1. (a) In connection with the financing of an unseasoned corporation, a number of promotional shares (considered in conjunction with any selling expenses paid to promoters) may be issued which is not unreasonable. A number of promotional shares which does not exceed 25% of all of the common shares issued and proposed to be issued by the corporation is presumptively reasonable. However, additional promotional shares may be authorized in the light of the services rendered and other consideration given to the corporation by the promoters, the nature and circumstances of the business enterprise being promoted, and the identity of the investors.
2. (b) Where the issuer is a small business issuer and meets the conditions for filing under Section 25113(b)(2), a number of promotional shares which does not exceed 50% of all of the common shares issued and proposed to be issued by the corporation is presumptively reasonable.
3. (c) Normally, no promotional shares may be issued in connection with the financing of a seasoned corporation.

Note: Authority cited: Section 25610, Corporations Code. Reference: Sections 25113(b)(2) and 25140, Corporations Code.

History

1. New subsection (a) and (c) designators, new subsection (b) and new Note filed 12-19-95; operative 1-18-96 (Register 95, No. 51).