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
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
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