SB 796, as introduced, Committee on Governmental Organization. Alcoholic beverage licenses: private equity funds.
The Alcoholic Beverage Control Act specifies the rules and procedures for the issuance and transfer of alcoholic beverage licenses by the Department of Alcoholic Beverage Control. The act requires the department to make a thorough investigation to determine whether the applicant for a license and the premises for which a license is applied qualify for a license.
This bill would provide that the Department of Alcoholic Beverage Control is not required to qualify for a license a person who is an investor in a private equity fund that holds an interest in an alcoholic beverage license, subject to specified conditions, and would authorize the department to require the manager of the private equity fund to execute an affidavit confirming compliance with the requirements of this provision.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 23405.4 is added to the Business and
2Professions Code, to read:
(a) The department is not required to qualify for a
4license a person who is an investor in a private equity fund that
5holds an interest in a license, provided all of the following
6conditions are satisfied:
7(1) The private equity fund’s interest in the license is limited to
8a passive investment, so that neither the private equity fund nor
9any manager, employee, or agent of the private equity fund has
10any involvement in, or control over, the management of the
11licensed business or of the licensee.
12(2) The private equity fund advisors are registered under the
13federal Investment Advisors Act of 1940, and the private equity
14fund advisors are subject to, and comply with, Section
275.204(b)-1
15of Title 17 of the Code of Federal Regulations.
16(3) An investor shall not, directly or indirectly, hold more than
1710-percent interest in the private equity fund.
18(4) An investor in the private equity fund shall not have any
19control, directly or indirectly, over the investment decisions of the
20private equity fund.
21(b) For purposes of this section, private equity fund means an
22investment company that makes investments in equity or debt
23securities of another company that does not provide investors with
24redemption rights in the ordinary course. A private equity fund
25does not include a hedge fund, liquidity fund, real estate fund,
26securitized asset fund, or venture capital fund.
27(c) The department may require the manager of the private
28equity
fund to execute an affidavit confirming compliance with
29the requirements of this section. If the manager does not have
30personal knowledge of any of the facts necessary to execute the
31affidavit, the manager shall make a diligent inquiry and may
32thereafter execute the affidavit upon information and belief. The
33manager of the private equity fund shall promptly notify the
34department in writing if any of the facts attested to change.
35(d) This section is not intended to allow a person, by reason of
36his or her investment in a private equity fund, to hold an interest
P3 1in a license issued by the department if that interest is not otherwise
2permitted under this division.
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