REITs in California

Title 3, Part 4 of the Corporations Code deals with real estate investment trusts (REITs) in this state. Section 2300 defines the term “real estate investment trust.”

Section 23001 prohibits any shareowner of a real estate investment trust from being personally liable for any liabilities, debts or obligations of, or claims against, the real estate investment trust.

Section 23002 applies Section 23001 to any real estate investment trust organized under the laws of this state, and to any real estate investment trust organized under the laws of a foreign jurisdiction.

Section 23003 prohibits a real estate investment trust from issuing any security redeemable at the option of the holder of the security.

Section 23004 requires Section 23001 to apply with respect to all liabilities, debts, obligations of, and claims against, a real estate investment trust arising after the effective date of this part, and prior law continued to govern with respect to liabilities, debts, obligations and claims existing on the effective date of this part.

Section 23005 explains that the provisions of Sections 1400 and 1402 governing bankruptcy reorganizations for corporations also apply to real estate investment trusts.

Section 23006 specifies three entities that may be merged pursuant to this article. Any merger under this section is only effective upon the approval of the holders of a majority of the shares of beneficial interest of the real estate investment trust.