Article 8. Financial Provisions of California Public Utilities Code >> Division 1. >> Part 4. >> Chapter 1. >> Article 8.

(a) Any share or membership issued by an association is exempt from Part 2 (commencing with Section 25100) of Division 1 of Title 4 of the Corporations Code if the aggregate investment of a shareholder or member in shares or memberships sold by an association does not exceed one thousand dollars ($1,000).
  (b) This exemption does not apply to the shares or memberships in an association if any promoter of those shares or memberships expects or intends to make a profit directly or indirectly from any business or activity associated with the association or from the operation of the association or to receive a salary or other remuneration from the association. Furthermore, this exemption does not apply to nonvoting shares or memberships in an association issued to any person who does not possess, and who will not acquire in connection with the issuance of nonvoting memberships, voting power in the association.
If an association issues nonpar value stock, the issuance of that stock shall be governed by the terms of all general laws which cover the issuance of nonpar value stock in domestic corporations.
If an association with preferred shares of stock purchases the stock or any property, or any interest in any property, of any person, it may discharge the obligations which are so incurred, in whole or in part, by exchanging for the acquired interest, shares of its preferred stock to an amount which at par value would equal the fair market value of the stock or interest so purchased, as determined by the board of directors. In that case, the transfer to the association of the stock or interest which is purchased is equivalent to payment in cash for the shares of stock which are issued.
The board of directors of an association shall cause to be sent to the members of the association, not later than 120 days after the close of the fiscal or calendar year, an annual report of the operations of the association, unless that report is expressly dispensed with in the bylaws. If required by the bylaws, interim reports of the operations of the association for the three month, six month, or nine month periods of the current fiscal year of the association shall be furnished to the members of the association. The annual report and any interim reports shall include a balance sheet as of the closing date. The financial statement shall be prepared from, and be in accordance with, the books. It shall be prepared in a form consistent with generally accepted accounting principles or in consultation with a certified public accountant or a public accountant.