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 260.105.17 - Exemption for Certain Publicly Traded Common Shares

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) 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, the offer or sale of nonassessable
				  common shares, or any warrant or right to purchase or subscribe to any such
				  shares, or any unit or right arising from a compensation plan of the issuer or
				  affiliate of the issuer payable in such shares or cash in an amount which
				  relates to the value of and/or dividends paid on such shares, or both, whether
				  or not subject to any contingency, if on the business day preceding the date of
				  sale of such shares, warrant or right, or grant of such unit or right, all of
				  the following requirements are met:
(1) Such
				  shares (or the shares issuable upon exercise of such warrant or right or
				  payable upon such unit or right) are issued by a person which is the issuer of
				  any security registered under Section
				  12 of the Securities Exchange Act
				  of 1934 (15 USC
				  781(g)) or exempted from
				  such registration by Section
				  12(g)(2)(G)
				  (15 USC
				  781(g)(2)(G)) of that
				  Act;
(2) The shares to be offered
				  or sold (or the shares issuable upon exercise of such warrant or right or
				  payable upon such unit or right) are listed or approved for listing upon notice
				  of issuance on a national securities exchange approved for the purpose of this
				  section by rule or order of the Commissioner (or in the case of employee
				  options or rights, shareholder approval is required of the options or rights or
				  of the plan and the issuer has no reason to believe that, upon such approval,
				  the shares issuable upon the exercise of such options or rights, will not be
				  listed or approved for listing upon notice of issuance), or quotations for the
				  class of such shares are reported by the automated quotations system operated
				  by any quotation system approved by rule or order of the Commissioner pursuant
				  to this section;
(3) Shares of the
				  class to be offered or sold (or shares of the class issuable upon exercise of
				  such warrant or right or payable upon such unit or right) shall have been
				  traded or (in the case of shares traded only over-the-counter) offered for sale
				  on each of at least twelve (12) days within the thirty (30) calendar days
				  preceding the date of sale of such shares, warrant or right and during such
				  period (A) shares of such class shall not have been suspended from trading by
				  order of the Commissioner or the Securities and Exchange Commission; and (B)
				  the average closing sale price and the last closing sale price of shares of
				  such class (exclusive of any sale price for the business day preceding the
				  offering) as reported on any national securities exchange on which shares of
				  such class are listed, or the average closing bid price and the last closing
				  bid price of shares of such class (exclusive of any bid price for the business
				  day preceding the offering), as reported by the quotation system referred to in
				  clause (2) of this subsection shall be at least $4 per share. Quotations
				  appearing in the Wall Street Journal or any other publication approved by order
				  of the Commissioner may be relied upon to satisfy the requirement of this
				  clause (3);
(4) The issuer of such
				  shares is a corporation organized under the laws of the United States or any
				  state of the United States or the District of Columbia and meets all of the
				  following requirements:
(A) Such corporation
				  has an authorized capitalization which includes not more than one class of
				  common shares, and such common shares are voting shares;
(B) Such corporation 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;
(C) Such corporation has a net worth on a
				  consolidated basis of at least one million dollars ($1,000,000) according to
				  (1) its most recent available audited financial statement which may not be over
				  15 months old and (2) its most recent available unaudited financial statement
				  as of a date subsequent to such audited statement;
(D) Such corporation has had net income,
				  after all charges, including taxes and extraordinary losses, and excluding
				  extraordinary gains, of either (1) at least five hundred thousand dollars
				  ($500,000) for its last fiscal year and one million five hundred thousand
				  dollars ($1,500,000) in total for its last five fiscal years, or (2) at least
				  one million dollars ($1,000,000) in each of its last two fiscal years. The
				  determination of net income herein required, if such determination is made
				  within 90 days after the close of its last fiscal year and prior to the
				  availability of an audited statement for that period, may be based upon an
				  unaudited statement for the period which the issuer reasonably believes is
				  prepared in accordance with generally accepted accounting principles. In
				  determining whether a corporation satisfies the requirements of this subsection
				  (D), there may be included the net income of any corporation to whose assets
				  such corporation, or a successor of such corporation, has succeeded by merger,
				  consolidation or acquisition of assets, if such net income of such predecessor
				  corporation may, in accordance with generally accepted accounting principles,
				  be consolidated with the income of such
				  corporation.