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 4 - Rights, Warrants and Options › Section 260.140.42 - Compensatory Purchase or Bonus Plans Excluding Option Plans

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Securities (other than options) distributed or sold to
						employees [including insurance agents who are employees for purposes of Rule
						701(c) under the Securities Act of 1933, as amended (17 C.F.R. 230.701)],
						officers, directors, general partners, trustees (where the issuer is a business
						trust), managers, advisors or consultants of the issuer, its parents, its
						majority-owned subsidiaries or majority-owned subsidiaries of the issuer's
						parents as part of a compensatory benefit plan shall be pursuant to a plan or
						agreement that provides for all of the following:
(a) The total number of securities (which may
					 be expressed as a specific number of securities or as a percentage of the total
					 number of securities outstanding from time to time) which may be issued and the
					 persons eligible to purchase securities under the plan or agreement.
(b) The nontransferablity of the rights of
					 any eligible person to acquire securities under the plan or agreement, provided
					 that the plan or agreement may permit transfer of the rights to purchase
					 securities by will, by the laws of descent and distribution, to a revocable
					 trust, or as permitted by Rule 701 of the Securities Act of 1933, as amended
					 (17 C.F.R.
					 230.701).
(c) The proportionate adjustment of the
					 number of securities allocated to any eligible person under the plan or
					 agreement in the event of a stock split, reverse stock split, stock dividend,
					 recapitalization, combination, reclassification or other distribution of the
					 issuer's equity securities without the receipt of consideration by the issuer,
					 of or on the issuer's class of securities subject to the purchase
					 right.
(d) Securities must be
					 issued within 10 years from the date the plan or agreement is adopted or the
					 plan or agreement is approved by the issuer's security holders, whichever is
					 earlier.
(e) The plan or agreement
					 must be approved by a majority of the outstanding securities entitled to vote
					 by the later of (1) within 12 months before or after the plan is adopted or the
					 date the agreement is entered into or (2) prior to or within 12 months of the
					 issuance of any security under the plan or agreement in this state. Any
					 issuance of securities before security holder approval is obtained must be
					 rescinded if security holder approval is not obtained in the manner described
					 in the preceding sentence. Such securities shall not be counted in determining
					 whether such approval is obtained. A foreign private issuer, as defined by Rule
					 3b-4 of the Securities Exchange Act of 1934, as amended (17 C.F.R.
					 240.3b-4), shall not be required to comply
					 with this subsection provided that the aggregate number of persons in this
					 state granted options under all option plans and agreements and issued
					 securities under all purchases and bonus plans and agreements does not exceed
					 35.
(f) Compliance with Section
					 260.140.46 of these rules
					 regarding the information required to be received by security
					 holders.
1.
						Renumbering and amendment of former section
						260.140.42 to section
						260.140.43, and renumbering and
						amendment of former section
						260.140.41.1 to Section
						260.140.42 filed 5-3-83; effective
						thirtieth day thereafter (Register 83, No. 19).
2. Amendment filed
						12-5-91; operative 1-6-92 (Register 92, No. 9).
3. Amendment of
						first paragraph and subsections (c), (d) and (h), repealer of subsections
						(h)(1) and (h)(2), and new subsection (i) filed 1-15-97; operative 1-15-97
						pursuant to Government Code section
						11343.4(d)
						(Register 97, No. 3).
4. Amendment filed 12-28-2000 as an emergency;
						operative 1-1-2001 (Register 2000, No. 52). A Certificate of Compliance must be
						transmitted to OAL by 5-1-2001 or emergency language will be repealed by
						operation of law on the following day.
5. Amendment refiled 5-2-2001
						as an emergency; operative 5-2-2001 (Register 2001, No. 18). A Certificate of
						Compliance must be transmitted to OAL by 8-30-2001 or emergency language will
						be repealed by operation of law on the following day.
6. Amendment
						refiled 8-30-2001 as an emergency; operative 8-30-2001 (Register 2001, No. 35).
						A Certificate of Compliance must be transmitted to OAL by 12-28-2001 or
						emergency language will be repealed by operation of law on the following
						day.
7. Certificate of Compliance as to 8-30-2001 order, including
						further amendment of section heading and section, transmitted to OAL 12-27-2001
						and filed 2-7-2002 (Register 2002, No. 6).
8. Amendment of section
						heading, section and NOTE filed 7-9-2007; operative 7-9-2007 pursuant to
						Government Code section
						11343.4
						(Register 2007, No. 28).
9. Amendment of subsection (e) and NOTE
						filed 9-23-2009; operative 10-23-2009 (Register 2009, No.
						39).
Note: Authority cited: Sections
						  25102,
						  25140,
						  25610
						  and
						  25612.5,
						  Corporations Code. Reference: Sections
						  25102,
						  25110,
						  25140,
						  25610
						  and
						  25612.5,
						  Corporations Code.