Cal. Code Regs. tit. 10 § 260.140.113.5

Current through Register 2024 Notice Reg. No. 25, June 21, 2024

Section 260.140.113.5 - Promotional Interests and Program Management Fees

(a) An adequately subordinated interest in the program will be allowed as a promotional interest and program management fee, provided the amount or percentage of such interest is reasonable. Such interest will be considered adequately subordinated and presumptively reasonable if it is within the limitations expressed in either subparagraph below:

(1) An interest equal to 25% of distributions from any source remaining after payment to investors of an amount equal to 100% of capital contributions plus an amount equal to 6% of capital contributions per annum cumulative; or

(2) An interest equal to:

(A) 10% of distributions from cash available for distribution from operations; and

(B) 15% of distributions from cash available from sale and refinancing of properties remaining after payment to investors of an amount equal to 100% of capital contributions plus an amount equal to 6% of capital contributions per annum cumulative.

(b) For the purposes of this Section, the capital contributions of participants shall only be reduced by distributions to participants from cash available from sale and refinancing of program properties and distributions from reserves created from the proceeds of the offering.

(c) Dissolution and liquidation of the partnership. The distribution of assets upon dissolution and liquidation of the partnership shall conform to the applicable subordination provisions of subparagraphs (a)(1) and (a)(2)(B) herein, and appropriate language to this effect shall be included in the partnership agreement.

(d) The cumulative benefits required by subparagraphs (a)(1) and (a)(2)(B) herein, shall commence no later than the end of the calendar quarter in which the participant's capital contribution is made. A program may elect an earlier date if it so chooses.

Cal. Code Regs. Tit. 10, § 260.140.113.5

1. Amendment filed 1-27-84; effective thirtieth day thereafter (Register 84, No. 4).
2. Renumbering and amendment of former section 260.140.113.4 to section 260.140.113.5 filed 5-18-92; operative 6-17-92 (Register 92, No. 22).

Note: Authority cited: Section 25610, Corporations Code. Reference: Section 25140, Corporations Code.