Cal. Code Regs. tit. 10 § 2607.03
Before any shares are offered to the public, except by conditional subscriptions without cash payment (Cf. Section 2613.05 infra) or are sold to the public, the promoters, organizers and all initial officers and directors as a group shall purchase and pay for in cash a substantial portion of the original issue on the same terms and conditions as share are offered to other investors. Ordinarily, such portion of the issue to be purchased by such persons as a group shall be not less than the sum of the following: 25% of the first million dollars and 15% of all amounts over one million dollars. Although such persons need not divide such purchase among themselves equally, ordinarily each shall make a substantial investment unless persuasive reasons why such person cannot do so are shown. Absent good cause the size of such group shall ordinarily not exceed twenty in number.
Cal. Code Regs. Tit. 10, § 2607.03