July 6, 1990
TO: SEC RULES MEMBERS NO. 48-90
STATE SECURITIES MEMBERS NO. 21-90
CLOSED-END FUND MEMBERS NO. 24-90
UNIT INVESTMENT TRUST MEMBERS NO. 45-90
RE: CALIFORNIA ISSUES PROPOSED FINAL ANTI-APARTHEID
DISCLOSURE REGULATIONS
__________________________________________________________
The office of the California Secretary of State has issued
proposed final regulations relating to Proposition 105, which
requires each corporation issuing securities in California to
include disclosure in its prospectus of "whether or not" it (or
any affiliated corporation) does business in South Africa, or
with any person or group located there. A copy of the proposed
final regulations is attached.
On December 18, 1989, the office of the California
Secretary of State issued emergency regulations relating to the
proposition, effective January 1, 1990 (See Memorandum to SEC
Rules Members No. 73-89, State Securities Members No. 43-89,
Closed-End Fund Members No. 69-89 and Unit Investment Trust
Members No. 71-89, dated December 19, 1989). The emergency
regulations set forth, among other items, the location of
disclosure, special rules for investment companies, specified
language, determination of doing business with persons located in
South Africa and the scope of the regulation.
The proposed final regulations are very similar to the
emergency regulations. However, the proposed final regulations
contain different alternatives for certain provisions that the
Secretary of State would like specific comments on as to
preference.
Types of Transactions Subject to Filing Requirements.
Section 21920(b) contains two alternative proposals concerning
the types of transactions which are subject to the filing
requirements. Alternative 1 would apply only to issuer
transactions. Alternative 2 would apply to both issuer and non-
issuer transactions.
Definition of "required by law". Section 21920(d) contains
four alternative definitions of the term "required by law". The
definitions differ with respect to the coverage of issuer or non-
issuer transactions and whether the prospectus was prepared
pursuant to the statutory anti-fraud provisions in the California
Corporations Code and the Securities Act of 1933.
Obligation to Update Information. Section 21938 relates to
filings of changes of status and two alternatives are proposed.
Alternative 1 would terminate the obligation to provide updated
information when the distribution of a security has been
completed or when the offering has been withdrawn. Alternative 2
would require that changes in status be filed even after a
prospectus is no longer current. In each alternative, the filing
must be made within thirty days of a change in status.
Written comments are due on August 16, 1990 and should be
sent to Margery E. Knapp, Staff Counsel, 1230 J Street-Room 100,
Sacramento, California 95814. A hearing on the proposed final
regulations will be held on August 16, 1990, at 10:00 a.m. in the
first floor Multipurpose Room of the Secretary of State's Office,
1230 J Street, Sacramento, California.
We will keep you informed of developments.
Patricia Louie
Assistant General Counsel
Attachment