Venture Capital Companies and Fair Investment Practices

Title 4, Division 2.5, Chapter 1 of the California Corporations Code deals with fair investment practices by venture capital companies.

Section 27500 defines the following terms: “commissioner,” “covered entity,” “department,” “diverse founding team member,” “founding team member,” “primarily founded by diverse founding team members,” “venture capital company,” and “venture capital investment.”

Section 27501 requires a covered entity to submit to the department specified information in a manner prescribed by the department. And the covered entity must keep the information provided updated by submitting any changes, as well as specified information about its funding determinations. A covered entity that is required to conduct the survey described must also do specified actions.

Section 27502 requires the department to make the reports received readily accessible, easily searchable, and easily downloadable on the department’s internet website. The department may publish aggregate results or aggregate information based on the information received pursuant to this chapter.

The department may use any information collected pursuant to this chapter in furtherance of its statutory duties, including using the information in a civil action brought by the department under this chapter or other law.

Section 27503 provides that, with respect to the investigative powers of the commissioner under this chapter, the commissioner may do two specified actions.

Section 27504 provides that, with respect to the enforcement powers of the commissioner and the department under this chapter, specified actions apply.

Section 27505 states that, if after an order has been served, 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 must be conducted in accordance with the Administrative Procedure Act and the commissioner has all of the powers granted under that chapter.

Section 27506 authorizes the commissioner to make, amend, and rescind any rules, forms, and orders as are necessary to carry out the provisions of this chapter. Moneys collected pursuant to this chapter are to be deposited in the Financial Protection Fund.