California Code of Regulations › Title 10 - Investment › Chapter 3 - Commissioner of Financial Protection and Innovation › Subchapter 2 - Corporate Securities › Article 2 - Exemptions from Qualification › Section 260.105.20 - Exemption for Certain Nonprofit Organizations

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
There is hereby exempted from the provisions of Section
					 25110 of the Code as not being
					 comprehended within the purposes of the Corporate Securities Law of 1968 and
					 the qualification of which is not necessary or appropriate in the public
					 interest or for the protection of investors, any offer or sale of a security
					 (except evidences of indebtedness, whether interest bearing or not) of a
					 nonprofit organization of the class described in Section
					 25100(j) of the
					 Code, if all of the following conditions are met:
(1) The nonprofit organization meets all of
				  the requirements of Section
				  25100(j), except
				  that some person instrumental in organizing the nonprofit organization expects
				  or intends to make a profit directly or indirectly from any business or
				  activity associated with the organization or operation of such nonprofit
				  organization or from remuneration received from such nonprofit
				  organization;
(2) Neither that
				  person nor any affiliate of that person is in control of the nonprofit
				  organization either directly or indirectly or is an officer or director of that
				  nonprofit organization nor is the holder of any securities of that organization
				  except for a membership or memberships for personal, family or other social
				  uses;
(3) The profit which such
				  person expects or intends to make will be derived solely from a passive
				  relationship with the organization by way of a lease of real or personal
				  property or providing of goods to such organization at a fair market rental or
				  price competitive with similar properties or goods offered by nonaffiliated
				  persons, or from the sale of real properties within the immediate geographic
				  area of operation of such organization but without the offer of immediate or
				  automatic admission into such nonprofit organization with or without an
				  additional fee, and without any active participation in or operation of any
				  business or activity associated with the organization or operation of such
				  nonprofit organization, including the operation of facilities or services, such
				  as a bar, restaurant, locker room, etc.;
(4) The initial offering of memberships was
				  qualified;
(5) The terms of the
				  arrangements with the promoter extant at the time the initial qualification
				  became effective, either remain unchanged in their terms or have become more
				  favorable to the members of the nonprofit organization;
(6) The nonprofit organization, at least 30
				  days prior to any sale of memberships under the exemption provided by this
				  Section, gives notice of such intention to the Commissioner and files financial
				  statements complying with Section
				  260.613 of these Rules;
				  and
(7) No order is issued by the
				  Commissioner under Sections
				  25140 or
				  25143 of the Code relating to a
				  qualification obtained for the sale of the memberships of the nonprofit
				  organization, and no order has been issued by the Commissioner withholding this
				  exemption either at the time of the initial offering of memberships or at any
				  subsequent time.
1. New
					 section filed 12-28-73; effective thirtieth day thereafter (Register 73, No.
					 52).
2. Amendment filed 1-22-75; effective thirtieth day thereafter
					 (Register 75, No. 4).
3. Editorial correction of NOTE filed 3-9-83
					 (Register 83, No. 11).
Note: Authority cited: Sections
						25105
						and
						25610,
						Corporations Code. Reference: Sections
						25100(j),
						25105,
						25110,
						25120
						and
						25130,
						Corporations Code.