CA Pub Util Code Section 3151

(a)

Any share or membership issued by an association is exempt from Part 2 (commencing with Section 25100) of Division 1 of Title 4 of the Corporations Code if the aggregate investment of a shareholder or member in shares or memberships sold by an association does not exceed one thousand dollars ($1,000).

(b)

This exemption does not apply to the shares or memberships in an association if any promoter of those shares or memberships expects or intends to make a profit directly or indirectly from any business or activity associated with the association or from the operation of the association or to receive a salary or other remuneration from the association. Furthermore, this exemption does not apply to nonvoting shares or memberships in an association issued to any person who does not possess, and who will not acquire in connection with the issuance of nonvoting memberships, voting power in the association.