1. (a) Unless circumstances warrant and the Commissioner allows another standard, suitability standards for participants shall be presumptively reasonable if all of the following criteria are met:

   1. (1) the participant has a net worth of $200,000 or more (exclusive of home, furnishings and automobiles), or
   2. (2) the participant has a net worth of $50,000 or more (exclusive of home, furnishings and automobiles) and had during the last tax year, or estimates that he will have during the current tax year, “taxable income” as defined in Section 63 of the Internal Revenue Code of 1954, as amended, some portion of which was or will be subject to federal income tax at a rate of 50% or more, without regard to the investment in the program.

2. (b) In the case of programs engaged primarily in investing in income producing properties (production purchase programs) the Commissioner may allow lower suitability standards than those described in Subsection (a). Subject to a satisfactory showing as to the plan of business of the program and the value of properties acquired or proposed to be acquired, the following suitability standards will be deemed reasonable if:

   1. (1) the participant has a net worth of $75,000 or more (exclusive of home, furnishings and automobiles), or
   2. (2) the participant has a net worth of $25,000 or more (exclusive of home, furnishings and automobiles) and an annual income of $20,000 or more.
3. (c) In the case of qualification by coordination, the application for such qualification should be accompanied by an undertaking by the issuer and underwriter to limit sales in California to an identified class meeting these standards, together with a statement of the method to be employed in meeting this requirement.

Note: Authority cited: Section 25610, Corporations Code. Reference: Section 25140, Corporations Code.

History

1. Editorial correction adding Note filed 11-8-82 (Register 82, No. 46).