Section 260.105.38 - Guarantees of Governmental SecuritiesThere is hereby exempted from the provisions of Sections 25110, 25120 and 25130 of the Code as not being comprehended within the purposes of the Corporate Securities Law of 1968 and the qualification of which is not necessary or appropriate in the public interest or for the protection of investors, any offer or sale of any guarantee, letter of credit, standby purchase agreement or similar security obligating the issuer to pay the principal of and/or the interest on a security exempted from the qualification requirements of the Code by virtue of Section 25100(a) provided:
(a) The security exempted from the qualification requirements of the Code by virtue of Section 25100(a) is an "investment grade security" as defined in subsection (a)(1) of Section 260.105.34 of these rules, or(b) the issuer of the guarantee, letter of credit, standby purchase agreement, or similar security meets all of the following requirements: (1) The issuer is the issuer of any security registered under Section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)) or exempted from such registration by Section 12(g)(2)(G) (15 U.S.C. 78l(g)(2)(G)) of the Act or, if the issuer is a bank, it is a member of the Federal Reserve System.(2) The issuer has not during the past five years, or during the period of its existence if shorter, defaulted in the payment of any dividend or sinking fund installment on preferred shares, or in the payment of any principal, interest or sinking fund installment on any indebtedness for borrowed money.(3) The issuer has net worth on a consolidated basis of at least 12 million dollars ($12,000,000) according to (A) its most recent available audited financial statement which may not be over 15 months old and (B) its most recent available unaudited financial statement as of a date subsequent to the audited statement;(4) The issuer has had average net income, after all charges, including taxes and extraordinary losses and excluding extraordinary gains, of at least 10% of its then net worth for (A) its 5 most recent fiscal years, or during the period of its existence if shorter, and (B) its most recent fiscal year, as determined from the financial statements referred to in subsection (b)(3). In determining whether the issuer satisfies the requirements of subsection (b)(4) there may be included in the net income of any entity to whose assets such issuer, or a successor of such issuer, has succeeded by merger, consolidation or acquisition of assets, if such net income of such predecessor may, in accordance with generally accepted accounting principles, be consolidated with the income of the issuer.Cal. Code Regs. Tit. 10, § 260.105.38
1. New section filed 7-16-86; effective thirtieth day thereafter (Register 86, No. 29). Note: Authority cited: Sections 25105 and 25610, Corporations Code. Reference: Sections 25100, 25105, 25110, 25120 and 25130, Corporations Code.
1. New section filed 7-16-86; effective thirtieth day thereafter (Register 86, No. 29).