Who Files The Most Permit Applications?

California Corporations Code Section 25113(d) requires the Commissioner of Business Oversight to prepare and publicize an annual report of the number of permits that it issues for the offer and sale of securities. The report must include the following information:

  • A summary of the general categories of investments for which permits were approved;
  • The minimum, maximum, and average net worth required of permit holders;
  • The least stringent and most stringent suitability standards imposed on persons issued permits for each category;
  • The experience requirements imposed;
  • The total dollar amount of money sought to be raised per category;
  • The number and nature of enforcement actions taken against permit holders; and
  • Any other information deemed relevant by the Commissioner.

The most recent report was issued in December 2014 and covers the 2013 calendar year.  In that year, the Department issued a total of 115 permits.  The largest category of permittees were religious issuers.  Approximately 35% of the permits were issued for church debt and church extension offerings.  The next highest categories were micro lender and membership organizations (social and sports clubs) with each representing approximately 10% of the total.  It is important to note that the report covers only permits.  It does not cover qualifications by coordination or a notification.

With federal preemption, the number of permits issued has dwindled.  In the Corporation Department's (as it was then known) first annual report, Commissioner Herschel L. Carnahan reported that the Department had issued permits to 1,970 companies during the 20 month period beginning January 1, 2015.  In 1926-1927, the number of permits had swelled to 5,582.  For more on California's first Commissioner, see this post.

When is a Synagogue a Church?

The Commissioner has adopted a series of standards for the qualification of church debt, 10 CCR §§ 260.140.72 - 260.140.72.6.  The use of the word "church" should not be interpreted to mean that only Christian institutions are covered by these rules.  Rule 260.140.72(c) defines a "church" to include "a synagogue, temple, mosque or other place of worship and related church property such as a school or youth camp." Under the Commissioner's definition a “Church” must be a nonprofit organization that operates exclusively for religious purposes and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.