Repealed and added by Stats. 1968, Ch. 88.
This division may be known as the “Corporate Securities Law of 1968.”
References herein to “this law” refer to the applicable provisions of this division.
Part 1 - DEFINITIONS
California Corporations Code — §§ 25000-25023
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Sections (31)
Repealed and added by Stats. 1968, Ch. 88.
Unless the context otherwise requires, the definitions in this part apply throughout this division.
Repealed and added by Stats. 1968, Ch. 88.
“Advertisement” means any written or printed communication or any communication by means of recorded telephone messages or spoken on radio, television, or similar communications media, published in connection with the offer or sale of a security.
Amended by Stats. 2015, Ch. 190, Sec. 12. (AB 1517) Effective January 1, 2016.
(a)“Agent” means any individual, other than a broker-dealer or a partner of a licensed broker-dealer, who represents a broker-dealer or who for compensation represents an issuer in effecting or attempting to effect purchases or sales of securities in this state.
(b)“Agent” does not include an individual who only represents an issuer in effecting transactions in securities exempted by subdivision (a), (b), (e), (f), (g), (j), (k), or (l) of Section 25100 or in effecting transactions exempted by Section 25102, and does not
include an individual who has no place of business in this state if he or she effects transactions in this state exclusively with broker-dealers.
(c)“Agent” does not include an associated person of a broker or dealer effecting transactions described in Section 15(i)(4) of the Securities Exchange Act of 1934, subject to the provisions of Section 15(i)(3) of that act.
(d)An officer or director of a broker-dealer or issuer, or an individual occupying a similar status or performing similar functions, is an agent only if he or she otherwise comes within this definition and receives compensation specifically related to purchases or sales of securities.
Added by Stats. 1973, Ch. 390.
“Business days” are all days other than every Saturday, every Sunday, and such other days as are specified or provided for as holidays in the Government Code of the State of California.
Amended by Stats. 2022, Ch. 452, Sec. 69. (SB 1498) Effective January 1, 2023.
(a)“Broker-dealer” means any person engaged in the business of effecting transactions in securities in this state for the account of others or for that person’s own account. “Broker-dealer” also includes a person engaged in the regular business of issuing or guaranteeing options with regard to securities not of that person’s own issue. “Broker-dealer” does not include any of the following:
(1)Any other issuer.
(2)An agent, when an employee of a broker-dealer or issuer.
(3)A bank, trust company, or savings and loan association.
(4)Any person insofar as that person buys
or sells securities for that person’s own account, either individually or in some fiduciary capacity, but not as part of a regular business.
(5)A person who has no place of business in this state if that person effects transactions in this state exclusively with (A) the issuers of the securities involved in the transactions or (B) other broker-dealers.
(6)A broker licensed by the Real Estate Commissioner of this state when engaged in transactions in securities exempted by subdivision (f) or (p) of Section 25100 or in securities the issuance of which is subject to authorization by the Real Estate Commissioner of this state or in transactions exempted by subdivision (e) of Section 25102.
(7)An exchange certified by the Commissioner of Financial Protection and Innovation pursuant to this section when it is issuing or
guaranteeing options. The commissioner may by order certify an exchange under this section upon those conditions as the commissioner by rule or order deems appropriate, and upon notice and opportunity to be heard the commissioner may suspend or revoke that certification, if the commissioner finds that certification, suspension, or revocation to be in the public interest and necessary and appropriate for the protection of investors.
(b)For purposes of this section, an agent is an employee of a broker-dealer under paragraph (2) of subdivision (a) when the agent is employed by or associated with the broker-dealer under all of the following conditions:
(1)The agent is subject to the supervision and control of the broker-dealer.
(2)The agent performs under the name, authority, and marketing policies of the
broker-dealer.
(3)The agent discloses to investors the identity of the broker-dealer.
(4)The agent is reported pursuant to subdivision (c) of Section 25210 and the rules adopted thereunder.
Amended by Stats. 2022, Ch. 452, Sec. 70. (SB 1498) Effective January 1, 2023.
“Commissioner” means the Commissioner of Financial Protection and Innovation.
Amended by Stats. 2012, Ch. 419, Sec. 21. (SB 323) Effective January 1, 2013. Operative January 1, 2014, by Sec. 32 of Ch. 419.
“Entity conversion transaction” means a conversion pursuant to Section 1151, 1157, 15911.02, 15911.08, 16902, 16908, 17710.02, or 17710.08 or a conversion that occurs entirely out of state, unless the interests in the entity resulting from the conversion to be held by the equity holders of the entity being converted as a result of the conversion are not securities. For purposes of Sections 25103 and 25120 an entity conversion transaction is not a change in the rights, preferences, privileges, or restrictions of or on outstanding securities or an exchange of securities by the issuer with its existing security holders exclusively.
Repealed and added by Stats. 1968, Ch. 88.
“Fraud,” “deceit,” and “defraud” are not limited to common law fraud or deceit.
Repealed and added by Stats. 1968, Ch. 88.
“Guaranteed” means guaranteed as to payment of principal, interest, dividends, or call premium.
Repealed and added by Stats. 1968, Ch. 88.
(a)An offer or sale of a security is made in this state when an offer to sell is made in this state, or an offer to buy is accepted in this state, or (if both the seller and the purchaser are domiciled in this state) the security is delivered to the purchaser in this state. An offer to buy or a purchase of a security is made in this state when an offer to buy is made in this state, or an offer to sell is accepted in this state, or (if both the seller and the purchaser are domiciled in this state) the security is delivered to the purchaser in this state.
(b)An offer to sell or to buy is made in this state when the offer either originates from this state or is directed by the offeror to this state and received at the place to which it is directed. An offer to buy or to sell is accepted in this state when acceptance is communicated to the offeror in this state; and acceptance is communicated to the offeror in this state when the offeree directs it to the offeror in this state reasonably believing the offeror to be in this state and it is received at the place to which it is directed. A security is delivered to the purchaser in this state when the certificate or other evidence of the security is directed to the purchaser in this state and received at the place to which it is directed.
(c)An offer to sell or to buy is not made in this state merely because (1) the publisher circulates or there is circulated on his behalf in this state any bona fide newspaper or other publication of general, regular and paid circulation which has had more than two-thirds of its circulation outside this state during the past 12 months, or (2) a radio or television program originating outside this state is received in this state.
Amended by Stats. 1996, Ch. 631, Sec. 1. Effective January 1, 1997.
(a)“Investment adviser” means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as a part of a regular business, publishes analyses or reports concerning securities. “Investment adviser” does not include (1) a bank, trust company or savings and loan association; (2) an attorney at law, accountant, engineer or teacher whose performance of these services is solely incidental to the practice of his or her profession; (3) an associated person of an investment adviser; (4) a broker-dealer or agent of a broker-dealer whose performance of these services is solely incidental to the conduct of the business of a broker-dealer and who receives no special compensation for them; or (5) a publisher of any bona fide newspaper, news magazine or business or financial publication of general, regular and paid circulation and the agents and servants thereof, but this paragraph (5) does not exclude any such person who engages in any other activity which would constitute that person an investment adviser within the meaning of this section.
(b)“Investment adviser” also includes any person who uses the title “financial planner” and who, for compensation, engages in the business, whether principally or as part of another business, of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as part of a regular business, publishes analyses or reports concerning securities. This subdivision does not apply to:
(1)a bank, trust company, or savings and loan association; (2) an attorney at law, accountant, engineer, or teacher whose performance of these services is solely incidental to the practice of his or her profession, so long as these individuals do not use the title “financial planner;” (3) an associated person of an investment adviser where the investment adviser is licensed or exempt from licensure under this law; (4) an agent of a broker-dealer where the broker-dealer is licensed or exempt from licensure under this law, so long as (A) the performance of these services by the agent is solely incidental to the conduct of the business of the broker-dealer, and (B) the agent receives no special compensation for the performance of these services; or (5) a publisher set forth in paragraph (5) of subdivision (a), so long as the publisher or the agents and servants of the publisher are not engaged in any other activity which would constitute that person an investment adviser within the meaning of this section.
Added by Stats. 1998, Ch. 48, Sec. 1. Effective January 1, 1999.
“Investment adviser” does not include persons excepted from the definition of “investment adviser” by Section 202(a)(11) of the Investment Advisers Act of 1940 (15 U.S.C. 80a-1 et seq., as amended), except that with regard to those persons the commissioner may investigate and bring enforcement actions with respect to fraud and deceit, including and without limitation fraud and deceit under Section 25235, and any rules of the commissioner adopted thereunder.
Added by Stats. 1997, Ch. 391, Sec. 2. Effective January 1, 1998.
(a)“Investment adviser representative” or “associated person of an investment adviser” means any partner, officer, director of (or a person occupying a similar status or performing similar functions) or other individual, except clerical or ministerial personnel, who is employed by or associated with, or subject to the supervision and control of, an investment adviser that has obtained a certificate or that is required to obtain a certificate under this law, and who does any of the following:
(1)Makes any recommendations or otherwise renders advice regarding securities.
(2)Manages accounts or portfolios of clients.
(3)Determines which recommendation or advice regarding securities should be given.
(4)Solicits, offers, or negotiates for the sale or sells investment advisory services.
(5)Supervises employees who perform any of the foregoing.
(b)“Investment adviser representative” means, with respect to an investment adviser subject to Section 25230.1, a person defined as an investment adviser representative by Rule 203A-3 of the Securities and Exchange Commission (17 C.F.R. 275.203A-3) and who has a place of business in this state.
Amended by Stats. 2000, Ch. 705, Sec. 1. Effective January 1, 2001.
“Issuer” means any person who issues or proposes to issue any security, except that:
(a)With respect to certificates of deposit, voting trust certificates or collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors or persons performing similar functions or of the fixed, restricted management or unit type, “issuer” means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which the security is issued. However, with respect to equipment-trust certificates or like securities, “issuer” means the person by whom the equipment or property is or is to be used.
(b)With respect to certificates of interest or participation in oil, gas or mining titles or leases or in payments out of production under those titles or leases, “issuer” means the person or persons in active control of the exploration or development of the property who sell those interests or participations or payments or any person or persons who subdivide and sell those interests or participations or payments. The determination of the person or persons in active control of the exploration or development of the property shall be made on the basis of the actual relationship of the parties and not on the basis of the legal designation of a person’s interest.
(c)With respect to a fractional or pooled interest in a viatical or life settlement contract, “issuer” means the person who creates, for the purposes of sale, the fractional or pooled interest. In the case of a viatical or life settlement contract that is not fractionalized or pooled, “issuer” means the person effecting the transactions with the investors in those contracts.
(d)In the case of an unincorporated association which provides by its articles for limited liability of any or all of its members, or in the case of a trust, committee, or other legal entity, the trustees or members thereof shall not be individually liable as issuers of any security issued by the association, trust, committee, or other legal entity.
Repealed and added by Stats. 1968, Ch. 88.
“Nonissuer transaction” means any transaction not directly or indirectly for the benefit of the issuer. A transaction is indirectly for the benefit of the issuer if any portion of the purchase price of any securities involved in the transaction will be received indirectly by the issuer. An offering which involves both an issuer transaction and a nonissuer transaction shall be treated for the purposes of Chapters 2 (commencing with Section 25110) and 4 (commencing with Section 25130) of Part 2 of this division as an issuer transaction, but for the purposes of Chapter 1 (commencing with Section 25100) of Part 2 of this division they shall be treated as separate transactions.
Amended by Stats. 1986, Ch. 698, Sec. 2.
“Owners’ association” means a nonprofit corporation or association created to own or lease the commonly owned lots, parcels or areas referred to in clause (a) of Section 25015, or to provide management, maintenance, preservation or control of either such lots, parcels or areas or of the separately owned lots, parcels or areas, or both, or any portion of or interest in them, or interest subject to subdivision (g) of Section 11004.5 of the Business and Professions Code, if the shares or certificates of membership therein are transferable only by transfer of the interests in the lots, parcels or areas. Such shares of stock or memberships shall be considered interests in a real estate development or in subdivided lands or a subdivision.
Amended by Stats. 1994, Ch. 1200, Sec. 28. Effective September 30, 1994.
“Person” means an individual, a corporation, a partnership, a limited liability company, a joint venture, an association, a joint stock company, a trust, an unincorporated organization, a government, or a political subdivision of a government.
Repealed and added by Stats. 1968, Ch. 88.
“Publish” means publicly to issue or circulate by newspaper, mail, radio or television, or otherwise to disseminate to the public.
Added by Stats. 1992, Ch. 1183, Sec. 2. Effective January 1, 1993.
“Rollup participant” means a finite-life limited partnership.
(a)Except as provided in subdivision (b) of Section 25014.6, a limited partnership has “finite-life” if both of the following apply:
(1)It operates as a conduit vehicle for investors to participate in the ownership of assets for a limited period of time.
(2)It has a policy or purpose of distributing to investors substantially all proceeds from the sale, financing, or refinancing of assets, whether for the term of the partnership or after an initial period of time following commencement of operations, rather than reinvesting those proceeds in the business.
(b)Rollup participant does not include any partnership registered under the Investment Company Act of 1940 or any business development company as defined in Section 80a-2(48) of Title 15 of the United States Code.
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