Section 260.140.116.9 - Dividend Reinvestment PlansA program may offer participants the opportunity to elect to have cash distributions reinvested in program interests to be issued by the program or subsequent programs pursuant to a reinvestment plan if the following conditions are met:
(a) The program interests to be issued by the program and subsequent programs in which the participants reinvest are qualified under the Corporate Securities Law of 1968 or exempted therefrom.(b) Counsel for the program submits an opinion that the pooling of the funds for reinvestment does not create a security.(c) The subsequent program has substantially identical investment objectives as the initial program.(d) The participants are free to elect or revoke reinvestment within a reasonable time and such right is fully disclosed in the offering documents.(e) Prior to each reinstatement the participants receive a current updated disclosure document which contains at a minimum the following information: (1) The minimum investment amount.(2) The type or source of proceeds (e.g. cash available for distribution from operations or cash from sale and refinancing of properties) which may be reinvested.(3) The tax consequences of the reinvestment to the participants.(f) Participants must be permitted to change or eliminate the designation of a securities broker-dealer in connection with the reinvestment plan. In the event no broker-dealer is designated, the program will retain amounts otherwise payable as commissions and fees for the benefit of all partners.(g) The broker-dealer or the issuer assumes responsibility for compliance and performance of due diligence responsibilities under the Corporate Securities Law of 1968 and has contacted the participants to ascertain whether the participants continue to meet the applicable suitability standards for participation in each reinvestment.(h) The program must demonstrate that the price of program interests to be issued upon reinvestment pursuant to the plan is fair pursuant to Section 260.140.50 of these Rules.Cal. Code Regs. Tit. 10, § 260.140.116.9
1. Repealer filed 1-27-84; effective thirtieth day thereafter (Register 84, No. 4).
2. New section filed 5-18-92; operative 6-17-92 (Register 92, No. 22). Note: Authority cited: Section 25610, Corporations Code. Reference: Section 25140, Corporations Code.
1. Repealer filed 1-27-84; effective thirtieth day thereafter (Register 84, No. 4).
2. New section filed 5-18-92; operative 6-17-92 (Register 92, No. 22).