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 260.105.38 - Guarantees of Governmental Securities

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
There is hereby exempted from the provisions of Sections
					 25110,
					 25120 and
					 25130 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 any
					 guarantee, letter of credit, standby purchase agreement or similar security
					 obligating the issuer to pay the principal of and/or the interest on a security
					 exempted from the qualification requirements of the Code by virtue of Section
					 25100(a)
					 provided:
(a) The security exempted
				  from the qualification requirements of the Code by virtue of Section
				  25100(a) is an
				  "investment grade security" as defined in subsection (a)(1) of Section
				  260.105.34 of these rules,
				  or
(b) the issuer of the guarantee,
				  letter of credit, standby purchase agreement, or similar security meets all of
				  the following requirements:
(1) The issuer is
				  the issuer of any security registered under Section
				  12 of the Securities Exchange Act
				  of 1934 (15 U.S.C.
				  78l(g)) or exempted from
				  such registration by Section
				  12(g)(2)(G)
				  (15 U.S.C.
				  78l(g)(2)(G)) of the Act or,
				  if the issuer is a bank, it is a member of the Federal Reserve
				  System.
(2) The issuer has not
				  during the past five years, or during the period of its existence if shorter,
				  defaulted in the payment of any dividend or sinking fund installment on
				  preferred shares, or in the payment of any principal, interest or sinking fund
				  installment on any indebtedness for borrowed money.
(3) The issuer has net worth on a
				  consolidated basis of at least 12 million dollars ($12,000,000) according to
				  (A) its most recent available audited financial statement which may not be over
				  15 months old and (B) its most recent available unaudited financial statement
				  as of a date subsequent to the audited statement;
(4) The issuer has had average net income,
				  after all charges, including taxes and extraordinary losses and excluding
				  extraordinary gains, of at least 10% of its then net worth for (A) its 5 most
				  recent fiscal years, or during the period of its existence if shorter, and (B)
				  its most recent fiscal year, as determined from the financial statements
				  referred to in subsection (b)(3). In determining whether the issuer satisfies
				  the requirements of subsection (b)(4) there may be included in the net income
				  of any entity to whose assets such issuer, or a successor of such issuer, has
				  succeeded by merger, consolidation or acquisition of assets, if such net income
				  of such predecessor may, in accordance with generally accepted accounting
				  principles, be consolidated with the income of the issuer.