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7 CFR § 4290.850 - Restrictions on redemption of Equity Securities. 

---
identifier: "/us/cfr/t7/s4290.850"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "7 CFR § 4290.850 - Restrictions on redemption of Equity Securities."
title_number: 7
title_name: "Agriculture"
section_number: "4290.850"
section_name: "Restrictions on redemption of Equity Securities."
chapter_name: "RURAL BUSINESS-COOPERATIVE SERVICE, DEPARTMENT OF AGRICULTURE"
part_number: "4290"
part_name: "RURAL BUSINESS INVESTMENT COMPANY (“RBIC”) PROGRAM"
positive_law: false
currency: "2026-03-24"
last_updated: "2026-03-24"
format_version: "1.1.0"
generator: "[email protected]"
authority: "7 U.S.C. 1989 and 2009cc"
regulatory_source: "69 FR 32204, June 8, 2004, unless otherwise noted."
cfr_part: "4290"
---

# 4290.850 Restrictions on redemption of Equity Securities.

(a) *Restriction on redemption.* A Portfolio Concern cannot be required to redeem Equity Securities earlier than one year from the date of the first closing unless:

(1) The Portfolio Concern makes a public offering, or has a change of management or control, or files for protection under the provisions of the Bankruptcy Code, or materially breaches your Financing agreement; or

(2) You make a follow-on Financing, in which case the new securities may be redeemed in less than one year, but no earlier than the redemption date associated with your earliest Financing of the Portfolio Concern.

(b) *Redemption price.* The redemption price must be either:

(1) A fixed amount that is no higher than the price you paid for the securities; or

(2) An amount that cannot be fixed or determined before the time of the redemption. In this case, the redemption price must be based on:

(i) A reasonable formula that reflects the performance of the Portfolio Concern (such as one based on earnings or book value); or

(ii) The fair market value of the Portfolio Concern at the time of redemption, as determined by a professional appraisal performed under an agreement acceptable to both parties.

(c) *Method.* Any method for determining the redemption price must be agreed upon no later than the date of the first (or only) closing of the Financing.