260.102.12. Limited Offering Exemption Interpretations
- The provisions of this section apply to the provisions of Section 25102(f) of the Code.
- Integration. The term "transaction" does not
- any offer or sale of a security made more than 6 months before the start of an offering under the exemption or made more than six months after completion of an offering under the exemption, so long as during those six month periods there are no offers or sales of securities by or for the issuer that are of the same or a similar class as those offered or sold pursuant to the exemption, other than those offers or sales of securities under any purchase, savings, option, bonus, appreciation, profit-sharing, thrift, incentive, pension or similar plan solely for employees, directors, trustees or officers of the issuer or a subsidiary of the issuer (note: Section 25102(f) is not available for an offer or sale of a security to a pension or profit-sharing trust of the issuer),
- any offer or sale of a security pursuant to a qualification under Section 25110 or 25120 which became effective after the filing of the notice of the transaction pursuant to Rule 260.102.14, or in which the application for qualification discloses the transaction under the exemption, whether past, current or proposed. This subsection does not create any presumption that offers and sales not excluded from the transaction by its provisions are to be integrated for the purposes of the exemption and that determination shall be made without reference to this subsection.
- Purchaser. The term "purchaser" means a person who acquires the beneficial ownership of the security, whether individually or in joint ownership, in the transaction under the exemption. Each person who takes in joint ownership with another is to be counted as one except as otherwise provided in Section 25102(f).
- The term "preexisting personal or business relationship" includes any relationship consisting of personal or business contacts of a nature and duration such as would enable a reasonably prudent purchaser to be aware of the character, business acumen and general business and financial circumstances of the person with whom such relationship exists. A relationship of employer-employee, or as a security holder of the issuer, or as a customer of a broker-dealer, investment adviser or other person, does not necessarily involve contacts of a nature which are sufficient to establish a "preexisting personal or business relationship" within the meaning of Section 25102(f). This subsection does not create any presumption that relationships not falling within its terms are not within the statutory language, and the determination of whether or not such a relationship is within the statutory language shall be made without reference to this subsection.
- The phrase "all purchasers" used in Section 25102(f)(2) of the Code does not include purchasers excluded from the count of purchasers by virtue of Section 25102(f)(4) or Rule 260.102.13.
- Partners. The term "partners" in Section 25102(f)(2) means general partners.
- Controlling Person. The term "controlling person of the offeror" includes but is not limited to a person who, in connection with transactions within one year of the formation of the issuer, is a "promoter" of the issuer. "Promoter" means a person who, acting alone or in conjunction with one or more other persons, takes the initiative in founding and organizing the business or enterprise of an issuer.
- Professional Advisor. The term "professional advisor"
means a person who, as a regular part of such person's business,
is customarily relied upon by others for investment recommendations
or decisions, and who is customarily compensated for such
services, either specifically or by way of compensation for
related professional services, and attorneys and certified
- The foregoing includes but is not limited to persons Licensed or registered as broker-dealers, agents, investment advisers, banks and savings and loan associations. The foregoing also includes Licensed real estate brokers with respect to those securities referred to in Section 25206 of the Code.
- A person is not the professional advisor of a purchaser unless designated as such by the purchaser.
- Unaffiliated. The relationships which will render a person
not "unaffiliated" include
- a present or intended relationship of employment, either as an employee, employer, independent contractor or principal,
- any relationship within the definition of the term "affiliate" or as an officer or director of an affiliate and
- the beneficial ownership by the professional advisor of securities of the issuer or its affiliates or selling agent, except that the ownership of 1% or less of such securities shall not render a professional advisor not unaffiliated.
- Affiliate. "Affiliate" of the issuer means a person controlling, controlled by or under common control with, the issuer. A person controls another person within the meaning of this subsection through the possession, direct or indirect, of the power to direct or cause the direction of the management, policies or actions of such other person.
- Publication of Advertising. Section 25102(f)(4) of the
Code is to be interpreted so as to facilitate the circulation
of disclosure materials to offerees and purchasers, so long
as such materials are not disseminated to the public (see
Sections 25002 and 25014 of the Code). Private placement memoranda,
offering circulars and similar disclosure documents are not
"disseminated to the public" for the purposes of
Section 25102(f) of the Code if the issuer limits such circulation
- to persons reasonably believed to be interested in purchasing the securities or
- to persons whom the issuer believes may meet the qualifications
required of purchasers pursuant to such section and the
rules thereunder, provided with respect to clause (1) and
clause (2) that neither the issuer nor any person acting
on its behalf shall offer or sell the securities by any
form of general solicitation or general advertising, including,
but not limited to, the following:
- Any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio; and
- Any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. The preceding sentence does not create any presumption that a dissemination of materials otherwise than as described therein is a "publication of advertising," and the determination of that question shall be made without reference to that sentence.
- Institutional Investors. The reference in Section 25102(f) of the Code to purchasers described in Section 25102(i) includes those persons designated in Rule 260.102.10.
- For purposes of Section 25102(f), when a person is both an "affiliate of the issuer" or a purchaser excluded by Rule 260.102.13 and a partnership, corporation or other organization which was specifically formed for the purpose of purchasing the security offered in reliance upon the exemption, each beneficial holder of its securities shall be counted or excluded from the count in accordance with the provisions of Section 25102(f).
Editor's Note: California Code of Regulations (CCR), Title 10, Chapter 3 located at the Office of Administrative Law's website. California Corporations Code sections located at Legislative Counsel's website.
For information about obtaining the CCR in print, please contact the State’s official publisher, Barclays Official California Code of Regulations at (800) 888-3600 or visiting them online at www.barclaysccr.com.