California Code of Regulations › Title 10 - Investment › Chapter 3 - Commissioner of Financial Protection and Innovation › Subchapter 2 - Corporate Securities › Article 1 - Definitions › Section 260.001 - General Definitions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The terms defined in Part 1 and Section
					 25600 of the Corporate Securities
					 Law of 1968 when used in this Subchapter 2 shall have the meanings set forth in
					 that part and that section. In addition, the following definitions shall apply
					 in this Subchapter 2:
(a) "Charter
				  Documents" means certificate of incorporation, articles of incorporation,
				  articles of organization, certificate of determination of preferences,
				  agreement of consolidation or merger, and bylaws of a corporation; a
				  shareholders' agreement as defined in subsection (h); declaration of trust;
				  agreement of partnership, certificate of limited partnership, or any other
				  document or instrument adopted to establish or regulate any association, joint
				  stock company, trust, limited liability company, or other entity; as such
				  documents are currently in effect, and includes a certificate of correction
				  such as that referred to in Section
				  109 of the Code, an opinion of
				  counsel pursuant to Section
				  110 of the Code (or pursuant to a
				  similar provision of the law of a foreign jurisdiction), and any of the
				  foregoing which have been filed with the Secretary of State or similar
				  authority subject to a request for delayed effectiveness.
(b) "Close corporation" means a corporation
				  which is a close corporation within the meaning of Section
				  158 of the Code, and includes a
				  foreign corporation organized or operating pursuant to a similar provision of
				  the laws of a foreign jurisdiction.
(c) "Code" means the California Corporations
				  Code.
(d) "Default" or "Arrears"
				  means default or arrears in payment of dividends, interest, sinking fund
				  payment, or principal, on the date due.
(e) "Limited Offering Qualification" means a
				  qualification which authorizes the offer and sale of securities only to persons
				  designated therein by name or class.
(f) "Open Qualification" means a
				  qualification which authorizes the offer and sale of securities to the public
				  generally, without restriction as to persons or class of persons.
(g) A "Seasoned Corporation" ordinarily means
				  an issuer which has been conducting bona fide business operations, either
				  directly or through a predecessor, for more than two years, and has operated at
				  profit during at least one of the last three fiscal years.
(h) Unless the context otherwise requires,
				  "shareholders' agreement" means an agreement as defined by Section
				  186 of the Code, and includes
				  substantially similar agreements pursuant to the laws of a foreign jurisdiction
				  (See Sections
				  260.017.2,
				  260.017.3,
				  260.102.12 and
				  260.105.22).
(i) The term "small business issuer" means
				  any entity meeting all of the following:
(1)
				  has annual revenues of less than $12.5 million;
(2) is either a California corporation or a
				  foreign corporation, which foreign corporation at the time of filing an
				  application for qualification:
(A) is subject
				  to Section
				  2115 of the Code, or
(B) is not subject to Section
				  2115 of the Code, but by applying
				  the three-factor test set forth in subdivision (a) of Section
				  2115 of the Code, has an average
				  property factor, payroll factor and sales factor of not less than 25 percent
				  during the latest full income year, provided that the payroll factor for the
				  same period is at least 50 percent, and has a percentage of outstanding voting
				  securities held of record, as of the last record date for a shareholder's
				  meeting, by persons having addresses in this state of at least 25
				  percent;
(3) is not an
				  investment company subject to the Investment Company Act of 1940 or "blind
				  pool" company (as that term is defined in Section
				  260.113.1); and,
(4) if a majority-owned subsidiary, the
				  parent is also a small business issuer.