Cal. Code Regs. Tit. 10, § 260.140.138 - Non-Qualifiable Securities

Current through Register 2021 Notice, Register No. 40, October 1, 2021

Ordinarily, securities which are subject to any of the limitations described below will not be qualified for nonissuer transactions:

(a) Common shares which are nonvoting or whose voting rights are disproportionate to other classes of common shares in relation to market price or equity interest.
(b) Securities which are not freely transferable. Securities which are subject to an escrow or legend condition or to a right of first refusal, and stock purchased for investment (letter stock) are considered to be not freely transferable within the meaning of this provision. If only some but not all securities of the class sought to be qualified are subject to such limitations, the application will not be denied solely on this ground if adequate assurances are established against a distribution of the securities subject to the limitations.


Cal. Code Regs. Tit. 10, § 260.140.138

Note: Authority cited: Section 25610, Corporations Code. Reference: Sections 25131 and 25140, Corporations Code.

1. Editorial correction adding NOTE filed 3-9-83 (Register 83, No. 11).
2. Amendment filed 8-7-85; effective thirtieth day thereafter (Register 85, No. 32).

The following state regulations pages link to this page.

State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.