Exemptions from Securities Regulation

Title 4, Division 1, Part 3, Chapter 1 of the Corporations Code deals with exemptions from regulation and notice filing requirements of agents, broker-dealers, investment adviser representatives, and investment advisers in California.

Section 25200 provides that a broker-dealer registered under the Securities Exchange Act of 1934, who has not previously had any certificate denied or revoked under this law or any predecessor statute, is exempted from certain provisions if he has no place of business in this state and he does not direct offers to sell or buy into this state in any manner to persons other than specified entities.

Section 25202 exempts an investment adviser from specified provisions if the investment adviser does not have a place of business in this state and during the preceding 12-month period has had fewer than six clients who are residents of this state. The term “client” is defined for this purpose.

Section 25203 provides that a person whose only clients are insurance companies is exempt from specified provisions.

Section 25206 specifies that a broker licensed by the Real Estate Commissioner is exempt from specified provisions when engaged in transactions in any interest in any general or limited partnership, joint venture, unincorporated association, or similar organization (but not a corporation) owned beneficially by no more than 100 persons and formed for the sole purpose of, and engaged solely in, investment in or gain from an interest in real property, including, but not limited to, a sale, exchange, trade, or development.

Section 25206.1 defines the term “finder.” A finder who satisfies all of the conditions set forth in law is exempt from specified provisions. The finder is required to file with the commissioner before engaging in any specified activities an initial statement of information that includes at least two specified item of information. The finer also has to file with the commissioner annually a renewal statement of information that includes all of the specified information.

Section 25207 provides that a financial institution that undertakes activities with respect to an investment company is not subject to specified provisions.

Section 25208 specifies that a person licensed as a capital access company is exempt from specified provisions when engaged in the transaction of business pursuant to the requirements of the Capital Access Company Law.