Article 5. Securities Transactions of California Financial Code >> Division 7. >> Chapter 5. >> Article 5.
Unless the context otherwise requires, in this article:
(a) "Offer" or "offer to sell" includes every attempt or offer to
dispose of, or solicitation of an offer to buy, a security for value.
(b) "Sale" or "sell" includes every contract of sale of, contract
to sell, or disposition of, a security for value. "Sale" or "sell"
includes any exchange of securities and any change in the rights,
preferences, privileges, or restrictions of or on outstanding
(c) "Security" means any stock or debenture, or any warrant,
right, or option to subscribe to or purchase any of the foregoing.
(d) The terms defined in subdivisions (a) and (b) of this section
do not include any stock dividend payable with respect to common
stock of an industrial loan company solely (except for any cash or
script paid for fractional shares) in shares of such common stock, if
such industrial loan company has no other class of voting stock
outstanding; provided, that shares issued in any such dividend shall
be subject to any conditions previously imposed by the commissioner
applicable to the shares with respect to which they are issued.
No industrial loan company organized under the laws of
this state shall offer or sell any security issued by it unless the
commissioner has issued a permit authorizing such sale.
An application for a permit shall be in such form and
contain such information as the commissioner may prescribe.
The commissioner shall charge and collect fees for
applications filed under this article as fixed in this section.
(a) The fee for a negotiating permit shall be fifty dollars ($50).
(b) The fee for a permit to exchange a security or to make any
change in the rights, preferences, privileges, or restrictions of or
on outstanding securities shall be fifty dollars ($50).
(c) The fee for any permit to sell securities other than as
specified in subdivision (b) shall be one hundred dollars ($100) plus
one-tenth of one percent of the aggregate value of the securities
sought to be sold, up to a maximum aggregate fee of one thousand
seven hundred fifty dollars ($1,750).
If the commissioner finds that the proposed sale of
securities is fair, just, and equitable, he or she shall issue to the
applicant a permit authorizing it to offer and sell the securities
in such amount and upon such terms and conditions as he or she may
provide in the permit. If the commissioner finds otherwise, he or she
shall deny the application.
The commissioner may impose conditions in any permit
issued under Section 18427.4, requiring the deposit in escrow of
securities, imposing a legend condition restricting the
transferability thereof, impounding the proceeds from the sale
thereof, limiting the expense in connection with the sale thereof, or
such other conditions as he or she deems reasonable and necessary or
advisable in the public interest.
Every permit issued pursuant to Section 18427.4 shall
recite that it is permissive only and does not constitute a
recommendation or endorsement of the securities permitted to be sold.
The commissioner may amend, alter, suspend, or revoke any
permit issued pursuant to Section 18427.4.
Whenever an industrial loan company applies for a permit
to issue any security or to deliver any other consideration (whether
or not such security or such transaction is exempt from, or not
subject to, the provisions of Section 18427.1) in exchange for one or
more bona fide outstanding securities (as defined in Section 25019
of the Corporations Code), claims, or property interests, or partly
in such exchange and partly for cash, the commissioner is authorized
to approve the terms and conditions of such issuance and exchange or
such delivery and exchange and the fairness of such terms and
conditions and is authorized to hold a hearing on the fairness of
such terms and conditions, at which all persons to whom it is
proposed to issue any security or to deliver any other consideration
in such exchange shall have the right to appear.
There shall be exempted from the provisions of Section
18427.1 all of the following:
(a) (1) Any offer, not involving a public offering, to an
affiliate or to a person of the type described in subdivision (i) of
Section 25102 of the Corporations Code or in the regulations of the
Commissioner of Corporations adopted thereunder.
(2) The execution and delivery of an agreement for the sale of
securities to any person of the type described in paragraph (1),
subject to all of the following:
(A) The agreement shall contain substantially the following
"The sale of the securities which are the subject of this agreement
has not been authorized by a permit issued by the Commissioner of
Financial Institutions of the State of California. The issuance of
the securities or the payment or receipt of any part of the
consideration therefor prior to the issuance of a permit is unlawful,
unless the sale of securities is exempt from Section 18427.1 of the
California Financial Code. The rights of all parties to this
agreement are expressly conditioned upon the issuance of a permit,
unless the sale is so exempt."
(B) No part of the purchase price may be paid or received, and
none of the securities may be issued, until a permit authorizing the
sale of the securities is issued, unless the sale is exempt from
(b) Any transaction or security which the commissioner by
regulation or order exempts as not being comprehended within the
purposes of this article and the regulation of which he or she finds
is not necessary or appropriate in the public interest or for the
protection of investors.
Nothing contained in this article shall affect the
Corporate Securities Law of 1968, Division 1 (commencing with Section
25000) of Title 4 of the Corporations Code.
The commissioner may by regulation or order restrict,
limit, prohibit or otherwise condition the uses of the proceeds from
the sale of securities, the extent to which a security may be
included within the definition of capital, or the extent to which the
proceeds from the sale of securities may be included in the
investment certificate ratio as defined by Section 18016, or used to
increase outstanding investment certificates.