Amended in Assembly January 6, 2014

Amended in Assembly April 30, 2013

Amended in Assembly April 4, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1260

Introduced by Assembly Member Medina

(Principal coauthor: Assembly Member V. Manuel Pérez)

February 22, 2013

An act to add Section 27 to the Government Code, relating to businesses.

LEGISLATIVE COUNSEL’S DIGEST

AB 1260, as amended, Medina. California family owned business.

Existing law provides various definitions for various purposes.

This bill would define a California family owned business for purposes of the Government Code.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares the following:

(a) In 2007, California was home to 1.4 million family owned
businesses, which employed nearly 7 million people.

(b) Both large and small family owned businesses have been
recognized through numerous academic studies as having unique
characteristics. Those studies verify that family owned 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.

(c) California family owned businesses continually demonstrate
extraordinary commitment to the communities in which they
operate because they are headquartered in the state. California
family owned businesses have been shown to engage in high levels
of local, community-based philanthropic giving, and are strong
stewards of the environment by virtue of their long-term
perspective and sense of duty to past, present, and future
generations within the state.

SEC. 2.  

It is the intent of the Legislature to enact legislation
that would aid, counsel, assist, and protect begin delete , to the maximum extent
feasible, end delete the interests of California family owned businesses in
order to preserve free competitive enterprise and support family
owned enterprises.

SEC. 3.  

Section 27 is added to the Government Code, to read:

27.  

begin insert (a) end insert begin insert   end insert For the purposes of this code, “California family owned
business” means a business that begin delete is independently owned and
operated as a privately held enterprise by members of a family or
a partnership of families that maintains its principal office in
California, has been in business for more than 10 years, and end delete meets
begin delete both end delete begin insert all end insert of the following requirements:

begin delete

(a) Strategic influence, including, but not limited to, being active
in the management, continuing to shape the culture of the business,
or serving as board members or advisors, is exercised by family
members on the management of the business.

end delete begin delete

(b) The business is able to demonstrate continuity across
generations or the intent for continuity across generations.

end delete begin insert

(1) Is independently operated as a privately held business by
family members.

end insert begin insert

(2) Maintains its principal executive office in California.

end insert begin insert

(3) Has been in business for more than 10 continuous years.

end insert begin insert

(4) Is conducted by a sole proprietorship owned by a family
member domiciled in California, or by an entity in which family
members domiciled in California hold at least 20 percent of the
equity interests.

end insert begin insert

(5) A family member or members exhibit strategic influence and
control of the business that is conducted by the sole proprietorship
owned by a family member or an entity in which family members
hold a majority of the voting interest.

end insert begin insert

(6) Demonstrates an intent to continuously operate as a family
owned business in the future through any of the following:

end insert begin insert

(A) Present ownership by multiple family members.

end insert begin insert

(B) A previous transfer of ownership or equity interests between
family members.

end insert begin insert

(C) Is subject to a written agreement providing for a future
transfer between family members provided that the agreement was
executed in good faith.

end insert begin insert

(b) For the purpose of this section, “family member” includes
a person who is related by a common ancestor, pursuant to state
or federal law up to four generations. 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 as described in paragraph (6). A family member
also includes a person that qualifies as related in accordance with
the rules for determining relationship and inheritance rights for
purposes of intestate succession according to Section 21115 of the
Probate Code.

end insert