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:
The Legislature finds and declares the following:
2(a) In 2007, California was home to 1.4 million family owned
3businesses, which employed nearly 7 million people.
P2 1(b) Both large and small family owned businesses have been
2recognized through numerous academic studies as having unique
3characteristics. Those studies verify that family owned businesses
4invest more in their employees in terms of training and benefits,
5promote more women to high-level management positions, and
6are less likely to lay off employees or downsize in tough economic
7times.
8(c) California family owned businesses continually demonstrate
9extraordinary commitment to the communities in which they
10operate because they are headquartered in the state. California
11
family owned businesses have been shown to engage in high levels
12of local, community-based philanthropic giving, and are strong
13stewards of the environment by virtue of their long-term
14perspective and sense of duty to past, present, and future
15generations within the state.
It is the intent of the Legislature to enact legislation
17that would aid, counsel, assist, and protect the interests of
18California family owned businesses in order to preserve free
19competitive enterprise and support family owned enterprises.
Section 27 is added to the Government Code, to read:
(a) For the purposes of this code, “California family owned
22business” means a business that meets all of the following
23requirements:
24(1) Is independently operated as a privately held business by
25family members.
26(2) Maintains its principal executive office in California.
27(3) Has been in business for more than 10 continuous years.
28(4) Is conducted by a sole proprietorship owned by a family
29member domiciled in California, or by an entity in which family
30members domiciled in California
holdbegin delete at least 20 percentend deletebegin insert a majorityend insert
31 of the equity interests.
32(5) A family member or members exhibit strategic influence
33and control of the business that is conducted by the sole
34proprietorship owned by a family member or an entity in which
35family members hold a majority of the voting interest.
36(6) Demonstrates an intent to continuously operate as a family
37owned business in the future through any of the following:
38(A) Present ownership by multiple family members.
39(B) A previous transfer of
ownership or equity interests between
40family members.
P3 1(C) Is subject to a written agreement providing for a future
2transfer between family members provided that the agreement was
3executed in good faith.
4(b) For the purpose of this section, “family member” includes
5a person who is related by a common ancestor, pursuant to state
6or federal law up to four generations. Any person related by greater
7than four generations is included if his or her ownership or
8operational involvement arose from an exercise of continuity across
9generations as described in paragraph (6). A family member also
10includes a person that qualifies as related in accordance with the
11rules for determining relationship and inheritance rights for
12purposes of intestate succession according to Section 21115 of the
13Probate
Code.
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