Section 2682.18 - Exemption from Section 1104.3 of Certain Transactions Involving an Exchange of Similar SecuritiesAny acquisition or disposition of securities made in an exchange of shares of a class (or series thereof) of stock of an insurer for an equivalent number of shares of another class (or series thereof) of stock of the same insurer, pursuant to a right of conversion under the terms of the insurer's charter or other governing instruments shall be exempt from the operation of Section 1104.3 if--
(1) The shares surrendered and those acquired in exchange therefor evidence substantially the same rights and privileges except that, pursuant to the provisions of the insurer's charter of other governing instruments, the board of directors may declare and pay a lesser dividend per share on shares of the class surrendered than on shares of the class acquired in exchange therefor, or may declare and pay no dividend on shares of the class surrendered; and(2) The transaction was effected in contemplation of a public sale of the shares acquired in the exchange; provided that this section shall not be construed to exempt from the operation of Section 1104.3 any purchase or sale of shares of the class surrendered and any sale or purchase of shares of the class acquired in the exchange (otherwise than in the transaction of exchange exempted by this section) within a period of less than six months.Cal. Code Regs. Tit. 10, § 2682.18