November 15, 1990
TO: SEC RULES COMMITTEE NO. 60-90
STATE LIAISON COMMITTEE NO. 28-90
CLOSED-END FUND COMMITTEE NO. 25-90
UNIT INVESTMENT TRUST COMMITTEE NO. 50-90
RE: CALIFORNIA ISSUES AMENDED PROPOSED FINAL ANTI-APARTHEID
DISCLOSURE REGULATIONS
__________________________________________________________
The office of the California Secretary of State has issued
amended 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 amended
proposed final regulations is attached.
As you know, on December 18, 1989, the office of the
California Secretary of State issued emergency regulations
relating to the proposition, effective January 1, 1990. Proposed
final regulations were subsequently published on June 29, 1990.
The amended proposed final regulations incorporate comments
received on both the emergency regulations and the proposed final
regulations.
The amended proposed final regulations are very similar to
the emergency regulations and the proposed final regulations.
The amended proposed final regulations require each corporation
selling securities in California to file a notice that attaches
photocopies of the required prospectus disclousre, as well as the
cover page of the prospectus. The amended proposed regulations
also describe the notice form.
A corporation is considered to be "doing business ... with
any person or group located in South Africa" when the corporation
to a "substantial extent" is either selling goods or services
(including financial services) to, or buying goods or services
(including financial services) from, a person or group located in
South Africa." "Substantial extent" has been defined as sales or
purchases or both amounting to a combined total of $10,000 or
more in the current fiscal year.
The amended proposed final regulations further provide that
a mutual fund which provides for the election of a majority of
directors by investors in the fund (beginning with the first
election held after the first public investors are admitted) will
not be considered a "subsidiary corporation" of its sponsoring
organization.
Written comments are due on on the amended proposed final
regulations are due December 11, 1990 and should be sent to
Margery E. Knapp, Staff Counsel, 1230 J Street-Room 100,
Sacramento, California 95814.
We will keep you informed of developments.
Patricia Louie
Assistant General Counsel
Attachment