Section 260.105.20 - Exemption for Certain Nonprofit OrganizationsThere is hereby exempted from the provisions of Section 25110 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 a security (except evidences of indebtedness, whether interest bearing or not) of a nonprofit organization of the class described in Section 25100(j) of the Code, if all of the following conditions are met:
(1) The nonprofit organization meets all of the requirements of Section 25100(j), except that some person instrumental in organizing the nonprofit organization expects or intends to make a profit directly or indirectly from any business or activity associated with the organization or operation of such nonprofit organization or from remuneration received from such nonprofit organization;(2) Neither that person nor any affiliate of that person is in control of the nonprofit organization either directly or indirectly or is an officer or director of that nonprofit organization nor is the holder of any securities of that organization except for a membership or memberships for personal, family or other social uses;(3) The profit which such person expects or intends to make will be derived solely from a passive relationship with the organization by way of a lease of real or personal property or providing of goods to such organization at a fair market rental or price competitive with similar properties or goods offered by nonaffiliated persons, or from the sale of real properties within the immediate geographic area of operation of such organization but without the offer of immediate or automatic admission into such nonprofit organization with or without an additional fee, and without any active participation in or operation of any business or activity associated with the organization or operation of such nonprofit organization, including the operation of facilities or services, such as a bar, restaurant, locker room, etc.;(4) The initial offering of memberships was qualified;(5) The terms of the arrangements with the promoter extant at the time the initial qualification became effective, either remain unchanged in their terms or have become more favorable to the members of the nonprofit organization;(6) The nonprofit organization, at least 30 days prior to any sale of memberships under the exemption provided by this Section, gives notice of such intention to the Commissioner and files financial statements complying with Section 260.613 of these Rules; and(7) No order is issued by the Commissioner under Sections 25140 or 25143 of the Code relating to a qualification obtained for the sale of the memberships of the nonprofit organization, and no order has been issued by the Commissioner withholding this exemption either at the time of the initial offering of memberships or at any subsequent time.Cal. Code Regs. Tit. 10, § 260.105.20
1. New section filed 12-28-73; effective thirtieth day thereafter (Register 73, No. 52).
2. Amendment filed 1-22-75; effective thirtieth day thereafter (Register 75, No. 4).
3. Editorial correction of NOTE filed 3-9-83 (Register 83, No. 11). Note: Authority cited: Sections 25105 and 25610, Corporations Code. Reference: Sections 25100(j), 25105, 25110, 25120 and 25130, Corporations Code.
1. New section filed 12-28-73; effective thirtieth day thereafter (Register 73, No. 52).
2. Amendment filed 1-22-75; effective thirtieth day thereafter (Register 75, No. 4).
3. Editorial correction of NOTE filed 3-9-83 (Register 83, No. 11).