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 2 - Selling Expenses and Options to Underwriters › Section 260.140.20 - Selling Expenses

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
					 No issuer of securities shall incur more selling expenses than are reasonably
					 necessary for the sale and issuance of such securities. Selling expenses which
					 do not exceed 15 percent of the aggregate offering price (before deducting
					 discounts and commissions) are presumed to be reasonable if the percentage is
					 computed only on the portion of the aggregate offering price when and as paid
					 to the issuer. "Selling expenses," as used in this Article, means the total
					 underwriting and brokerage discounts and commissions (including fees of the
					 underwriters' attorneys paid by the issuer) paid in connection with the
					 offering plus all other expenses incurred by the issuer relating to printing,
					 engraving, mailing, salaries of employees while engaged in sales activity,
					 charges of transfer agents, registrars, trustees, escrow holders, depositaries,
					 and engineers and other experts, expenses of qualification of the sale of the
					 securities under Federal and State laws, including taxes and fees, and any
					 other expenses incurred by the issuer directly related to the offering and sale
					 of the securities, but excluding accountants' and the issuer's attorneys' fees
					 and options to underwriters.
Stock acquired or to be acquired by the underwriter, a
						person associated with an underwriter, underwriter's counsel, finder, financial
						advisor, or related parties in connection with the offering is considered part
						of the underwriter's compensation and is valued for such purposes on a formula
						basis taking into account the difference between the cost of such stock and the
						public offering price and other factors. However, the fact that stock has been
						held, or that there is an obligation to hold it, for a substantial period of
						time, and the method of payment therefor, may alter the valuation placed
						thereon.
(b) Where the
					 issuer is a small business issuer and the proposed maximum aggregate offering
					 price for all the securities to be sold in the offering does not exceed
					 $5,000,000 anywhere, selling expenses which do not exceed 18 percent of the
					 aggregate offering price (before deducting discounts and commissions) are
					 presumed to be reasonable provided the total underwriting and brokerage
					 discounts and commissions (including fees of the underwriters' attorneys paid
					 by the issuer) do not exceed 13 percent of the aggregate offering price and the
					 percentages are computed only on the portion of the aggregate offering price
					 when and as paid to the issuer.
(c)
					 Where the issuer is a small business issuer and the proposed maximum aggregate
					 offering price for all the securities to be sold in the offering do not exceed
					 $3,000,000 anywhere, selling expenses which does not exceed 20 percent of the
					 aggregate offering price (before deducting discounts and commissions) are
					 presumed to be reasonable provided the total underwriting and brokerage
					 discounts and commissions (including fees of the underwriters' attorneys paid
					 by the issuer) do not exceed 15 percent of the aggregate offering price and the
					 percentages are computed only on the portion of the aggregate offering price
					 when and as paid to the issuer.
1.
						Amendment filed 7-20-72; effective thirtieth day thereafter (Register 72, No.
						30).
2. Amendment filed 5-3-83; effective thirtieth day thereafter
						(Register 83, No. 19).
3. New subsection (a) designator, new
						subsections (b)-(c) and amendment of NOTE filed 12-19-95; operative 1-18-96
						(Register 95, No. 51).
Note: Authority cited: Section
						  25610,
						  Corporations Code. Reference: Sections
						  25113(b)(2)
						  and
						  25140,
						  Corporations Code.