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SECTION 34940-34948

34940. A stockholder in a corporation shall not receive or accept
from the corporation in the repayment of his investment in its stock
any sum in excess of the par value of the stock, current dividends
not to exceed 6 percent a year of its par value, and any cumulative
dividends to which he is entitled.

34941. If required by the commission, the corporation shall deposit
all money received by it as proceeds of the sale of its securities
with a corporation in the State authorized to do trust business and
to perform trust functions. The trustee shall receive the money and
make payment from it for the acquisition of the land, the
construction of improvements, and other items entering into the
actual cost of the project upon presentation of an order signed by a
proper corporation officer, and if required by the commission,
countersigned by a commission member or a person designated by the
commission. If upon the completion of the project the corporation has
made full payment, or has arranged for payment in a manner
satisfactory to the commission, any money remaining in the custody of
the trustee shall be paid to the corporation.

34942. The amount of net earnings transferable to surplus in any
year, after making or providing for the payment of all fixed charges,
dividend, and interest requirements approved by the commission, and
other charges required or approved by the commission, is subject to
the approval of the commission. The amount of such surplus shall not
exceed 15 percent of the outstanding capital stock and obligation of
the corporation, but the surplus shall not be deemed to include any
increase in assets due to reduction of mortgage or bonded
indebtedness or other similar payments. Unless the commission deems
it too small, the balance of yearly net earnings in excess of the
amount transferred to surplus shall be applied to the reduction of
rentals on rental properties, the improvement of properties for sale,
or the reduction of the sale price, as the commission prescribes.

34943. The provisions of the Corporate Securities Law of 1968 not
inconsistent with this chapter apply to a corporation formed under
this chapter.

34944. Before the Corporation Commissioner issues a permit for the
sale of any securities there shall be on file with him a certificate
of the commission approving the project.

34945. A corporation shall not:
(a) Pay any dividends on its shares of stock at a rate in excess
of 6 percent of their par value.
(b) Issue securities covering any project in an aggregate amount
greater than the actual cost of the project, plus an allowance for
working capital, not exceeding 5 percent of the estimated cost of the
project or the actual cost if it is greater than the estimated cost.

(c) Issue securities except in exchange for money or property
actually received for the use and lawful purpose of a corporation, or
for services actually rendered to a corporation; securities shall
not be issued for property except upon a valuation approved by the
commission, and such valuation shall be used in computing actual or
estimated costs.

34946. Each authorized issue of bonds shall relate to one specific
project and shall be secured by mortgages or deeds of trust upon all
the real property of which the project consists, except where units
of the project are to be offered for sale, upon the approval of the
commission, bonds may be issued in an amount to cover each unit of
sale or to cover the entire project and may be paid off at any time.

34947. The bonds, mortgages, or deeds of trust may contain
provisions approved by the commission including the right to
assignment of rentals and entry into possession in case of default,
but the operation of the housing projects after entry by mortgagees,
trustees, or receivers is subject to regulation by the commission
pursuant to this chapter.

34948. The mortgages or trust deeds may create a first lien and a
second lien upon all the real property embraced under the project.


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