A real exemption from fishing – Securities


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California’s blue sky law, the Corporate Securities Law of 1968, generally requires offers and sales of securities to be qualified unless the security or transaction is exempt or not subject to qualification. Most of the exemptions are conveniently located in the CSL or the Financial Protection and Innovation Commissioner rules. Sometimes, however, I come across exemptions in other laws.

One such exemption is found in the California Fish Marketing Act. The California Legislature enacted this law in 1957 to “promote, favor, and encourage the intelligent and orderly marketing of fish and fish products by co-operation; eliminate speculation and waste; cause the distribution of fish and fishery products between the producer and the consumer is as direct as can be effectively done; and to stabilize the marketing of fish and fishery products”. cal. Corp. Code§ 13201. The law provides for the organization of societies, which it calls “associations”. cal. Company Code § 13202(c).

The Fish Marketing Act gives these associations a full pass in CSL compliance. Section 13205 of the Companies Code provides:

No association is in any way subject to the terms of the corporate securities law and all associations may issue their certificates of membership or their shares or other securities as provided in this section without need an authorization from the business surveillance commissioner.

The breadth of this exemption is breathtaking, as it exempts fish marketing associations not only from the CSL’s qualification requirements, but also from its anti-fraud provisions.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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