§ 260.140.8. Restrictions on Transfer.
10 CA ADC § 260.140.8BARCLAYS OFFICIAL CALIFORNIA CODE OF REGULATIONS
Barclays Official California Code of Regulations Currentness
Title 10. Investment
Chapter 3. Commissioner of Business Oversight, Division of Corporations
Subchapter 2. Corporate Securities
Article 4. Standards for the Exercise of the Commissioner's Authority
Subarticle 1. Rights of Security Holders (Refs & Annos)
10 CCR § 260.140.8
§ 260.140.8. Restrictions on Transfer.
(a) No open qualifications will be approved to issue securities if the transfer of the securities is subject to any restrictions imposed by the issuer's charter documents, indenture agreements or other instruments or agreements under which the securities are to be issued.
(b) Limited offering qualifications may be approved to issue securities subject to transfer restrictions if the restrictions do not unfairly prejudice the opportunity of the holder(s) to receive the fair value of the securities (Section 260.140.50).
(1) Provisions are presumptively reasonable when there is no third-party offeror and the holder(s) desires to sell, if the provisions base the price at which the issuer or other holder(s) may purchase the securities upon either: (A) an independent appraised value; or (B) the book value of the securities (unless the business is one where the book value is not a significant indication of value).
(2) Rights of first refusal in favor of the issuer or other holder(s) are presumptively reasonable if: (A) they apply only where there is a bona fide third-party offeror and the selling holder desires to sell the securities; (B) such right of first refusal requires the issuer or other holder(s) to make its election to purchase the securities subject to such right of first refusal, if at all, by giving notice of such election no more than 30 days after receipt of notice of such right of first refusal; and (C) upon such exercise, the issuer or other holder(s) exercising such right of first refusal must purchase all (but not less than all, unless the selling holder consents) of the offered securities on the same terms offered by the bona fide third-party offeror, within 60 days after receipt of the notice described in clause (B) hereof, unless a longer period is offered by the bona fide third-party offeror.
(3) Provisions are not presumptively reasonable if they absolutely prohibit the transfer of securities or permit transfer only upon the consent of the issuer or the other holder(s), or give an option to the issuer or the other holder(s) to purchase regardless of the desire of the selling holder(s) to sell and will only be permitted when justified by the issuer, except as otherwise set forth in these rules.
(4) Provisions giving an issuer the right to repurchase securities upon termination of employment are presumptively reasonable if the repurchase price:
(A) is not less than the fair value of the securities to be repurchased on the date of termination of employment, and the right to repurchase will be exercised for cash or cancellation of purchase money indebtedness for the securities within 6 months of termination of employment (or in the case of securities issued upon exercise of options after the date of termination, within 6 months after the date of the exercise), and the right terminates when the issuer's securities become publicly traded; or
(B) is at the original purchase price, provided that the right to repurchase at the original purchase price lapses at the rate of at least 20% of the securities per year over 5 years from the date the option is granted (without respect to the date the option was exercised or became exercisable) and the right to repurchase must be exercised for cash or cancellation of purchase money indebtedness for the securities within 6 months of termination of employment (or in the case of securities issued upon exercise of options after the date of termination, within 6 months after the date of the exercise). In addition to the restrictions set forth in clauses (A) and (B), the securities held by an officer, director, general partner, trustee (where the issuer is a business trust), manager, advisor or consultant of the issuer, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer's parents, or an affiliate of the issuer may be subject to additional or greater restrictions.
Note: Authority cited: Sections 25102, 25140, 25610 and 25612.5, Corporations Code. Reference: Sections 25102, 25110, 25140, 25610 and 25612.5, Corporations Code.
1. Amendment filed 12-5-91; operative 1-6-92 (Register 92, No. 9).
2. Amendment of subsection (b)(3), new subsections (b)(4)-(b)(4)(B) and amendment of Note filed 7-9-2007; operative 7-9-2007 pursuant to Government Code section 11343.4 (Register 2007, No. 28).
3. Amendment of subsection (b)(4)(B) and Note filed 9-23-2009; operative 10-23-2009 (Register 2009, No. 39).
This database is current through 10/4/19 Register 2019, No. 40
10 CCR § 260.140.8, 10 CA ADC § 260.140.8
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