BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1430|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 1430
Author: Cooper (D)
Amended: 3/26/15 in Assembly
Vote: 21
SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 8-0, 6/6/16
AYES: Hill, Bates, Block, Gaines, Galgiani, Hernandez,
Mendoza, Wieckowski
NO VOTE RECORDED: Jackson
ASSEMBLY FLOOR: 76-0, 5/7/15 - See last page for vote
SUBJECT: California family owned businesses
SOURCE: Family Business Association
DIGEST: This bill creates a definition for California family
owned business in the Government Code.
ANALYSIS:
Existing law:
1) Defines a small business as "an independently owned and
operated business that is not dominant in the field of
operation, the principal office of which is located in
California, the officers of which are domiciled in
California, and which, together with affiliates, has 100 or
fewer employees, and average annual gross receipts of ten
million dollars or less over the previous three years, or is
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Page 2
a manufacturer as specified." (Government Code (GC) § 14837)
2) Defines a microbusiness as "a small business which, together
with affiliates, has average annual gross receipts of two
million, five hundred thousand dollars or less over the
previous three years or is a manufacturer as specified."
(GC § 14837)
3) Defines a disabled veteran's business enterprise as "an
enterprise that has been certified as meeting the
qualifications established by Section 999 of the Military
Code." (GC § 14837)
This bill:
1) Makes various findings and declarations about California
family owned businesses, including recognition that these
businesses invest more in their employees in terms of
training and benefits, promote more women to high-level
management positions, and are less likely to lay off
employees or downsize in tough economic times while also
outlining the engagement in and commitment to local
California communities made by these businesses.
2) Defines a "California family owned business" (CFOB) as a
business that meets certain requirements. A CFOB must be
organized as a privately held business by one individual or
two or more related persons or is a partnership of business
entities owned by related persons and must maintain its
principal executive office in California and have been in
business continuously for more than 10 years.
3) Requires the business, in order to be defined as a CFOB, to
also either be owned by a sole proprietorship, be a business
entity owned by one individual or two or more related persons
domiciled in California who hold a majority of the equity
interests, or be a partnership of business entities owned by
related persons domiciled in California who hold a majority
of the equity interests.
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4) Requires the business, in order to be defined as a CFOB, to
be controlled by one individual or two or more related
persons who exhibit strategic influence and control of the
business by holding it as a sole proprietorship or by holding
a majority of the voting interest.
5) Requires that the business, in order to be defined as a CFOB,
demonstrates an intent to continuously operate as a family
business in the future by either present ownership by two or
more related persons, a previous transfer of ownership of
equity interests between related persons, or being subject to
a written agreement providing for a future transfer between
related persons provided that the agreement was executed in
good faith.
6) Defines "related person" as a person who is related by a
common ancestor, pursuant to state or federal law up to four
generations. Provides that any person related by greater
than four generations is included if his or her ownership or
operational involvement arose from an exercise of continuity
across generations. Provides that "related person" also
includes a parent, stepparent, brother, sister, stepbrother,
stepsister, half-brother, half-sister, adopted person, person
born out of wedlock, stepchild, foster child, uncle, aunt,
niece, nephew, first cousin, and any person denoted by the
prefix "grand" or "great." A spouse, domestic partner, and
the spouse or domestic partner of any person that qualifies
as a person related by a common ancestor, pursuant to state
or federal law up to four generations, is also included
within the definition of "related persons" and shall continue
to be included in the event of the legal relationship being
terminated by death or dissolution.
Background
The sponsor of this bill is the Family Business Association.
According to the author, research has shown that family-owned
businesses have unique characteristics that distinguish them
from other businesses; however, there is currently no
standardized definition for family owned business. The author
states that a standardized definition is needed in order to
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recognize the needs and contributions of family owned
businesses.
An almost identical bill, AB 1260 (Medina, 2013-14 Session), was
vetoed in 2014. In his veto message, Governor Brown wrote,
"Family-owned businesses have an important role in our state and
local economies and I am supportive of efforts that recognize
their vital contributions. I am concerned, however, that adding
a definition of 'California Family Owned Business' in statute
with no legal or programmatic purpose will not achieve the
bill's intended purpose." It remains unclear how adding a
definition of California family owned business to the statute
will provide any benefit to the state or those businesses that
fall under the definition.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified6/7/16)
Family Business Association (source)
California Asian Pacific Chamber of Commerce
OPPOSITION: (Verified6/7/16)
None received
ARGUMENTS IN SUPPORT: Supporters write that that establishing a
statutory definition of a family owned business for the first
time is important, in that it more clearly identifies the unique
and distinct differences between family-owned enterprises from
other businesses and allows decision makers to consider the
special aspects of operating these businesses when considering
future action.
ASSEMBLY FLOOR: 76-0, 5/7/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
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Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,
Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,
Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gray,
Grove, Hadley, Harper, Holden, Irwin, Jones, Jones-Sawyer,
Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,
Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,
Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood,
Atkins
NO VOTE RECORDED: Campos, Gordon, Roger Hernández, Steinorth
Prepared by:Nicole Billington / B., P. & E.D. / (916) 651-4104
6/8/16 16:12:01
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