In California to be exempt from registering security transactions with the Department of Corporations, which follows the rules set by the SEC Regulation D as well as the California Corporations Code 25102 (f). There are certain requirements that a company must meet in order to qualify for exemption from registration. First sales of the company’s securities cannot be made to more than 35 persons, including persons not in this state. These purchasers of the securities must also have a preexisting personal or business relationship with an officer, partner, director, manager, or controlling person of your company. If the purchaser does not have a preexisting relationship then they must be reasonably assumed to have the capacity to protect their own interests with the transaction. Second your company cannot advertise or solicit their securities to the public and when bought a individual must be purchasing the security for themselves or a trust as they cannot resell it. In California, Corporations Code 21502 (n) also offers corporations exemption from registering transactions, however to qualify under this section the corporation must only sell its securities within California. If your company does this then it must meet the same requirements for exemption as seen as in Code 25102 (f) above to be considered for exemption within this code as well. Security registration requirements are extremely complex, and any company seeking to raise money from investors is urged to seek the advice of qualified legal counsel.