citation: CORP § 25619

text:
(a) The commissioner may destroy any applications, notices, orders, permits, and revoked or surrendered certificates, together with the files and folders, as useless or obsolete, four years after the date of filing or issuance, with the approval of the Department of General Services; provided, that a permanent record shall be maintained of any disciplinary action taken by the commissioner.

(b) When acting as escrow holder for securities, the commissioner may destroy any certificates evidencing securities of any corporation which has been dissolved or whose charter has been suspended for a period of not less than two years for nonpayment of taxes or penalties and may destroy any other records pertaining to the escrow of the securities destroyed, and he or she shall have no further liability or accountability therefor; provided, that the commissioner shall maintain a permanent record containing such information as he or she may by rule prescribe relating to the certificates and records so destroyed.

(c) Copies on microfilm or in other form which may be retained by the commissioner in his discretion of any records destroyed under this section shall be accepted for all purposes as equivalent to the original when certified by the commissioner.

history: (History: Amended by Stats. 1997, Ch. 391, Sec. 35. Effective January 1, 1998.)

title: 4. SECURITIES


kind: section

code: CORP

citation: CORP § 25620

text:
(a) Notwithstanding any other law, the commissioner may by rule or order prescribe circumstances under which to accept electronic records or electronic signatures. This section does not require the commissioner to accept electronic records or electronic signatures.

(b) For purposes of this section, the following terms have the following meanings:

(1) “Electronic record” means a record created, generated, sent, communicated, received, or stored by electronic means. “Electronic record” also includes, but is not limited to, all of the following:

(A) An application, amendment, supplement, and exhibit, filed for any qualification, registration, order, permit, certificate, license, consent, or other authority.

(B) A financial statement, report, or advertising.

(C) An order, permit, certificate, license, consent, or other authority.

(D) A notice of public hearing, accusation, and statement of issues in connection with any application, qualification, registration, order, permit, certificate, license, consent, or other authority.

(E) A proposed decision of a hearing officer and a decision of the commissioner.

(F) The transcripts of a hearing.

(G) A release, newsletter, interpretive opinion, determination, or specific ruling.

(H) Correspondence between a party and the commissioner directly relating to any document listed in subparagraphs (A) to (G), inclusive.

(2) “Electronic signature” means an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record.

(c) The Legislature finds and declares that the Department of Financial Protection and Innovation has continuously implemented methods to accept records filed electronically, including broker-dealer and investment adviser applications, and is encouraged to continue to expand its use of electronic filings to the extent feasible, as budget, resources, and equipment are made available to accomplish that goal.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 84. (SB 1498) Effective January 1, 2023.)

division: 1. CORPORATE SECURITIES LAW OF 1968

part: 7. ADMINISTRATION

title: 4. SECURITIES

chapter: 4. Service of Process

path: 4. SECURITIES > 1. CORPORATE SECURITIES LAW OF 1968 > 4. Service of Process > 7. ADMINISTRATION


citation: CORP § 25700

text: No provision of this law imposing any liability applies to any act done or omitted in good faith in conformity with any rule, form, permit, order, or written interpretive opinion of the commissioner, or any such opinion of the Attorney General, notwithstanding that the rule, form, permit, order, or written interpretive opinion may later be amended or rescinded or be determined by judicial or other authority to be invalid for any reason.

history: (History: Repealed and added by Stats. 1968, Ch. 88.)

part: 8. GENERAL PROVISIONS

title: 4. SECURITIES

path: 4. SECURITIES > 1. CORPORATE SECURITIES LAW OF 1968 > 4. Service of Process > 8. GENERAL PROVISIONS


citation: CORP § 25701

text: Any condition, stipulation or provision purporting to bind any person acquiring any security to waive compliance with any provision of this law or any rule or order hereunder is void.

title: 4. SECURITIES


citation: CORP § 25702

text: Whenever a person is entitled under this law to a hearing in accordance with the provisions of the Administrative Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, a formal hearing before the Department of Financial Protection and Innovation may be substituted with the consent of such person and of the commissioner for such hearing before an independent hearing officer; and in that case after such hearing before the Department of Financial Protection and Innovation such person shall not be entitled to any further administrative remedy.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 85. (SB 1498) Effective January 1, 2023.)

title: 4. SECURITIES


citation: CORP § 25703

text: If any provision of this law or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of this law which can be given effect without the invalid provision or application, and to this end the provisions of this law are declared to be severable.

title: 4. SECURITIES


citation: CORP § 25704

text:
(a) Except as expressly provided in this section, prior law exclusively governs all suits, actions, prosecutions or proceedings which are pending or may be initiated on the basis of facts or circumstances occurring before the effective date of this law.

(b) No civil suit or action may be maintained to enforce any liability or to establish that any securities are void under prior law unless brought within any period of limitation which applied when the cause of action accrued and, in any event, within three years after the effective date of this law.

(c) All effective permits, certificates, orders, consents, and registrations under prior law, all administrative orders relating to the same and all conditions imposed upon the same remain in effect so long as they would have remained in effect if this law had not been enacted. They are considered to have been filed, entered, or imposed under this law, but are governed by prior law. Certificates dated as of January 1, 1969, may be issued by the commissioner after the effective date of this law pursuant to applications filed prior thereto and shall be considered to have been issued under the prior law. Applications for permits filed prior to January 1, 1969, may subsequently be processed without amendment if they comply with prior law, but thereafter shall be otherwise governed by this law.

(d) Judicial review of all administrative orders as to which review proceedings have not been instituted by the effective date of this law are governed by Section 25609, except that no review proceeding may be instituted unless the petition is filed within any period of limitation which applied to a review proceeding when the order was entered.

title: 4. SECURITIES


citation: CORP § 25705

text: All references to “the Corporate Securities Law” in any code or statute of the State of California shall hereafter be deemed to be references to the Corporate Securities Law of 1968.

title: 4. SECURITIES


citation: CORP § 25706

text:
(a) All effective permits, orders, and consents under the Real Estate Syndicate Act, all administrative orders relating to the Real Estate Syndicate Act, and all conditions imposed upon the Real Estate Syndicate Act remain in effect so long as they would have remained in effect if such act had not been repealed, but shall be considered to have been filed, entered, or imposed under this law. An application to amend, extend, modify, revoke, or set aside any such permits, orders, or consents shall be filed under and be subject to the provisions of this division.

(b) Any application pending under the Real Estate Syndicate Act, upon the effective date of this section, shall be processed by the Real Estate Commissioner pursuant to the provisions of the Real Estate Syndicate Act in effect on December 31, 1977, until such application is granted or denied by such commissioner.

(c) Except as expressly provided by this section, the Real Estate Syndicate Act continues to govern all suits, actions, prosecutions, or proceedings which are pending prior to, or which may be initiated thereunder on the basis of facts or circumstances occurring prior to, the effective date of this section.

(d) No civil suit or action may be maintained to enforce any liability under the Real Estate Syndicate Act, unless brought within any period of limitation which applied the time the cause of action accrued.

(e) Judicial review of all administrative orders under the Real Estate Syndicate Act as to which review proceedings have not been commenced prior to the effective date of this section shall be governed by Section 25609, except that no review proceeding may be commenced unless the petition is filed within the applicable period of limitation which applied to a review proceeding when the order was issued and except that judicial review of administrative orders of the Real Estate Commissioner made pursuant to subdivision (b) shall be governed by the provisions of law applicable to such proceedings on December 31, 1977.

history: (History: Added by Stats. 1977, Ch. 991.)

title: 4. SECURITIES


citation: CORP § 25707

text:
(a) All permits and orders issued under Article 6 (commencing with Section 10237) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, and all conditions imposed pursuant to those provisions, shall remain in effect for the period of time that they would have remained in effect if those provisions had not been repealed by the act enacting this section. Following the repeal of those provisions, the permits, orders, and conditions shall be deemed to have been issued or imposed under this division. An application to amend, extend, modify, revoke, or set aside a permit or order shall be filed under this division and is subject to this division.

(b) An application pending under Article 6 (commencing with Section 10237) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, on the effective date of this section, shall be processed by the Real Estate Commissioner subject to those provisions as they were in effect on December 31, 1996, until each application that was pending on the effective date of this section is granted or denied by the Real Estate Commissioner.

(c) Except as expressly provided by this section, all actions, prosecutions, or proceedings under Article 6 (commencing with Section 10237) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code that are pending prior to the effective date of this section, or that otherwise could be initiated based on facts or circumstances occurring prior to the effective date of this section, shall be governed by those provisions.

(d) No civil action may be brought to enforce any liability under Article 6 (commencing with Section 10237) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, unless it is brought within the period of limitations that applied to the action at the time the action accrued.

(e) Judicial review of orders under Article 6 (commencing with Section 10237) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code that had not commenced prior to the effective date of this section shall be governed by Section 25609, except that no review proceeding shall be commenced unless the petition is filed within the applicable period of limitations that applied to a review proceeding when the order was issued. Judicial review of an order of the Real Estate Commissioner made pursuant to subdivision (b) shall be governed by the provisions of law applicable to those proceedings on December 31, 1996.

history: (History: Added by Stats. 1996, Ch. 592, Sec. 16. Effective January 1, 1997.)

title: 4. SECURITIES


citation: CORP § 27000

text: Unless the provision or the context otherwise indicates, and except as expressly otherwise provided in this chapter, words used in this division have the meanings prescribed in Part 1 (commencing with Section 25000) of the Corporate Securities Law.

history: (History: Amended by Stats. 1968, Ch. 88.)

division: 2. SECURITY OWNERS PROTECTION

title: 4. SECURITIES

chapter: 1. Definitions and General Provisions

path: 4. SECURITIES > 2. SECURITY OWNERS PROTECTION > 1. Definitions and General Provisions


citation: CORP § 27001

text: As used in this division “security” includes all of the things enumerated in Section 25019 and also includes shares, stock, and investment certificates as defined in the Savings Association Law.

history: (History: Amended by Stats. 1996, Ch. 458, Sec. 1. Effective January 1, 1997.)

title: 4. SECURITIES


citation: CORP § 27002

text:
(a) As used in this division, “individual” includes every natural person, domestic or foreign private corporation, nonprofit corporation, unincorporated association, company, partnership of whatever kind, syndicate, joint stock company, trustee, protective committee, depositors’ league, and other similar organization however described.

(b) As used in this division, “individual” does not include any of the following persons:

(1) Any licensed practicing attorney rendering or performing services in connection with the practice of law.

(2) Any person holding a broker-dealer’s or investment adviser’s certificate then in effect issued by the commissioner, rendering or performing services as such.

(3) Any holder of a permit then in effect, granted by the commissioner under the Corporate Securities Law, permitting the issue of certificates of deposit.

(4) Any securities depository as defined in Section 30004 of the Financial Code, which is licensed under Section 30200 of the Financial Code or exempted from licensing thereunder by Section 30005 or 30006 of the Financial Code.

(5) Any broker licensed by the Real Estate Commissioner of this state rendering or performing services with respect to securities, if the person would not be subject to the broker-dealer certification requirements for effecting transactions in the securities.

(6) Any security owner or holder who, without compensation of any kind, induces or attempts to induce, other security holders or owners of the same issuer into entering into agreements with persons who are excluded from “individual” by virtue of paragraphs (1) to (5), inclusive.

history: (History: Amended by Stats. 1996, Ch. 458, Sec. 2. Effective January 1, 1997.)

title: 4. SECURITIES


citation: CORP § 27003

text: If any provision of this division, or the application thereof to any person or circumstance, is held invalid, the remainder of this division, or the application of such provision to other persons or circumstances, shall not be affected thereby.

history: (History: Added by renumbering Section 27007 by Stats. 1996, Ch. 458, Sec. 7. Effective January 1, 1997.)

title: 4. SECURITIES


citation: CORP § 27100

text: Any individual who, within this state, solicits, receives, collects, or solicits any subscription or contract to pay, any contributions, fees, funds, or compensation of any kind, from any owner or holder of any security, for the purpose of protecting, enforcing, or representing the rights of the security owners or holders evidenced by the security, shall be subject to the provisions of this division.

history: (History: Repealed and added by Stats. 1996, Ch. 458, Sec. 9. Effective January 1, 1997.)

title: 4. SECURITIES

chapter: 2. Unlawful and Fraudulent Conduct

path: 4. SECURITIES > 2. SECURITY OWNERS PROTECTION > 2. Unlawful and Fraudulent Conduct


citation: CORP § 27101

text:
It is unlawful for any individual, directly or indirectly, in connection with the solicitation, receipt, or collection of, or solicitation of any subscription or contract to pay any contributions, fees, funds, or compensation of any kind, from any owner or holder of any security, for the purpose of protecting, enforcing, or representing the rights of the security owners or holders evidenced by the security, to do any of the following:

(a) Employ any device, scheme, or artifice to defraud.

(b) By means of any written or oral communication, make any untrue statement of a material fact, or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.

(c) Engage in any transaction, act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

(d) Misappropriate or convert the funds, security, or property of any other person.

title: 4. SECURITIES


citation: CORP § 27200

text: Every individual who solicits, receives, collects, or contracts for the payment of, any contributions, fees, funds, or compensation of any kind, in violation of this division, is civilly liable for the return of the full amount of that contribution, fee, or fund, together with reasonable attorney’s fees. This liability is both joint and several.

history: (History: Amended by Stats. 1996, Ch. 458, Sec. 11. Effective January 1, 1997.)

title: 4. SECURITIES

chapter: 3. Civil Liability and Crimes

path: 4. SECURITIES > 2. SECURITY OWNERS PROTECTION > 3. Civil Liability and Crimes


citation: CORP § 27201

text: No action shall be maintained to enforce any liability created under Section 27200 unless brought before the expiration of two years after the violation upon which it is based or the expiration of one year after the discovery by the plaintiff of the facts constituting the violation, whichever shall first expire.

history: (History: Added by renumbering Section 27200.1 by Stats. 1996, Ch. 458, Sec. 12. Effective January 1, 1997.)

title: 4. SECURITIES


citation: CORP § 27202

text: Every individual who willfully violates Section 27101 is guilty of a public offense punishable by a fine not exceeding two hundred fifty thousand dollars ($250,000), or by imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code for two, three, or four years, or by both fine and imprisonment.

history: (History: Amended by Stats. 2011, Ch. 15, Sec. 49. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)

title: 4. SECURITIES


citation: CORP § 27500

text:
For purposes of this chapter, the following definitions apply:

(a) “Commissioner” means the Commissioner of Financial Protection and Innovation.

(b) “Covered entity” means a venture capital company that meets both of the following criteria:

(1) The venture capital company primarily engages in the business of investing in, or providing financing to, startup, early-stage, or emerging growth companies.

(2) The venture capital company meets any of the following criteria:

(A) The venture capital company is headquartered in California.

(B) The venture capital company has a significant presence or operational office in California.

(C) The venture capital company makes venture capital investments in businesses that are located in, or have significant operations in, California.

(D) The venture capital company solicits or receives investments from a person who is a resident of California.

(c) “Department” means the Department of Financial Protection and Innovation.

(d) “Diverse founding team member” means a founding team member who self-identifies as a woman, nonbinary, Black, African American, Hispanic, Latino-Latina, Asian, Pacific Islander, Native American, Native Hawaiian, Alaskan Native, disabled, veteran or disabled veteran, lesbian, gay, bisexual, transgender, or queer.

(e) “Founding team member” means either of the following:

(1) A person who satisfies all of the following conditions:

(A) The person owned initial shares or similar ownership interests of the business.

(B) The person contributed to the concept of, research for, development of, or work performed by the business before initial shares were issued.

(C) The person was not a passive investor in the business.

(2) A person who has been designated as the chief executive officer or president.

(f) “Primarily founded by diverse founding team members” means a founding team for which more than one-half of the founding team members responded to the survey described in paragraph (1) of subdivision (c) of Section 27501 and at least one-half of the founding team members are diverse founding team members.

(g) “Venture capital company” has the same meaning as defined in paragraph (4) of subdivision (a) of Section 260.204.9 of Title 10 of the California Code of Regulations.

(h) “Venture capital investment” has the same meaning as defined in paragraph (5) of subdivision (a) of Section 260.204.9 of Title 10 of the California Code of Regulations.

history: (History: Added by Stats. 2024, Ch. 41, Sec. 21. (SB 164) Effective June 29, 2024.)

title: 4. SECURITIES

path: 4. SECURITIES > 2.5. Fair Investment Practices by Venture Capital Companies > 1. Fair Investment Practices by Venture Capital Companies


citation: CORP § 27501

text:
(a) (1) Commencing March 1, 2026, a covered entity shall submit to the department the following information in a manner prescribed by the department:

(A) The name of the covered entity.

(B) The name, title, and email address of the person who serves as the designated point of contact for the covered entity.

(C) The designated email address, telephone number, physical address, and internet website of the covered entity.

(2) The covered entity shall keep the information provided under paragraph (1) updated by submitting any changes to that information when filing the report required by subdivision (b).

(3) (A) If a covered entity fails to update the information provided under paragraph (1) in the report required by subdivision (b) by April 1 of any year, the department shall notify the covered entity that the covered entity has 60 calendar days from the date of the notification to submit the updated information without penalty.

(B) If a covered entity has not submitted the updated information after the 60-day period described in subparagraph (A) has elapsed, the department may pursue any remedy provided under this chapter.

(b) By April 1, 2026, and annually thereafter, a covered entity shall report to the department all of the following information about its funding determinations:

(1) At an aggregated level, all of the following information for the founding teams of all of the businesses in which the covered entity made a venture capital investment in the prior calendar year to the extent the information was provided pursuant to the survey described in paragraph (1) of subdivision (c):

(A) The gender identity of each member of the founding team, including nonbinary and gender-fluid identities.

(B) The race of each member of the founding team.

(C) The ethnicity of each member of the founding team.

(D) The disability status of each member of the founding team.

(E) Whether any member of the founding team identifies as LGBTQ+.

(F) Whether any member of the founding team is a veteran or a disabled veteran.

(G) Whether any member of the founding team is a resident of California.

(H) Whether any member of the founding team declined to provide any of the information described in subparagraphs (A) to (G), inclusive.

(2) (A) During the prior calendar year, the number of venture capital investments to businesses primarily founded by diverse founding team members, as a percentage of the total number of venture capital investments the covered entity made, in the aggregate and broken down into the categories described in subparagraphs (A) to (H), inclusive, of paragraph (1).

(B) The information provided pursuant to this subparagraph shall be anonymized to the extent possible.

(3) During the prior calendar year, the total amount of venture capital investments to businesses primarily founded by diverse founding team members, as a percentage of venture capital investments made by the covered entity, in the aggregate and broken down into the categories described in subparagraphs (A) to (H), inclusive, of paragraph (1).

(4) The total amount of money in venture capital investments the covered entity invested in each business during the prior calendar year.

(5) The principal place of business of each company in which the covered entity made a venture capital investment during the prior calendar year.

(c) (1) A covered entity shall obtain the information required by subdivision (b) by providing each founding team member of a business that has received funding from a covered entity with an opportunity to participate in a survey for the purpose of collecting the information.

(2) The survey described in paragraph (1) of subdivision (b) shall be provided pursuant to a standardized form specified by the department. The survey shall include a “decline to state” option for each question on the survey.

(3) A covered entity shall provide a written disclosure to each founding team member prior to, or concurrently with, the survey described in paragraph (1) of subdivision (b) that states all of the following:

(A) The founding team member’s decision to disclose their demographic information is voluntary.

(B) No adverse action will be taken against the founding team member if they decline to participate in the survey.

(C) The aggregate data collected for each demographic category will be reported to the department.

(4) A covered entity shall not provide the survey described in paragraph (1) of subdivision (b) and the disclosure described in paragraph (3) to a founding team member until after the covered entity has executed an investment agreement with the business and made the first transfer of funds.

(5) Neither a covered entity nor the department shall in any way encourage, incentivize, or attempt to influence the decision of a founding team member to participate in the survey described in paragraph (1) of subdivision (b).

(d) A covered entity required to conduct the survey described in paragraph (1) of subdivision (c) shall do both of the following:

(1) Collect survey response data from the founding team members in a manner that does not associate the survey response data with an individual founding team member.

(2) Report the survey response data pursuant to paragraph (1) in a manner that does not associate the survey response data with an individual founding team member.

(3) A covered entity may satisfy the requirements of this chapter by providing a report prepared by a business that controls each covered entity at any time during the prior calendar year if the report contains all of the information required by subdivision (b).

division: 2.5. Fair Investment Practices by Venture Capital Companies

title: 4. SECURITIES

chapter: 1. Fair Investment Practices by Venture Capital Companies


citation: CORP § 27502

text:
(a) (1) The department shall make the reports received pursuant to subdivision (b) of Section 27501 readily accessible, easily searchable, and easily downloadable on the department’s internet website.

(2) The department may publish aggregate results or aggregate information based on the information received pursuant to this chapter.

(b) The department may use any information collected pursuant to this chapter in furtherance of its statutory duties, including, but not limited to, using the information in a civil action brought by the department under this chapter or other law.

(c) (1) A covered entity shall make and keep records related to its obligation under this chapter. All records related to a report delivered to the department pursuant to subdivision (b) of Section 27501 shall be preserved for at least five years after the covered entity delivers the report.

(2) The commissioner may examine the records of a covered entity to determine their compliance with this chapter using powers set forth in Sections 11180 to 11191, inclusive, of the Government Code and may further require a covered entity to do either of the following:

(A) Produce documentary material for inspection and copying or reproduce in the form or medium requested by the department.

(B) File written reports or answers to questions.

(d) The department shall charge and collect fees from covered entities to cover the expenses incurred in the administration of this chapter, not to exceed the reasonable costs of that administration.

(1) The fee per report shall be at least one hundred seventy-five dollars ($175).

(2) The department may adjust this fee as necessary to meet the reasonable costs of administration.

(e) (1) If a covered entity fails to file a report required by subdivision (b) of Section 27501 by April 1 of any year, the department shall notify the covered entity that the covered entity has 60 calendar days from the date of the notification to submit the report without penalty.

(2) If a covered entity has not submitted a report after the 60 calendar days described in paragraph (1) has elapsed, the department may pursue all remedies provided under this chapter.

title: 4. SECURITIES


citation: CORP § 27503

text:
With respect to the investigative powers of the commissioner under this chapter, the commissioner may do the following at their discretion:

(a) Make public or private investigations within or outside of this state as they deem necessary to determine whether a covered entity has violated or is about to violate any provision of this chapter, any rule or order pursuant to this chapter or to aid in the enforcement of this chapter in the prescribing of rules and forms pursuant to this chapter.

(b) Publish information concerning any violations of this chapter or of any rule or order pursuant to this chapter.

title: 4. SECURITIES


citation: CORP § 27504

text:
(a) With respect to the enforcement powers of the commissioner and the department under this chapter, all of the following apply:

(1) The commissioner may take any action authorized by this chapter against a covered entity who fails to meet the requirements of Section 27501 or who makes an untrue statement of a material fact in any report filed with the department.

(2) Relief under this chapter may include, but is not limited to, any of the following:

(A) An order requiring the covered entity to desist and refrain from the violation.

(B) An order requiring costs, representing reasonable attorney’s fees and investigative expenses for the services rendered, for deposit into the Financial Protection Fund for use by the department.

(C) An order requiring the payment of monetary penalties, as set forth by subdivision (b).

(b) (1) In any civil or administrative action brought pursuant to this chapter in which the commissioner orders penalties, the following penalty amounts apply:

(A) For any violation of this chapter, rule or final order pursuant to this chapter, or condition imposed in writing by the department, a penalty shall not exceed five thousand dollars ($5,000) for each day during which the violation or failure to pay continues.

(B) Notwithstanding subparagraph (A), for any reckless violation by a covered entity subject to this chapter, rule or final order pursuant to this chapter, or condition imposed by the department, a penalty that is sufficient to deter the covered entity from failing to comply with this chapter as determined by the commissioner under paragraph (2), and exceeds the penalty amount provided in subparagraph (A) for each day during which the violation continues.

(C) Notwithstanding subparagraphs (A) or (B), for any knowing violation by a covered entity subject to this chapter, rule or final order pursuant to this chapter, or condition imposed by the department, a penalty that is sufficient to deter the covered entity from failing to comply with this chapter as determined by the commissioner under paragraph (2), and exceeds the penalty amount provided in subparagraph (B) for each day during which the violation continues.

(2) In determining the amount of any penalty ordered under this chapter, the commissioner shall take into account mitigating factors and the appropriateness of the penalty with respect to all of the following:

(A) The financial standing of the covered entity.

(B) The number of assets under management by the covered entity.

(C) The nature of the covered entity’s failure to comply with this chapter.

(D) The amount of financial resources available to the covered entity.

(E) The covered entity’s history of previous violations.

(3) The commissioner may compromise, modify, or remit any penalty that may be ordered or that has already been ordered.

title: 4. SECURITIES


citation: CORP § 27505

text:
(a) (1) If, after an order has been served pursuant to Section 27504, a request for hearing is filed in writing within 30 days of the date of service of the order on the covered entity, a hearing shall be conducted in accordance with the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and the commissioner shall have all of the powers granted under that chapter.

(2) If a covered entity fails to file a written request for a hearing within 30 days from the date of service of the order, the order shall be deemed a final order of the commissioner and is not subject to review by any court or agency, notwithstanding subdivision (b).

(b) Every final order, decision, or other official act of the commissioner is subject to judicial review in accordance with law.

(c) The commissioner may file a certified copy of the final order with the clerk of the superior court or any court of competent jurisdiction. The final order filed has the same effect as a judgment of the court and may be recorded, enforced, or satisfied in the same manner as a judgment of the court.

(d) (1) If a covered entity does not comply with an order under this chapter, the commissioner may petition the superior court or any court of competent jurisdiction to enforce the order.

(2) The court shall not require the commissioner to post a bond in an action or proceeding under this chapter.

(3) If the court finds, after service and opportunity for hearing, that the covered entity was not in compliance with the order, the court may adjudge the covered entity in civil contempt of the order. The court may impose a further civil penalty against the covered entity for contempt and may grant any other relief the court determines is just and proper under the circumstances.

(e) When a covered entity, including a nonresident of this state, engages in conduct prohibited or made actionable by this chapter or any rule or order pursuant to this chapter, whether or not the covered entity has filed a consent to service of process, and personal jurisdiction over the covered entity cannot otherwise be obtained in this state, that conduct shall be considered equivalent to the covered entity’s appointment of the commissioner or the commissioner’s successor in office to be the covered entity’s attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against the covered entity or the covered entity’s successor, executor, or administrator that grows out of that conduct and that is brought under this chapter or any rule or order pursuant to this chapter, with the same force and validity as if served on the covered entity personally. Service may be made by leaving a copy of the process in the office of the commissioner, but it is not in effect unless the following conditions are met:

(1) The plaintiff, who may be the commissioner in a suit, action, or proceeding instituted by commissioner, sends notice of the service and a copy of the process by registered or certified mail to the covered entity at the covered entity’s last known address or take other steps that are reasonably calculated to give actual notice.

(2) The plaintiff’s affidavit of compliance with this chapter is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.

title: 4. SECURITIES


citation: CORP § 27506

text:
(a) The commissioner may make, amend, and rescind any rules, forms, and orders as are necessary to carry out the provisions of this chapter, including rules and forms governing applications and reports, and defining any terms, whether or not used in this chapter, insofar as the definitions are not inconsistent with the provisions of this chapter.

(b) Moneys collected pursuant to this chapter shall be deposited in the Financial Protection Fund established pursuant to Section 12895 of the Government Code. It is the intent of the Legislature that the moneys collected pursuant to this chapter be appropriated in the annual Budget Act to the department for administration of this chapter.

title: 4. SECURITIES


citation: CORP § 28000

text: This division shall be known and may be cited as the “Capital Access Company Law.”

history: (History: Added by Stats. 1998, Ch. 668, Sec. 3. Effective January 1, 1999. Operative July 1, 1999, by Sec. 4 of Ch. 668.)

division: 3. CAPITAL ACCESS COMPANIES

title: 4. SECURITIES

chapter: 1. General Provisions

article: 1. Short Title and Construction

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 1. General Provisions > 1. Short Title and Construction


citation: CORP § 28001

text: This division shall be liberally construed to accomplish its purposes.

title: 4. SECURITIES

article: 1. Short Title and Construction


citation: CORP § 28002

text: The provisions of the Corporate Securities Law of 1968 (Division 1 (commencing with Section 25000) of Title 4) shall apply to licensees.

title: 4. SECURITIES

article: 1. Short Title and Construction


citation: CORP § 28003

text:
The Legislature finds all of the following:

(a) It is necessary to increase job opportunities in the state.

(b) Promoting the establishment, growth, and expansion of small business firms in this state is an efficient way to increase job opportunities in the state.

(c) Small business firms are unable to grow and create job opportunities unless they have access to risk capital.

(d) Congress has exempted from the provisions of the federal Investment Company Act of 1940, certain companies that are not in the business of issuing redeemable securities, the operations of which are subject to state regulation governing entities that provide financial or managerial assistance to enterprises doing business, or proposing to do business, in that state.

(e) Therefore, in order for the state to obtain the full benefits of that exemption, it is necessary that the state provide for the licensure and regulation of capital access companies, to permit these companies to operate pursuant to the exemption from regulation under the federal Investment Company Act of 1940.

title: 4. SECURITIES

article: 1. Short Title and Construction


citation: CORP § 28004

text:
(a) The purpose of this division is to provide for the licensure and regulation of capital access companies that will provide risk capital and management assistance, primarily to small business firms in the state, to enable those companies to operate pursuant to the exemption from regulation under the federal Investment Company Act of 1940.

(b) The purpose of this division as set forth in subdivision (a) constitutes the standard that the commissioner shall observe in administering the provisions of this division.

title: 4. SECURITIES

article: 1. Short Title and Construction


citation: CORP § 28030

text: Subject to additional definitions contained in this division which are applicable to specific provisions of this division, and unless the context otherwise requires, the definitions in this article apply throughout this division.

title: 4. SECURITIES

article: 2. Definitions

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 1. General Provisions > 2. Definitions


citation: CORP § 28031

text: “Accredited investor” means a person who is defined in Section 2(a)(15) of the Securities Act of 1933, or any other person that the Securities and Exchange Commission may so designate by rule, regulation, or order, who, by purchasing the securities of a licensee, provides the investment funds with which the licensee will provide financial assistance to small business firms.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28032

text: “Affiliate” means any person or persons controlling, controlled by, or under common control with, other specified persons.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28033

text: “Commissioner” means the Commissioner of Financial Protection and Innovation or their designee with respect to a particular matter.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 86. (SB 1498) Effective January 1, 2023.)

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28034

text: “Company” means a corporation, limited partnership, limited liability company, or other form of business entity, which is organized under the laws of the State of California.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28035

text: “Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a specified person.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28036

text: “Controlling person,” when used with respect to a specified person, means any person who controls the specified person, directly or indirectly, through one or more intermediaries.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28037

text: “Insolvent,” when used with respect to any person, means a person who has ceased to pay his or her debts in the ordinary course of business, who cannot pay his or her debts as they become due, or whose liabilities exceed his or her assets.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28038

text: “License” means a license issued under this division authorizing a licensee to transact business as a capital access company.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28039

text: “Licensee” means a company that is licensed under this division.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28040

text:
“Officer” means either of the following:

(a) When used with respect to a corporation, any person appointed or designated as an officer of the corporation by or pursuant to applicable law or the articles of incorporation or bylaws of the corporation or any person who performs with respect to the corporation functions usually performed by an officer of a corporation.

(b) When used with respect to a specified person other than a natural person or a corporation, any person who performs with respect to the specified person functions usually performed by an officer of a corporation with respect to the corporation.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28041

text: “Order” means any approval, consent, authorization, exemption, denial, prohibition, or requirement applicable to a specific case issued by the commissioner. “Order” includes any condition of a license and any agreement made by any person with the commissioner under this division.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28042

text: “Parent,” when used with respect to a specified person other than a natural person, means any person other than a natural person that controls the specified person, directly or indirectly, through one or more intermediaries.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28043

text: “Person” means any natural person, proprietorship, joint venture, partnership, trust, business trust, syndicate, association, joint stock company, corporation, limited liability company, government, agency of any government, or any other organization. However, “person,” when used with respect to acquiring control of or controlling a specified person, includes any combination of two or more persons acting in concert.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28044

text: “Principal security holder,” means any person who owns, directly or indirectly, of record or beneficially, securities representing 10 percent or more of the voting power of the issuer of those securities.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28045

text: “To provide financing assistance to a person” means to purchase securities issued by the person, either directly from the person, or indirectly through a securities underwriter.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28046

text: “Security” has the meaning set forth in Section 25019.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28047

text: “Small business firm” means a person that proposes to transact, or transacts, business on a regular and continuous basis in California and, together with its affiliates, has a net worth of not more than eighteen million dollars ($18,000,000) and average net income after federal income taxes, excluding any carryover losses, for the preceding two years no greater than six million dollars ($6,000,000).

history: (History: Amended by Stats. 2010, Ch. 516, Sec. 2. (SB 1155) Effective January 1, 2011.)

title: 4. SECURITIES

article: 2. Definitions


text: “Smaller business firm” means a person that proposes to transact, or transacts, business on a regular and continuous basis in California and, together with its affiliates, has a net worth of not more than six million dollars ($6,000,000), and average net income after federal income taxes, excluding any carryover losses, for the preceding two years no greater than two million dollars ($2,000,000).

history: (History: Added by Stats. 2010, Ch. 516, Sec. 3. (SB 1155) Effective January 1, 2011.)

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28048

text: “Subsidiary,” when used with respect to a specified person other than a natural person, means any person other than a natural person controlled by the specified person, directly or indirectly, through one or more intermediaries.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28049

text: “Voting power” has the meaning set forth in Section 194.5.

title: 4. SECURITIES

article: 2. Definitions


citation: CORP § 28100

text: The commissioner shall administer and enforce the provisions of this division in a manner that facilitates the legislative purposes set forth in Section 28004, consistent with protection of investors.

history: (History: Amended by Stats. 2010, Ch. 516, Sec. 4. (SB 1155) Effective January 1, 2011.)

title: 4. SECURITIES

chapter: 2. Administration

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 2. Administration


citation: CORP § 28101

text: Whenever the commissioner issues an order or license under this division, the commissioner may impose any conditions that are in his or her opinion necessary to carry out the provisions and purposes of this division.

title: 4. SECURITIES


citation: CORP § 28102

text: Any application filed with the commissioner under this division or under any regulation or order issued under this division shall be in a form, shall contain information, shall be signed in a manner, and shall be verified in a manner, that the commissioner may by regulation or order require.

title: 4. SECURITIES


citation: CORP § 28103

text: In determining whether to approve any application filed under this division or under any regulation or order issued under this division, the commissioner may consider proposals made by the applicant, including, but not limited to, proposals to appoint officers, sell securities, obtain financing, or purchase securities of small business firms, and, if in the opinion of the commissioner it is probable that the applicant will be able to implement the proposal, the commissioner may make findings on the basis of the proposal. However, whenever the commissioner approves an application on the basis, in whole or in part, of a proposal made by the applicant, the commissioner shall impose upon the approval appropriate conditions requiring that the applicant implement the proposal within a period of time specified by the commissioner.

title: 4. SECURITIES


citation: CORP § 28104

text:
(a) The commissioner may do both of the following:

(1) Make public or private investigations within or outside this state that he or she deems necessary to determine whether to approve any application filed under this division or under any regulation or order issued under this division, to determine whether any person has violated or may violate any provision of this division or of any regulation or order issued under this division, to aid in the enforcement of any provision of this division or of any regulation or order issued under this division, or to aid in the issuing of regulations or orders under this division.

(2) Publish information concerning any violation of any provision of this division or of any regulation or order issued under this division.

(b) For purposes of any investigation, examination, or other proceeding under this division, the commissioner may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records that the commissioner deems relevant or material to the inquiry.

(c) In case of contumacy by, or refusal to obey a subpoena issued to, any person, the superior court, upon application by the commissioner, may issue to the person an order requiring him or her to appear before the commissioner, and to produce documentary evidence, if so ordered, or to give evidence relevant to the matter under investigation or in question. Failure to obey the order of the court may be punished by the court as a contempt.

title: 4. SECURITIES


citation: CORP § 28105

text: The commissioner may provide information relating to a licensee or any parent or subsidiary of the licensee to, or receive information relating to a licensee or any parent or subsidiary of the licensee from, any governmental agency.

title: 4. SECURITIES


citation: CORP § 28106

text: If the commissioner permits any licensee, any affiliate of the licensee, or any governmental agency to inspect or make copies of any record relating to the licensee or to any director, officer, employee, or affiliate of the licensee, or if the commissioner provides the record, or a copy thereof, to any of those persons, Section 7922.000 of the Government Code, subdivision (a) of Section 7922.540 of the Government Code, and each provision listed in Section 7920.505 of the Government Code shall continue to apply to the record to the extent that these provisions applied to the record prior to that action by the commissioner.

history: (History: Amended by Stats. 2021, Ch. 615, Sec. 59. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Sec. 463 of Stats. 2021, Ch. 615.)

title: 4. SECURITIES


citation: CORP § 28107

text: The commissioner may refer any evidence available concerning any violation of this division or of any regulation or order issued under this division that constitutes a crime to the district attorney of the county in which the violation occurred, who may, with or without that reference, institute appropriate criminal proceedings.

title: 4. SECURITIES


citation: CORP § 28108

text: Before any applicant for a license is issued a license, the applicant and each parent and subsidiary of the applicant shall file, and each person that becomes a parent or subsidiary of a licensee shall file, not less than 30 days after becoming a parent or subsidiary of the licensee, with the commissioner, in the form the commissioner may by regulation or order require, an irrevocable consent appointing the commissioner to be the person’s attorney-in-fact to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the person, or the person’s successor, executor, or administrator, which arises under this division or under any regulation or order issued under this division after the consent has been filed, with the same force and validity as if served personally on the person. Service may be made by leaving a copy of the process at any office of the commissioner, but the service is not effective unless (a) the party making the service, who may be the commissioner, forthwith sends notice of the service and a copy of the process by registered or certified mail to the person served at the person’s last address on file with the commissioner, and (b) an affidavit of compliance with this section by the party making service is filed on or before the return date, if any, or within that further time as the court, in the case of a judicial proceeding, or the administrative agency, in the case of an administrative proceeding, allows.

title: 4. SECURITIES


citation: CORP § 28109

text: Whenever any person, including any nonresident of this state, engages in conduct prohibited or made actionable by this division or by any regulation or order issued under this division, whether or not the person has filed a consent to service of process under Section 28108, and if personal jurisdiction over the person cannot otherwise be obtained in this state, that conduct shall be considered equivalent to the person’s appointment of the commissioner to be the person’s attorney-in-fact to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the person or the person’s successor, executor, or administrator, which grows out of that conduct and which is brought under this division or under any regulation or order issued under this division, with the same force and validity as if served on the person personally. Service may be made by leaving a copy of the process in any office of the commissioner, but the service is not effective unless (a) the party making the service, who may be the commissioner, forthwith sends notice of the service and a copy of the process by registered or certified mail to the person served at the person’s last known address or takes other steps which are reasonably calculated to give actual notice, and (b) an affidavit of compliance with this section by the party making service is filed in the case on or before the return date, if any, or within that further time as the court, in the case of a judicial proceeding, or the administrative agency, in the case of an administrative proceeding, allows.

title: 4. SECURITIES


citation: CORP § 28110

text:
(a) Fees shall be paid to, and collected by, the commissioner, as follows:

(1) The fee for filing with the commissioner an application for a license shall be no greater than two thousand dollars ($2,000).

(2) The fee for filing with the commissioner an application for approval to acquire control of a licensee shall be no greater than one thousand dollars ($1,000).

(3) The fee for filing with the commissioner an application for approval for a licensee to merge with another company, an application for approval for a licensee to purchase all or substantially all of the business of another person, or an application for approval for a licensee to sell all or substantially all of its business or of the business of any of its offices to another licensee, shall be no greater than one thousand dollars ($1,000). However, whenever two or more applications relating to the same merger, purchase, or sale are filed with the commissioner, the fee for filing each application shall be the quotient determined by dividing one thousand dollars ($1,000) by the number of the applications.

(4) Whenever the commissioner examines, audits, or investigates any licensee or any affiliate of a licensee, that licensee shall pay, within 10 days after receipt of a statement from the commissioner, a fee that equals the amount of the salary or other compensation paid to the persons making the examination, audit, or investigation plus the amount of expenses, including overhead, reasonably incurred in the performance of the work. The licensee shall be given a preliminary estimate of the fee before the commissioner commences an examination, audit, or investigation. In determining the costs associated with an examination, audit, or investigation, the commissioner may use the estimated average hourly cost for all departmental persons performing examinations, audits, or investigations for the fiscal year.

(b) (1) Each fee for filing an application with the commissioner shall be paid at the time the application is filed with the commissioner.

(2) No fee for filing an application with the commissioner shall be refundable, regardless of whether the application is approved, denied, withdrawn, or abandoned.

(c) All fees charged and collected under this section shall be transmitted to the Treasurer at least weekly, accompanied by a detailed statement therefor, and shall be credited to the State Corporations Fund.

title: 4. SECURITIES


citation: CORP § 28111

text:
(a) If a licensee becomes licensed as a small business investment company and is subject to regulation by the Small Business Administration under the federal Small Business Investment Act of 1958, the commissioner may by rule or order provide that a licensee in compliance with those federal regulations shall be deemed to be in compliance with the regulatory requirements under this division except those provisions required to exempt licensees from regulation under the federal Investment Company Act of 1940, and the provisions of Chapter 8 (commencing with Section 28550), Chapter 9 (commencing with Section 28600), Chapter 10 (commencing with Section 28650), Chapter 11 (commencing with Section 28700), Chapter 12 (commencing with Section 28800), Chapter 13 (commencing with Section 28900), and Chapter 14 (commencing with Section 28950).

(b) A violation by a licensee of any regulation promulgated by the Small Business Administration that the commissioner has by rule or order deemed to be consistent with the regulatory requirements under this division shall constitute a violation of this division. The commissioner shall have all of the powers granted in this division to enforce those federal regulations against a licensee.

history: (History: Added by Stats. 2010, Ch. 516, Sec. 5. (SB 1155) Effective January 1, 2011.)

title: 4. SECURITIES


citation: CORP § 28150

text:
(a) Except as provided in subdivision (b), no person proposing to transact or transacting business in this state, other than a licensee, shall use any name or title that indicates that it is a capital access company or otherwise represent that it is a capital access company or that it is a licensee.

(b) Any company that proposes to apply for a license or that has applied for a license, may, before being issued a license, use a name or title that indicates that it is a capital access company if it meets all of the following requirements:

(1) The company appends to the name the designation “proposed,” “in organization,” or “in formation,” or any similar designation that the commissioner may approve. The designation shall be set forth at least as conspicuously as the name or title.

(2) The company performs only those acts that may be necessary to (A) apply for and obtain the license and (B) prepare to commence transacting business as a licensee.

(3) The company does not represent that it is a licensee.

title: 4. SECURITIES

chapter: 3. Licensing

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 3. Licensing


citation: CORP § 28151

text: No person other than a person who meets the definition of a licensee may be issued a license under this division.

title: 4. SECURITIES


citation: CORP § 28152

text:
If the commissioner finds all of the following with respect to an application for a license, the commissioner shall approve the application:

(a) That the applicant has a tangible net worth, exclusive of the funds to invest under subdivision (b), in an amount that is not less than two hundred fifty thousand dollars ($250,000) and that the tangible net worth is adequate for the applicant to transact business as a capital access company.

(b) That the applicant has funds to invest in an amount that is not less than five million dollars ($5,000,000).

(c) That the applicant has, in addition to the requirements of subdivisions (a) and (b), financial resources in an amount that is adequate for the applicant to pay its expenses in transacting business as a capital access company for a period of not less than three years from the date of licensure.

(d) That the directors, officers, and controlling persons of the applicant are each of good character and sound financial standing, that the directors and officers of the applicant are each competent to perform their functions with respect to the applicant, and that the directors and officers of the applicant are collectively adequate to manage the business of the applicant as a capital access company. For purposes of this subdivision, the commissioner shall accord weight to the prior or current successful operation of a commercial or investment enterprise.

(e) That none of the following persons are subject to any act or omission enumerated in subdivision (a), (e), (f), or (g) of Section 25212, or has been convicted of, or pled nolo contendere to, any offense or been held liable in any civil action specified in subdivision (b) of Section 25212, or is enjoined from any act, conduct, or practice specified in subdivision (c) of Section 25212, or is subject to any order specified in subdivision (d) of Section 25212:

(1) A person who is or will be a controlling person of the applicant.

(2) A person who makes or will make recommendations with respect to the investment of funds of the applicant.

(3) A person who is or will be a partner, principal executive officer, manager, or director of the applicant.

(4) A person who occupies or will occupy a similar status or who performs or will perform similar functions to those listed above in paragraphs (1) to (3), inclusive.

(5) An employee who materially aids or assists or will materially aid or assist in the applicant’s investment-related functions.

(6) A broker-dealer or agent who materially aids or assists or will materially aid or assist in the sale or distribution of any securities of the applicant.

(f) That it is reasonable to believe that the applicant, if licensed, will comply with the provisions of Section 6(a)(5) of the Investment Company Act of 1940, the applicable provisions of the Corporate Securities Law of 1968, this division, and of any regulation adopted or order issued under this division.

If, after notice and a hearing, the commissioner finds otherwise, the commissioner shall deny the application.

history: (History: Amended by Stats. 2010, Ch. 516, Sec. 6. (SB 1155) Effective January 1, 2011.)

title: 4. SECURITIES


citation: CORP § 28153

text:
(a) For purposes of Section 28152, the commissioner may find:

(1) That a director, officer, or controlling person of an applicant is not of good character if the director, officer, or controlling person or any director or officer of the controlling person has been convicted of, or has pleaded nolo contendere to, a crime involving fraud or dishonesty.

(2) That it is not reasonable to believe that an applicant, if licensed, will comply with all applicable provisions of this division and of any regulation or order issued under this division if the applicant has been convicted of, or has pleaded nolo contendere to, a crime involving fraud or dishonesty.

(b) Subdivision (a) shall not be deemed to be the only grounds upon which the commissioner may find, for purposes of Section 28152, that a director, officer, or controlling person of an applicant is not of good character or that it is not reasonable to believe that an applicant, if licensed, will comply with all applicable provisions of the Investment Company Act of 1940, the Corporate Securities Law of 1968, this division, and of any regulation or order issued under this division.

title: 4. SECURITIES


citation: CORP § 28154

text: Except pursuant to Section 28551, no license shall be transferable or assignable.

history: (History: Amended by Stats. 2010, Ch. 516, Sec. 7. (SB 1155) Effective January 1, 2011.)

title: 4. SECURITIES


citation: CORP § 28155

text: No licensee shall represent that it is sponsored, recommended, or approved by, or that its abilities or qualifications have in any respect been passed upon by, the commissioner. No licensee shall advertise, print, display, publish, distribute, or broadcast, or cause or permit to be advertised, printed, displayed, published, distributed, or broadcast in any manner, any statement or representation with regard to the business subject to the provisions of this division that is false, misleading, or deceptive, or that omits material information that is necessary to make the statements not false, misleading, or deceptive, or in the case of a licensee, that refers to the supervision of business by the state or any department or official of the state. Nothing in this section shall be deemed to prohibit a licensee from stating that it is licensed if the effect of such license is not misrepresented.

title: 4. SECURITIES


citation: CORP § 28200

text:
The organizational documents of the licensee shall include the following statement:

(a) The activities of the licensee are limited to the promotion of economic, business, or industrial development in the State of California through the provision of financial or managerial assistance primarily to small business firms and to other activities that are incidental or necessary to carry out that purpose.

(b) The licensee will not engage in the business of issuing redeemable securities.

(c) The security holders of the licensee are limited, on a class-by-class basis, to persons who reside in the State of California, or who have a substantial business presence in the State of California, and who hold not less than 80 percent of the licensee’s securities.

(d) The securities of the licensee will be sold solely to accredited investors (Section 28031) and the licensee will not purchase any securities issued by an investment company as defined in Section 3 of the Investment Company Act of 1940 or issued by any company that would be an investment company except for the exclusions from that definition under paragraph (1) or (7) of Section 3(a) of that act, other than (1) any debt security that is rated investment grade by not less than one nationally recognized statistical rating organization or (2) any security issued by a registered open-end investment company that is required by its investment policies to invest not less than 65 percent of its total assets in securities described in paragraph (1) or securities that are determined by that registered open-end investment company to be comparable in quality to securities described in paragraph (1).

(e) The licensee will engage in the transaction of business pursuant to the exemption from registration under the Investment Company Act of 1940 afforded to economic, business, and industrial development companies as provided for by Section 6(a)(5) of the Investment Company Act of 1940, as amended (15 U.S.C. Sec. 80a-6(a)), and a license pursuant to the Capital Access Company Law (Division 3 (commencing with Section 28000)).

(f) The investment of funds by the licensee will be limited by and subject to the provisions of Section 6(a)(5) of the Investment Company Act of 1940, the Corporate Securities Law of 1968, and the Capital Access Company Law.

title: 4. SECURITIES

chapter: 4. Organizational Matters

article: 1. Organization and Name

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 4. Organizational Matters > 1. Organization and Name


citation: CORP § 28201

text: No licensee shall, except by prior written notice to the commissioner, transact business under any name other than its corporate name.

title: 4. SECURITIES

article: 1. Organization and Name


citation: CORP § 28210

text: Each licensee shall have a board of directors, executive committee, or other policy body, which shall consist of not less than three members.

title: 4. SECURITIES

article: 2. Directors

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 4. Organizational Matters > 2. Directors


citation: CORP § 28211

text: The board of directors, executive committee, or other policy body of each licensee shall hold a meeting not less frequently than once each calendar year.

title: 4. SECURITIES

article: 2. Directors


citation: CORP § 28212

text: The board of directors, executive committee, or other policy body of each licensee shall approve the contract to be entered into between the licensee and any person who will make recommendations with respect to the investment of funds of the licensee.

title: 4. SECURITIES

article: 2. Directors


citation: CORP § 28320

text:
(a) No licensee shall relocate its head office without prior written notice to the commissioner.

(b) No licensee shall establish, relocate, or close any office (other than its head office) unless it files a notice with the commissioner not less than two business days after taking the action.

title: 4. SECURITIES

chapter: 5. Offices

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 5. Offices > 1. Establishing, Relocating, and Closing Offices


citation: CORP § 28400

text:
No licensee shall engage in any business other than the following:

(a) The business of providing financing assistance through the purchase of securities of small business firms or smaller business firms doing business or proposing to do business wholly or substantially in this state.

(b) The business of providing managerial assistance (including managerial and technical assistance) to small business firms or smaller business firms doing business or proposing to do business wholly or substantially in this state.

(c) At least 20 percent of all financing assistance provided by the licensee shall be through purchase of securities of smaller business firms doing business or proposing to do business wholly or substantially in this state.

history: (History: Amended by Stats. 2010, Ch. 516, Sec. 8. (SB 1155) Effective January 1, 2011.)

title: 4. SECURITIES

chapter: 6. Transaction of Business

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 6. Transaction of Business


citation: CORP § 28404

text: No licensee shall provide financing assistance to any small business firm for the purpose of evading the requirements of this division.

history: (History: Amended by Stats. 2010, Ch. 516, Sec. 12. (SB 1155) Effective January 1, 2011.)

title: 4. SECURITIES


citation: CORP § 28405

text: This section creates and authorizes an exempt class of persons pursuant to Section 1 of Article XV of the California Constitution. The restrictions upon rates of interest contained in Section 1 of Article XV of the California Constitution shall not apply to any evidence of indebtedness purchased by any licensee.

title: 4. SECURITIES


citation: CORP § 28500

text: Each licensee shall make and keep books, accounts, and other records in the form and in the manner that the commissioner may by regulation or order require. All records so required shall be kept at the place and shall be preserved for the time that the commissioner may by regulation or order specify.

title: 4. SECURITIES

chapter: 7. Records, Reports, and Examinations

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 7. Records, Reports, and Examinations


citation: CORP § 28501

text:
Each licensee shall, not more than 90 days after the close of each of its fiscal years or within a longer period that the commissioner may by regulation or order specify, file with the commissioner an audit report containing all of the following:

(a) Financial statements (including balance sheets, statements of income or loss, statements of changes in capital accounts, and statements of cashflows or, in the case of a licensee that is a California nonprofit corporation, comparable financial statements) for, or as of, the end of the fiscal year, prepared, with audit, by an independent certified public accountant in accordance with generally accepted accounting principles.

(b) A report, certificate, or opinion of the independent certified public accountant or independent public accountant, stating that the financial statements were prepared in accordance with generally accepted accounting principles.

(c) Any other information that the commissioner may by regulation or order require.

history: (History: Amended by Stats. 2006, Ch. 214, Sec. 10. Effective January 1, 2007.)

title: 4. SECURITIES


citation: CORP § 28502

text: Each licensee, director, officer, and employee of a licensee, and each parent and subsidiary of a licensee shall file with the commissioner all reports that the commissioner may by regulation or order require within the timeframe specified. In addition, each affiliate of a licensee (other than a parent or subsidiary of the licensee) shall file with the commissioner all reports regarding transactions between the affiliate and the licensee that the commissioner may require within the timeframe specified. Each report shall be in a form, shall contain information, shall be signed in a manner, and shall be verified in a manner, that the commissioner may by regulation or order require.

title: 4. SECURITIES


citation: CORP § 28503

text:
(a) The commissioner shall examine each licensee not less frequently than once each calendar year.

(b) (1) The commissioner may at any time examine any licensee or any parent or subsidiary of a licensee.

(2) The commissioner may at any time examine any affiliate of a licensee (other than a parent or subsidiary of the licensee), but only with respect to matters relating to transactions between the affiliate and the licensee.

(c) The directors, officers, and employees of any licensee or of any affiliate of a licensee being examined by the commissioner and any other person having custody of any of the books, accounts, or records of the licensee or of the affiliate shall exhibit to the commissioner, on request, any or all of the books, accounts, and other records of the licensee or of the affiliate and shall otherwise facilitate the examination so far as it may be in their power to do so. However, in the case of an examination of an affiliate of a licensee other than a parent or subsidiary of the licensee, only books, accounts, and records of the affiliate that relate to transactions between the affiliate and the licensee shall be subject to this subdivision.

(d) The commissioner may, if in his or her opinion it is necessary in the examination of any licensee or of any affiliate of a licensee, retain any certified public accountant, attorney, appraiser, or other person to assist him or her, and the licensee shall pay, within 10 days after receipt of a statement from the commissioner, the fees of the person retained.

title: 4. SECURITIES


citation: CORP § 28504

text:
(a) A licensee may, after the approval of the board of directors, executive committee, or other policy body of the licensee, cause or permit any other person to make or keep any of its books, accounts, or other records.

(b) If any person other than a licensee makes or keeps any of the books, accounts, or other records of the licensee, the provisions of this division and of any regulation or order issued under this division shall apply to the person with respect to the performance of those services and with respect to those books, accounts, and other records to the same extent as if the person were the licensee.

(c) If any person other than an affiliate of a licensee makes or keeps any of the books, accounts, or other records of the affiliate or, in the case of an affiliate other than a parent or subsidiary of the licensee, the books, accounts, and other records of the affiliate that relate to transactions between the affiliate and the licensee, the provisions of this division and of any regulation or order issued under this division shall apply to the person with respect to those books, accounts, and other records to the same extent as if the person were the affiliate.

title: 4. SECURITIES


citation: CORP § 28505

text: Subject to the provisions of Rules 250.10 and 250.10.5 of the Commissioner of Financial Protection and Innovation (10 C.C.R. Secs. 250.10 and 250.10.5), the commissioner may make available to the public any report filed with the commissioner under this division or under any regulations or order issued under this division.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 87. (SB 1498) Effective January 1, 2023.)

title: 4. SECURITIES


citation: CORP § 28550

text: No person shall, except with the prior written approval of the commissioner, acquire control of a licensee.

title: 4. SECURITIES

chapter: 8. Acquisition of Control

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 8. Acquisition of Control


citation: CORP § 28551

text:
The commissioner shall approve an application for approval to acquire control of a licensee only if, after notice and a hearing, the commissioner finds all of the following:

(a) That the applicant and the directors and officers of the applicant are of good character and sound financial standing.

(b) That it is reasonable to believe that, if the applicant acquires control of the licensee, the applicant will comply with all applicable provisions of this division and of any regulation or order issued under this division.

(c) That the applicant’s plans, if any, to make any major change in the business, corporate structure, or management of the licensee are not detrimental to the safety and soundness of the licensee or the accredited investors of the licensee, or to the public convenience and advantage.

title: 4. SECURITIES


citation: CORP § 28552

text:
(a) For purposes of Section 28551, the commissioner may find:

(1) That an applicant or a director or officer of an applicant is not of good character if the person has been convicted of, or has pleaded nolo contendere to, a crime involving fraud or dishonesty.

(2) That an applicant’s plan to make a major change in the management of a licensee is detrimental to the safety and soundness of the licensee or the accredited investors of the licensee and to the public convenience and advantage if the plan provides for a person who has been convicted of, or has pleaded nolo contendere to, a crime involving fraud or dishonesty to become a director or officer of the licensee.

(b) Subdivision (a) shall not be deemed to be the only grounds upon which the commissioner may find, for purposes of Section 28551, that an applicant or a director or officer of an applicant is not of good character or that an applicant’s plan to make a major change in the management of a licensee is detrimental to the safety and soundness of a licensee or to the accredited investors of the licensee, or to the public convenience and advantage.

title: 4. SECURITIES


citation: CORP § 28600

text:
For purposes of this chapter:

(a) “Acquiring licensee” means either of the following:

(1) In the case of a merger, the licensee that is the surviving company.

(2) In the case of a purchase or sale, the licensee that is the purchaser.

(b) “Disappearing company” has the meaning set forth in Section 165.

(c) “Surviving company” has the meaning set forth in Section 190.

title: 4. SECURITIES

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 9. Merger and Purchase or Sale of Business


citation: CORP § 28601

text:
No licensee shall merge with any other company unless either of the following apply:

(a) If the licensee is to be the surviving company, the merger is first approved by the commissioner.

(b) If the licensee is to be a disappearing company, the surviving company is a licensee and the merger is first approved by the commissioner.

title: 4. SECURITIES

chapter: 9. Merger and Purchase or Sale of Business


citation: CORP § 28602

text: No licensee shall purchase all or substantially all of the business of any other person unless the purchase is first approved by the commissioner.

title: 4. SECURITIES


citation: CORP § 28603

text: No licensee shall sell all or substantially all of its business to any other person unless the other person is a licensee and the sale is first approved by the commissioner.

title: 4. SECURITIES


citation: CORP § 28604

text:
The commissioner shall approve an application for approval of a merger, purchase, or sale, only if, after notice and a hearing, the commissioner finds all of the following:

(a) That the merger, purchase, or sale will be safe and sound with respect to the acquiring licensee.

(b) That it is reasonable to believe that, upon consummation of the merger, purchase, or sale, the acquiring licensee will comply with all applicable provisions of this division and of any regulation or order issued under this division.

(c) That the merger, purchase, or sale will not be detrimental to the licensee or the accredited investors of the licensee, or the public convenience and advantage, or, if the merger, purchase, or sale would be detrimental to any of the foregoing, then it is necessary in the interests of the safety and soundness of any of the parties to it.

title: 4. SECURITIES


citation: CORP § 28650

text: Any licensee may offer to surrender its license by filing with the commissioner the license and a report, which shall (a) be in a form, (b) contain information, and (c) be signed and verified in a manner, that the commissioner may by regulation or order require.

title: 4. SECURITIES

chapter: 10. Voluntary Surrender of License

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 10. Voluntary Surrender of License


citation: CORP § 28651

text:
(a) Except as otherwise provided in subdivision (b), a voluntary surrender of a license shall be effective upon the issuance of an order by the commissioner accepting the offer of surrender and the report required under Section 28650.

(b) If a proceeding to revoke or suspend a license is pending at the time when the license and the report required under Section 28650 are filed with the commissioner or if a proceeding to revoke or suspend a license or to impose conditions upon the surrender of a license is instituted before the license and the report called for in Section 28650 are filed with the commissioner, the voluntary surrender of the license shall become effective at the time and upon the conditions that the commissioner may by order specify.

title: 4. SECURITIES


citation: CORP § 28700

text:
For purposes of this chapter, unless the context otherwise requires:

(a) “Office with a licensee” means the position of director, officer, or employee of the licensee or of any subsidiary of the licensee.

(b) “Subject person,” when used with respect to a licensee, means any of the following:

(1) Any controlling person or affiliate of the licensee.

(2) Any director, officer, or employee of the licensee or of any of the persons specified in paragraph (1).

(3) Any other person who participates in the conduct of the business of the licensee.

title: 4. SECURITIES

chapter: 11. Enforcement

path: 4. SECURITIES > 3. CAPITAL ACCESS COMPANIES > 11. Enforcement


citation: CORP § 28701

text: Whenever it appears to the commissioner that any person has violated, or that there is reasonable cause to believe that any person may violate, any provision of this division or of any regulation or order issued under this division, the commissioner may bring an action in the name of the people of this state in the superior court to enjoin the violation or to enforce compliance with this division or with any regulation or order issued under this division. Upon a proper showing, a restraining order, preliminary or permanent injunction, or writ of mandate shall be granted, and a receiver or a conservator may be appointed for the defendant or the defendant’s assets. The court may not require the commissioner to post a bond.

title: 4. SECURITIES


citation: CORP § 28702

text:
(a) If the commissioner finds that any person has violated, or that there is reasonable cause to believe that any person may violate, Section 28150, the commissioner may order the person to cease and desist from the violation unless and until the person is issued a license.

(b) (1) Within 30 days after an order is issued pursuant to subdivision (a), the person to whom the order is directed may file with the commissioner an application for a hearing on the order. If the commissioner fails to commence a hearing within 15 business days after the application is filed with him or her (or within any longer period to which the person consents), the order shall be deemed rescinded. Upon the completion of the hearing, the commissioner shall affirm, modify, or rescind the order.

(2) The right of any person to whom an order is issued under subdivision (a) to petition for judicial review of the order shall not be affected by the failure of the person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).

title: 4. SECURITIES


citation: CORP § 28703

text:
The commissioner may issue a cease and desist order, including an order to take appropriate corrective action, if, after notice and a hearing, the commissioner finds either of the following:

(a) That any licensee or any subject person of a licensee has violated, is violating, or that there is reasonable cause to believe that any licensee or any subject person of a licensee may violate, any provision of this division or of any regulation or order issued under this division or any provision of any other applicable law.

(b) That any licensee or any subject person of a licensee has engaged or participated in, is engaging or participating in, or that there is reasonable cause to believe that any licensee or any subject person of a licensee may engage or participate in, any unsafe or unsound act with respect to the business of the licensee.

title: 4. SECURITIES


citation: CORP § 28704

text:
(a) The commissioner may issue a cease and desist order, including an order to take appropriate corrective action, if the commissioner finds both of the following:

(1) That any of the factors set forth in Section 28703 is true with respect to any licensee or any subject person of a licensee.

(2) That the action or violation is likely to cause the insolvency of, or substantial dissipation of the assets or earnings of, the licensee, or is likely to seriously weaken the condition of the licensee or otherwise to seriously prejudice the interests of the licensee or the accredited investors of the licensee, prior to the completion of proceedings conducted pursuant to Section 28703.

(b) (1) Within 30 days after an order is issued pursuant to subdivision (a), any licensee or subject person of a licensee to whom the order is directed may file with the commissioner an application for a hearing on the order. The filing of an application for a hearing shall not stay the effectiveness of the order. If the commissioner fails to commence a hearing within 15 business days after the application is filed (or within any longer period to which the licensee or subject person consents), the order shall be deemed rescinded. Upon the completion of the hearing, the commissioner shall affirm, modify, or rescind the order.

(2) The right of any licensee or subject person of a licensee to whom an order is issued under subdivision (a) to petition for judicial review of the order shall not be affected by the failure of the licensee or subject person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).

title: 4. SECURITIES


citation: CORP § 28705

text:
The commissioner may issue an order removing a subject person from that person’s office with the licensee, if any, and prohibiting that person from further participating in any manner in the conduct of the business of the licensee, if, after notice and a hearing, the commissioner finds all of the following:

(a) (1) That the subject person of a licensee has violated a provision of this division or of any regulation or order issued under this division or any provision of any other applicable law;

(2) That the subject person of a licensee has engaged or participated in any unsafe or unsound act with respect to the business of the licensee; or

(3) That the subject person of a licensee has engaged or participated in any act which constitutes a breach of his or her fiduciary duty as a subject person.

(b) (1) That the act, violation, or breach of fiduciary duty has caused or is likely to cause substantial financial loss or other damage to the licensee or the accredited investors of the licensee; or

(2) That the act, violation, or breach of fiduciary duty has seriously prejudiced or is likely to seriously prejudice the interests of the licensee or the accredited investors of the licensee; or

(3) That the subject person has received financial gain by reason of the act, violation, or breach of fiduciary duty.

(c) That the act, violation, or breach of fiduciary duty either involves dishonesty on the part of the subject person or demonstrates the subject person’s gross negligence with respect to the business of the licensee or a willful disregard for the safety and soundness of the licensee.

title: 4. SECURITIES


citation: CORP § 28706

text:
The commissioner may issue an order removing a subject person from his or her office, if any, with the licensee and prohibiting him or her from further participating in any manner in the conduct of the business of the licensee, except with the prior consent of the commissioner, if the commissioner finds, after notice and a hearing, that the subject person of a licensee has, by engaging or participating in any act with respect to any financial or other business institution which resulted in substantial financial loss or other damage, demonstrated either of the following:

(a) Dishonesty.

(b) Willful or continuing disregard for the safety and soundness of the financial or other business institution.

title: 4. SECURITIES


citation: CORP § 28707

text:
(a) The commissioner may issue an order suspending a subject person from his or her office, if any, with the licensee and prohibiting him or her from further participating in any manner in the conduct of the business of the licensee, except with the consent of the commissioner, if the commissioner finds both of the following:

(1) That the factors set forth in subdivisions (a), (b), and (c) of Section 28705 or the factors set forth in subdivision (a) of Section 28706 are true with respect to the subject person of a licensee.

(2) That it is necessary for the protection of the interests of the licensee or the accredited investors of the licensee, or for the protection of the public interest that the commissioner immediately suspend the subject person from his or her office, if any, with the licensee and prohibit him or her from further participating in any manner in the conduct of the business of the licensee.

(b) (1) Within 30 days after an order is issued pursuant to subdivision (a), any subject person of a licensee to whom the order is directed may file with the commissioner an application for a hearing on the order. The filing of an application for a hearing shall not stay the effectiveness of the order. If the commissioner fails to begin a hearing within 15 business days after the application is filed (or within any longer period to which the subject person consents), the order shall be deemed rescinded. Upon the completion of the hearing, the commissioner shall affirm, modify, or rescind the order.

(2) The right of any subject person of a licensee to whom an order is issued under subdivision (a) to petition for judicial review of the order shall not be affected by the failure of the subject person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).

title: 4. SECURITIES


citation: CORP § 28708

text:
(a) The commissioner may issue an order suspending a subject person from his or her office, if any, with the licensee and prohibiting him or her from further participating in any manner in the conduct of the business of the licensee, except with the consent of the commissioner, if the commissioner finds both of the following:

(1) That the subject person of a licensee has been indicted by a grand jury for, or held to answer by a magistrate for, a crime involving dishonesty or breach of trust.

(2) That the continuation of that person as a subject person of the licensee may threaten the interests of the licensee or the accredited investors of the licensee, or may threaten to impair public confidence in the licensee.

(b) The commissioner may issue an order suspending or removing the subject person or former subject person from his or her office, if any, with the licensee and prohibiting him or her from further participating in any manner in the conduct of the business of the licensee, except with the prior consent of the commissioner, if the commissioner finds both of the following:

(1) That the subject person or former subject person of a licensee to whom an order was issued pursuant to subdivision (a) or any other subject person of a licensee has been finally convicted of a crime which is punishable by imprisonment for a term exceeding one year and which involves dishonesty or breach of trust.

(2) That the continuation or resumption by that person as a subject person of the licensee may threaten the interests of the licensee or the accredited investors of the licensee, or may threaten to impair public confidence in the licensee.

(c) (1) Within 30 days after an order is issued pursuant to subdivision (a) or (b), any subject person of a licensee to whom the order is directed may file with the commissioner an application for a hearing on the order. If the commissioner fails to commence a hearing within 15 business days after the application is filed (or within any longer period to which the subject person consents), the order shall be deemed rescinded. Upon the completion of the hearing, the commissioner shall affirm, modify, or rescind the order.

(2) The right of any subject person or former subject person of a licensee to whom an order is issued under subdivision (a) or (b) to petition for judicial review of the order shall not be affected by the failure of the person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).

(d) The fact that any subject person of a licensee charged with a crime involving dishonesty or breach of trust is not finally convicted of the crime shall not preclude the commissioner from issuing an order to the subject person pursuant to any other section of this division.

title: 4. SECURITIES


citation: CORP § 28709

text: Any person to whom an order is issued under Section 28705, 28706, 28707, or 28708 may apply to the commissioner to modify or rescind the order. The commissioner shall not grant the application unless the commissioner finds that it is in the public interest to do so and that it is reasonable to believe that the person will, if and when he or she becomes a subject person of a licensee, comply with all applicable provisions of this division and of any regulation or order issued under this division.

title: 4. SECURITIES


citation: CORP § 28710

text:
The commissioner may issue an order suspending or revoking the license of a licensee, if, after notice and a hearing, the commissioner finds any of the following:

(a) That the licensee or any controlling person or affiliate of the licensee has violated any provision of this division or of any regulation or order issued under this division or any provision of any other applicable law.

(b) That the licensee is conducting its business in an unsafe and unsound manner.

(c) That the licensee is in a condition that it is unsafe or unsound for it to transact business.

(d) That the licensee has ceased to transact business as a capital access company.

(e) That the licensee is insolvent.

(f) That the licensee has suspended payment of its obligations, has made an assignment for the benefit of its creditors, or has admitted in writing its inability to pay its debts as they become due.

(g) That the licensee is the subject of an order for relief in bankruptcy or has sought other similar relief under any other bankruptcy, reorganization, insolvency, or moratorium law, or that any person has applied for any of that relief under any of those laws against any licensee and the licensee has by any affirmative act approved of or consented to the action or the relief has been granted.

(h) That any fact or condition exists which, if it had existed at the time when any licensee applied for its license, would have been grounds for denying the application.

history: (History: Amended by Stats. 2009, Ch. 500, Sec. 31. (AB 1059) Effective January 1, 2010.)

title: 4. SECURITIES


citation: CORP § 28711

text:
(a) If the commissioner finds that any of the factors set forth in Section 28710 is true with respect to any licensee and that it is necessary for the protection of the public interest that the commissioner immediately suspend or revoke the license of the licensee, the commissioner may issue an order suspending or revoking the license of the licensee.

(b) Within 30 days after an order is issued pursuant to subdivision (a), any licensee to whom the order is directed may file with the commissioner a request for a hearing on the order. If the commissioner fails to commence a hearing within 15 business days after the request is filed (or within any longer period to which the licensee consents), the order shall be deemed rescinded. Upon the completion of the hearing, the commissioner shall affirm, modify, or rescind the order.

history: (History: Amended by Stats. 2007, Ch. 101, Sec. 7. Effective January 1, 2008.)

title: 4. SECURITIES


citation: CORP § 28712

text: Any person whose license is suspended or revoked shall immediately deliver the license to the commissioner.

title: 4. SECURITIES


citation: CORP § 28713

text:
Any person to whom an order is issued under Section 28709 or 28710 may apply to the commissioner to modify or rescind the order.

The commissioner shall not grant the application unless the commissioner finds that it is in the public interest to do so and that it is reasonable to believe that the person will, if and when it becomes a licensee, comply with all applicable provisions of this division and of any regulation or order issued under this division.

title: 4. SECURITIES