BILL NUMBER: SB 796	INTRODUCED
	BILL TEXT


INTRODUCED BY   Committee on Governmental Organization (Senators Hall
(Chair), Berryhill, Block, Gaines, Galgiani, Hernandez, Hill, Hueso,
Lara, McGuire, and Vidak)

                        MARCH 12, 2015

   An act to add Section 23405.4 to the Business and Professions
Code, relating to alcoholic beverages.


	LEGISLATIVE COUNSEL'S DIGEST


   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 1.  Section 23405.4 is added to the Business and
Professions Code, to read:
   23405.4.  (a) The department is not required to qualify for a
license a person who is an investor in a private equity fund that
holds an interest in a license, provided all of the following
conditions are satisfied:
   (1) The private equity fund's interest in the license is limited
to a passive investment, so that neither the private equity fund nor
any manager, employee, or agent of the private equity fund has any
involvement in, or control over, the management of the licensed
business or of the licensee.
   (2) The private equity fund advisors are registered under the
federal Investment Advisors Act of 1940, and the private equity fund
advisors are subject to, and comply with, Section 275.204(b)-1 of
Title 17 of the Code of Federal Regulations.
   (3) An investor shall not, directly or indirectly, hold more than
10-percent interest in the private equity fund.
   (4) An investor in the private equity fund shall not have any
control, directly or indirectly, over the investment decisions of the
private equity fund.
   (b) For purposes of this section, private equity fund means an
investment company that makes investments in equity or debt
securities of another company that does not provide investors with
redemption rights in the ordinary course. A private equity fund does
not include a hedge fund, liquidity fund, real estate fund,
securitized asset fund, or venture capital fund.
   (c) The department may require the manager of the private equity
fund to execute an affidavit confirming compliance with the
requirements of this section. If the manager does not have personal
knowledge of any of the facts necessary to execute the affidavit, the
manager shall make a diligent inquiry and may thereafter execute the
affidavit upon information and belief. The manager of the private
equity fund shall promptly notify the department in writing if any of
the facts attested to change.
   (d) This section is not intended to allow a person, by reason of
his or her investment in a private equity fund, to hold an interest
in a license issued by the department if that interest is not
otherwise permitted under this division.