Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2610

Introduced by Assembly Member Holden

(Coauthor: Assembly Member Brown)

February 19, 2016

An act to amend Section 25114 of the Corporations begin delete Code end delete begin insert Code, end insert relating to securities.

LEGISLATIVE COUNSEL’S DIGEST

AB 2610, as amended, Holden. Securities: begin delete qualification. end delete begin insert qualification: period of effectiveness. end insert

Existing law, the Corporate Securities Law of 1968, requires securities offered or sold in this state in an issuer transaction to be qualified through an application filed with the Commissioner of Business Oversight, unless exempt from the qualification begin delete requirements. Existing law end delete begin insert requirements, and end insert generally provides that every qualification under these provisions is effective for 12 months from its effective date. begin delete Existing end delete begin insert This end insert law makes it begin delete unlawful end delete begin insert a crime end insert for a person begin delete in connection with the offer, sale, or purchase of a security to engage in fraudulent or misleading acts or omissions. end delete begin insert to willfully violate any of its provisions. end insert

This bill would increase that effective period begin delete of end delete begin insert for a end insert qualification begin insert eligible for a Small Corporate Offering Registration, as specified, end insert from 12 months to 36 begin delete months end delete begin insert months, end insert unless an issuer makes a change to its board members, directors, officers, partners, members, or trustees, in which case the qualification would become begin delete ineffective, as provided. end delete begin insert ineffective. The bill would reinstate effectiveness for the remainder of the 36 end insert begin insert -months qualification period if the offering is requalified, as specified. By modifying the period and conditions under which an offering is effective, this bill would modify the application of criminal provisions in existing law and thereby impose a state-mandated end insert begin insert local program. end insert

begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert It is the intent of the Legislature in enacting this
legislation to expand the period of effectiveness for a qualification
eligible for a Small Corporate Offering Registration. It is not the
intent of the Legislature to modify the consumer protections
provided by the requirements for qualification. end insert

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Section 25114 of the Corporations Code is amended
to read:

25114.  

(a)  begin delete Subject to the limitations in subdivisions (b) and
(c), every end delete begin insert Every end insert qualification under this chapter is effective for begin delete 36 end delete
begin insert 12 end insert months from its effective date, unless the commissioner by
order or rule specifies a different period, except during the time
an order under Section 25140 or subdivision (a) of Section 25143
is in effect.

begin delete

(b) (1) Any qualification under this chapter immediately
becomes ineffective upon any change in board members, directors,
officers, partners, members, or trustees of the issuer.

end delete begin delete

(2) If any of the changes specified in paragraph (1) occur, an
issuer shall reapply for qualification pursuant to this chapter. If a
qualification becomes ineffective pursuant to paragraph (1) but
the issuer subsequently successfully obtains qualification for the
securities, then that qualification shall only remain effective for
the same period of time as the original qualification issued pursuant
to subdivision (a).

end delete begin delete

(c) The provisions of this section shall not change the
qualification requirements of Sections 25111, 25112, or 25113.

end delete begin insert

(b) (1) Notwithstanding subdivision (a) and subject to the
limitations in paragraph (2) and the authority of the commissioner
pursuant to Section 25140 or subdivision (a) of Section 25143, a
qualification pursuant to paragraph (2) of subdivision (b) of
Section 25113 shall be effective for a period of 36 months from its
effective date.

end insert begin insert

(2) (A) At the end of 12 months from the effective date of the
qualification period authorized pursuant to paragraph (1), the
qualification shall become ineffective upon any change in the board
members, directors, officers, partners, members, or trustee of the
issuer.

end insert begin insert

(B) If a qualification becomes ineffective pursuant to
subparagraph (A), an issuer may apply for a requalification
pursuant to paragraph (2) of subdivision (b) of Section 25113. If
an issuer subsequently obtains a requalification, then the
requalification shall only remain effective for the remaining period
of the 36 months authorized pursuant to paragraph (1).

end insert begin insert

(3) The provisions of this subdivision shall not be deemed to
modify the qualification requirements of Section 25111, 25112, or
25113.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert begin insert

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

end insert