Section 260.105.17 - Exemption for Certain Publicly Traded Common Shares(a) There 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, the offer or sale of nonassessable common shares, or any warrant or right to purchase or subscribe to any such shares, or any unit or right arising from a compensation plan of the issuer or affiliate of the issuer payable in such shares or cash in an amount which relates to the value of and/or dividends paid on such shares, or both, whether or not subject to any contingency, if on the business day preceding the date of sale of such shares, warrant or right, or grant of such unit or right, all of the following requirements are met:(1) Such shares (or the shares issuable upon exercise of such warrant or right or payable upon such unit or right) are issued by a person which is the issuer of any security registered under Section 12 of the Securities Exchange Act of 1934 (15 USC 781(g)) or exempted from such registration by Section 12(g)(2)(G) (15 USC 781(g)(2)(G)) of that Act;(2) The shares to be offered or sold (or the shares issuable upon exercise of such warrant or right or payable upon such unit or right) are listed or approved for listing upon notice of issuance on a national securities exchange approved for the purpose of this section by rule or order of the Commissioner (or in the case of employee options or rights, shareholder approval is required of the options or rights or of the plan and the issuer has no reason to believe that, upon such approval, the shares issuable upon the exercise of such options or rights, will not be listed or approved for listing upon notice of issuance), or quotations for the class of such shares are reported by the automated quotations system operated by any quotation system approved by rule or order of the Commissioner pursuant to this section;(3) Shares of the class to be offered or sold (or shares of the class issuable upon exercise of such warrant or right or payable upon such unit or right) shall have been traded or (in the case of shares traded only over-the-counter) offered for sale on each of at least twelve (12) days within the thirty (30) calendar days preceding the date of sale of such shares, warrant or right and during such period (A) shares of such class shall not have been suspended from trading by order of the Commissioner or the Securities and Exchange Commission; and (B) the average closing sale price and the last closing sale price of shares of such class (exclusive of any sale price for the business day preceding the offering) as reported on any national securities exchange on which shares of such class are listed, or the average closing bid price and the last closing bid price of shares of such class (exclusive of any bid price for the business day preceding the offering), as reported by the quotation system referred to in clause (2) of this subsection shall be at least $4 per share. Quotations appearing in the Wall Street Journal or any other publication approved by order of the Commissioner may be relied upon to satisfy the requirement of this clause (3);(4) The issuer of such shares is a corporation organized under the laws of the United States or any state of the United States or the District of Columbia and meets all of the following requirements:(A) Such corporation has an authorized capitalization which includes not more than one class of common shares, and such common shares are voting shares;(B) Such corporation 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;(C) Such corporation has a net worth on a consolidated basis of at least one million dollars ($1,000,000) according to (1) its most recent available audited financial statement which may not be over 15 months old and (2) its most recent available unaudited financial statement as of a date subsequent to such audited statement;(D) Such corporation has had net income, after all charges, including taxes and extraordinary losses, and excluding extraordinary gains, of either (1) at least five hundred thousand dollars ($500,000) for its last fiscal year and one million five hundred thousand dollars ($1,500,000) in total for its last five fiscal years, or (2) at least one million dollars ($1,000,000) in each of its last two fiscal years. The determination of net income herein required, if such determination is made within 90 days after the close of its last fiscal year and prior to the availability of an audited statement for that period, may be based upon an unaudited statement for the period which the issuer reasonably believes is prepared in accordance with generally accepted accounting principles. In determining whether a corporation satisfies the requirements of this subsection (D), there may be included the net income of any corporation to whose assets such corporation, or a successor of such corporation, has succeeded by merger, consolidation or acquisition of assets, if such net income of such predecessor corporation may, in accordance with generally accepted accounting principles, be consolidated with the income of such corporation.(b) Pursuant to subsection (a)(2) of this section, the following national securities exchanges are certified: THE NASDAQ GLOBAL MARKET
THE NEW YORK STOCK EXCHANGE NYSE AMEX
Cal. Code Regs. Tit. 10, § 260.105.17
1. New section filed 6-28-73; effective thirtieth day thereafter (Register 73, No. 26).
2. Amendment filed 3-27-81; effective thirtieth day thereafter (Register 81, No. 13).
3. Amendment filed 10-20-83; effective thirtieth day thereafter (Register 83, No. 43).
4. Amendment of subsections (a)(2) and (b) filed 11-10-2009; operative 12-10-2009 (Register 2009, No. 46). Note: Authority cited: Sections 25105 and 25610, Corporations Code. Reference: Sections 25105 and 25531(a), Corporations Code.
1. New section filed 6-28-73; effective thirtieth day thereafter (Register 73, No. 26).
2. Amendment filed 3-27-81; effective thirtieth day thereafter (Register 81, No. 13).
3. Amendment filed 10-20-83; effective thirtieth day thereafter (Register 83, No. 43).
4. Amendment of subsections (a)(2) and (b) filed 11-10-2009; operative 12-10-2009 (Register 2009, No. 46).