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 purposesbegin insert of any provisionend insert of the Government Codebegin insert that explicitly references this definitionend insert.
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:
P2 1(a) In 2007, California was home to 1.4 million family owned
2businesses, which employed nearly 7 million people.
3(b) Both large and small family owned businesses have been
4recognized through numerous academic studies as having unique
5characteristics. Those studies verify that family owned businesses
6invest more in their employees in terms of training and benefits,
7promote more women to high-level management positions, and
8are less likely to lay off employees or downsize in tough economic
9times.
10(c) California family owned businesses continually demonstrate
11extraordinary commitment to the communities in which they
12operate because they are headquartered in the state. California
13
family owned businesses have been shown to engage in high levels
14of local, community-based philanthropic giving, and are strong
15stewards of the environment by virtue of their long-term
16perspective and sense of duty to past, present, and future
17generations within the state.
begin insert(a)end insertbegin insert end insert It is the intent of the Legislature to enact
19legislation that would aid, counsel, assist, and protect the interests
20of California family owned businesses in order to preserve free
21competitive enterprise and support family owned enterprises.
22(b) A business that is owned and operated by relatives creates
23a unique business structure that can be distinguished from other
24business
structures. The purpose of this legislation is to create a
25definition for this business structure in order to provide a
26framework for the Legislature to better understand and address
27the role family owned businesses play within the California
28economy.
Section 27 is added to the Government Code, to read:
(a) For the purposes of this code, “California family owned
31business” means a business that meets all of the following
32requirements:
33(1) Isbegin delete independently operatedend deletebegin insert organizedend insert as a privately held
34business bybegin delete family membersend deletebegin insert one individual or two or more related
35personsend insert.
36(2) Maintains its principal executive office in California.
37(3) Has been in business for more than 10 continuous years.
38(4) Isbegin delete conductedend deletebegin insert ownedend insert by a sole proprietorshipbegin insert or is a business
39entityend insert owned bybegin delete a family member domiciled in California, or by begin insert
one
40an entity in which family members domiciled in Californiaend delete
P3 1individual or two or more related personsend insertbegin insert domiciled in California
2whoend insert
hold a majority of the equity interests.
3(5) begin deleteA family member or members end deletebegin insertThe business is controlled by
4one individual or two or more related persons who end insertexhibit strategic
5influence and control of the businessbegin delete that is conducted by theend deletebegin insert by
6holding the business as aend insert sole proprietorshipbegin delete owned by a family begin insert
or by holdingend insert
7member or an entity in which family members holdend delete
8 a majority of the voting interest.
9(6) Demonstrates an intent to continuously operate as a family
10owned business in the future through any of the following:
11(A) Present ownership bybegin delete multiple family membersend deletebegin insert two or more
12related personsend insert.
13(B) A previous transfer of ownership or equity interests between
14begin delete family membersend deletebegin insert
related personsend insert.
15(C) Is subject to a written agreement providing for a future
16transfer betweenbegin delete family membersend deletebegin insert related personsend insert provided that
17the agreement was executed in good faith.
18(b) For the purpose of this section,begin delete “family member”end deletebegin insert “related
19personend insertbegin insert”end insert includes a person who is related by a common ancestor,
20pursuant
to state or federal law up to four generations. Any person
21related by greater than four generations is included if his or her
22ownership or operational involvement arose from an exercise of
23continuity across generations as described in paragraph (6).begin delete A
24family member also includes a person that qualifies as related in
25accordance with the rules for determining relationship and
26inheritance rights for purposes of intestate succession according
27to Section 21115 of the Probate
Code.end delete
28includes a parent, stepparent, brother, sister, stepbrother,
29stepsister, half-brother, half-sister, adopted person, person born
30out of wedlock, stepchild, foster child, uncle, aunt, niece, nephew,
31first cousin, and any person denoted by the prefix “grand” or
32“great.” A spouse, domestic partner, and the spouse or domestic
33partner of any person that qualifies as a person related by a
34common ancestor, pursuant to state or federal law up to four
35generations, is also included within the definition of “related
36persons” and shall continue to be included in the event of the legal
37relationship being terminated by death or dissolution.end insert
38(c) The definition for “California family owned business”
39provided in this section shall only
apply to provisions in which
40this section is explicitly cross-referenced.
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