California Corporations Code 25117 – (a) An evidence of indebtedness, and the purchasers or holders …
(a) An evidence of indebtedness, and the purchasers or holders thereof, shall be exempt from the usury provisions of § 1 of Article XV of the California Constitution if (1) the evidence of indebtedness is rated or provisionally rated by Standard & Poor’s Corporation as AAA, AA, A, BBB, or investment grade commercial paper, or by Moody’s Investors Service, Inc. as Aaa, Aa, A, Baa, or investment grade commercial paper, including any such ratings with “+” or “-” designation or other variations that occur within these ratings, or has a rating or a provisional rating by another nationally recognized rating agency or system, which rating and agency or system have been certified by rule or order of the commissioner, or (2) the issuer thereof either (A) has any security listed or approved for listing upon notice of issuance on a national securities exchange, if the exchange has been certified by the commissioner, pursuant to subdivision (o) of Section 25100, or (B) meets each of the following requirements:
(i) The issuer is a corporation which is subject to Section 13 of the Securities Exchange Act of 1934.
Terms Used In California Corporations Code 25117
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Usury: Charging an illegally high interest rate on a loan. Source: OCC
(ii) The issuer had total shareholders’ equity of at least one million dollars ($1,000,000) at the end of its most recent fiscal year, and had consolidated net income, after all charges, including taxes and extraordinary losses, and excluding extraordinary gains, of at least five hundred thousand dollars ($500,000) for three of its last four fiscal years, including its most recent fiscal year. The determination of total shareholders’ equity and net income shall be determined in conformity with generally accepted accounting principles applicable to that fiscal year or years, on a consolidated basis, or (3) the evidence of indebtedness is issued by any corporation all of the outstanding shares of which are owned by an issuer which meets the requirements of subparagraph (A) or (B) of paragraph (2).
(b) This section creates and authorizes a class of transactions and persons pursuant to § 1 of Article XV of the California Constitution.
(c) Any evidence of indebtedness issued in compliance with this section shall be entitled to the benefits of the usury exemption contained in this section regardless of whether subsequent to its issuance the evidence of indebtedness is determined by a court of competent jurisdiction to be a “security.”
(Amended by Stats. 2009, Ch. 131, Sec. 11. (AB 991) Effective January 1, 2010.)