the maker to
						waive all defenses in any action to enforce the notes and requiring the note to
						be full recourse obligation of the maker.
1.
						  Amendment filed 3-12-74; effective thirtieth day thereafter (Register 74, No.
						  11).
2. Amendment filed 1-27-84; effective thirtieth day thereafter
						  (Register 84, No. 4).
3. Amendment and new subsection (b) filed
						  5-18-92; operative 6-17-92 (Register 92, No. 22).
4. Editorial
						  correction of subsection (b) (Register 95, No.
						  48).
Note: Authority cited: Section
							 25610,
							 Corporations Code. Reference: Section
							 25140,
							 Corporations Code.
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 › Requirements of Sponsors › Section 260.140.111.3 - Reports to the Commissioner

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Each application for qualification shall contain a
						  commitment, executed by the sponsor, to submit to the Commissioner upon request
						  any report or statement required to be distributed to limited partners pursuant
						  to Section
						  260.140.116.3.
1.
						  Amendment filed 1-27-84; effective thirtieth day thereafter (Register 84, No.
						  4).
Note: Authority cited: Section
							 25610,
							 Corporations Code. Reference: Section
							 25140,
							 Corporations Code.
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 › Requirements of Sponsors › Section 260.140.111.4 - Liability and Indemnification

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) The program shall not provide for
						indemnification of the sponsor for any liability or loss suffered by the
						sponsor, nor shall it provide that the sponsor be held harmless for any loss or
						liability suffered by the program, unless all of the following conditions are
						met:
(1) the sponsor has determined, in good
						faith, that the course of conduct which caused the loss or liability was in the
						best interests of the program, and
(2) the sponsor was acting on behalf of or
						performing services for the program, and
(3) such liability or loss was not the result
						of gross negligence or gross misconduct by the sponsor, and
(4) such indemnification or agreement to hold
						harmless is recoverable only out of the assets of the program and not from the
						participants.
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 › Requirements of Sponsors › Section 260.140.111.5 - Fiduciary Duty

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The program agreement shall provide that the sponsor
						  shall have fiduciary responsibility for the safekeeping and use of all funds
						  and assets of the program, whether or not in the sponsor's possession or
						  control, and that the sponsor shall not employ, or permit another to employ
						  such funds or assets in any manner except for the exclusive benefit of the
						  program. In addition, the program shall not permit the participant to contract
						  away the fiduciary duty owed to the participant by the sponsor under common
						  law.
1.
						  Renumbering and amendment of former section
						  260.140.118.1 to section
						  260.140.111.5 filed 1-27-84;
						  effective thirtieth day thereafter (Register 84, No. 4).
2.
						  Amendment filed 5-18-92; operative 6-17-92 (Register 92, No.
						  22).
Note: Authority cited: Section
							 25610,
							 Corporations Code. Reference: Section
							 25140,
							 Corporations Code.
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 › Requirements of Sponsors › Section 260.140.111.6 - Terminated General Partner

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Upon the occurrence of a terminating event, the
						  partnership may be required to pay to the terminated general partner all
						  amounts then accrued and owing to the terminated general partner. Additionally,
						  the partnership may terminate the general partner's interest in partnership
						  income, losses, distributions, and capital by payment of an amount equal to the
						  then present fair market value of the terminated general partner's interest in
						  said items determined by agreement of the terminated general partner and the
						  partnership, or, if they cannot agree, by arbitration in accordance with the
						  then current rules of the American Arbitration Association. The expense of
						  arbitration shall be borne equally by the terminated general partner and the
						  partnership. The fair market value of the terminated general partner's interest
						  shall be the amount the terminated general partner would receive upon
						  dissolution and termination of the partnership assuming that such dissolution
						  or termination occurred on the date of the terminating event and the assets of
						  the partnership were sold for their then fair market value without any
						  compulsion on the part of the partnership to sell such assets.
The method of payment to the terminated general partner
						  must be fair, and must protect the solvency and liquidity of the partnership.
						  Where the termination is voluntary, the method of payment will be deemed
						  presumptively fair where it provides for a non-interest bearing unsecured
						  promissory note with principal payable, if at all, from distributions which the
						  terminated general partner otherwise would have received under the partnership
						  agreement had the general partner not terminated. Where the termination is
						  involuntary, the method of payment will be deemed presumptively fair where it
						  provides for an interest bearing promissory note coming due in no less than 5
						  years with equal installments each year.
1. New
						  section filed 1-27-84; effective thirtieth day thereafter (Register 84, No.
						  4).
Note: Authority cited: Section
							 25610,
							 Corporations Code. Reference: Section
							 25140,
							 Corporations Code.
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 › Suitability of the Participant › Section 260.140.112.1 - Standards to Be Imposed

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Given the limited transferability, lack of liquidity,
						  and the risks associated with investments in real estate programs, the sponsor
						  and each person selling program interests on behalf of the sponsor or program
						  shall be cautious concerning the persons to whom such securities are marketed.
						  Suitability standards will be imposed which are reasonable in view of the
						  foregoing and the type of program to be offered. In determining how restrictive
						  the suitability standards must be, the Commissioner will consider the type of
						  program and the existence of such factors as high leverage, tax implications,
						  mandatory deferred payments, balloon payment financing, excessive investments
						  in unimproved land, and the prospect of uncertain or no cash available for
						  distribution from operations. Programs which involve more than ordinary
						  investor risk should emphasize suitability standards for investors of high net
						  worth and/or income.
1.
						  Amendment filed 1-27-84; effective thirtieth day thereafter (Register 84, No.
						  4).
2. Amendment filed 5-18-92; operative 6-17-92 (Register 92, No.
						  22).
3. Editorial correction (Register 95, No.
						  48).
Note: Authority cited: Section
							 25610,
							 Corporations Code. Reference: Section
							 25140,
							 Corporations Code.
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 › Suitability of the Participant › Section 260.140.112.2 - Sales to Appropriate Persons

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The sponsor and each person selling program interests
						  on behalf of the sponsor or program shall make every reasonable effort to
						  assure that the persons being offered or sold program interests, by reason of
						  their educational, business, or financial experience, can be reasonably assumed
						  to have the capacity to understand the fundamental aspects of the program and
						  meet the suitability standards imposed. The sponsor or its representatives
						  shall ascertain that the investor can bear the economic risk of an investment
						  in the program and that the program interests are appropriate for the
						  investor's investment objectives, portfolio structure, and financial
						  situation.
1.
						  Amendment filed 1-27-84; effective thirtieth day thereafter (Register 84, No.
						  4).
2. Renumbering of former section
						  260.140.112.2 to section
						  260.140.112.3 and new section
						  filed 5-18-92; operative 6-17-92 (Register 92, No.
						  22).
Note: Authority cited: Section
							 25610,
							 Corporations Code. Reference: Section
							 25140,
							 Corporations Code.