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 any provision of the Government Code that explicitly references this definition.
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.
4(b) Both large and small family owned businesses have been
5recognized through numerous academic studies as having unique
6characteristics. Those studies verify that family owned businesses
7invest more in their employees in terms of training and benefits,
8promote more women to high-level management positions, and
9are less likely to lay off employees or downsize in tough economic
10times.
11(c) California family owned businesses continually demonstrate
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extraordinary commitment to the communities in which they
13operate because they are headquartered in the state. California
14family owned businesses have been shown to engage in high levels
15of local, community-based philanthropic giving, and are strong
16stewards of the environment by virtue of their long-term
17perspective and sense of duty to past, present, and future
18generations within the state.
(a) It is the intent of the Legislature to enact legislation
20that would aid, counsel, assist, and protect the interests of
21California family owned businesses in order to preserve free
22competitive enterprise and support family owned enterprises.
23(b) A business that is owned and operated by relatives creates
24a unique business structure that can be distinguished from other
25business structures. The purpose of this legislation is to create a
26definition for this business structure in order to provide a
27framework for the Legislature to better understand and address
28the role family owned businesses play within the California
29economy.
Section 27 is added to the Government Code, to read:
(a) For the purposes of this code, “California family owned
32business” means a business that meets all of the following
33requirements:
34(1) Is organized as a privately held business by one individual
35or two or more relatedbegin delete personsend deletebegin insert persons, or is a partnership of
36business entities owned by related personsend insert.
37(2) Maintains its principal executive office in California.
38(3) Has been in business for more than 10 continuous years.
begin insertP3 1(4) One of the following apply:
end insert2(4)
end delete
3begin insert(A)end insert Is owned by a solebegin delete proprietorship or isend deletebegin insert proprietorship.end insert
4begin insert(B)end insertbegin insert end insertbegin insertIsend insert a business entity owned by one individual or two or
more
5related persons domiciled in California who hold a majority of the
6equity interests.
7(C) Is a partnership of business entities owned by related
8persons domiciled in California who hold a majority of the equity
9interests.
10(5) The business is controlled by one individual or two or more
11related persons who exhibit strategic influence and control of the
12business by holding the business as a sole proprietorship or by
13holding a majority of the voting interest.
14(6) Demonstrates an intent to continuously operate as a family
15owned business in the future through any of the following:
16(A) Present ownership by two or more related persons.
17(B) A previous transfer of ownership or equity interests between
18related persons.
19(C) Is subject to a written agreement providing for a future
20transfer between related persons provided that the agreement was
21executed in good faith.
22(b) For the purpose of this section, “related person” includes a
23person who is related by a common ancestor, pursuant to state or
24federal law up to four generations. Any person related by greater
25than four generations is included if his or her ownership or
26operational involvement arose from an exercise of continuity across
27generations as described in paragraph (6). “Related persons” also
28includes a parent, stepparent, brother, sister, stepbrother, stepsister,
29half brother, half sister, adopted person, person born out of
30wedlock, stepchild, foster child, uncle, aunt, niece, nephew, first
31
cousin, and any person denoted by the prefix “grand” or “great.”
32A spouse, domestic partner, and the spouse or domestic partner of
33any person that qualifies as a person related by a common ancestor,
34pursuant to state or federal law up to four generations, is also
35included within the definition of “related persons” and shall
36continue to be included in the event of the legal relationship being
37terminated by death or dissolution.
P4 1(c) The definition for “California family owned business”
2provided in this section shall only apply to provisions in which
3this section is explicitly cross-referenced.
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