California Code of Regulations
Title 2 - Administration
Division 6 - Fair Political Practices Commission
Chapter 7 - Conflicts of Interest
Article 1 - Conflicts of Interest; General Prohibition
Section 18700.2 - Parent, Subsidiary, Otherwise Related Business Entity: Defined

Universal Citation: 2 CA Code of Regs 18700.2

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

(a) For purposes of Section 82034 and Section 87209, in determining if a business entity has an interest in real property or does business or plans to do business in the jurisdiction, or has done business in the jurisdiction at any time during the two years prior to the time any statement or any other action is required under the Act, the business entity includes a "parent," "subsidiary," or "otherwise related to" another business entity as those terms are defined in subdivision (b) below.

(b) Parent, Subsidiary, Otherwise Related Business Entity, defined.

(1) Parent -- A business entity is a "parent" if it is a corporation that controls more than 50 percent of the voting stock of another corporation. The parent corporation is also a parent to any subsidiaries of the corporation that it controls.

(2) Subsidiary -- A business entity is a "subsidiary" if it is a corporation whose voting stock is more than 50 percent controlled by another corporation. The subsidiary corporation is also a subsidiary to any corporation that controls its parent corporation.

(3) Otherwise related business entity. Business entities, other than a parent corporation as defined in subdivision (b)(1), are otherwise related if:
(A) The same person or persons together direct or control each business entity; or

(B) The same person or persons together have a 50 percent or greater ownership interest in each business entity.

(c) An official with a financial interest in a business entity also has an interest in a parent or subsidiary of the business entity or an otherwise related business entity except when the business entity meets the criteria provided in subdivision (d).

(d) An official with a financial interest in a business entity does not have an interest in a parent or subsidiary of that business entity or an otherwise related business entity if:

(1) The official's only interest is that of a shareholder and the official is a passive shareholder with less than 5 percent of the shares of the corporation; and

(2) The parent corporation is required to file annual Form 10-K or 20-F Reports with the Securities and Exchange Commission and has not identified the subsidiary on those forms or its annual report.

1. Change without regulatory effect renumbering former section 18700.3 to new section 18700.2, including amendment of section heading, filed 4-27-2015. Submitted to OAL for filing pursuant to Fair Political Practices Commission v. Office of Administrative Law, 3 Civil C010924, California Court of Appeal, Third Appellate District, nonpublished decision, April 27, 1992 (FPPC regulations only subject to 1974 Administrative Procedure Act rulemaking requirements and not subject to procedural or substantive review by OAL) (Register 2015, No. 18).
2. Amendment of subsections (b)(3)-(b)(3)(B) and new subsections (c)-(d)(2) filed 9-24-2018; operative 10-24-2018 pursuant to Cal. Code Regs., tit. 2, section 18312(e). Submitted to OAL for filing pursuant to Fair Political Practices Commission v. Office of Administrative Law, 3 Civil C010924, California Court of Appeal, Third Appellate District, nonpublished decision, April 27, 1992 (FPPC regulations only subject to 1974 Administrative Procedure Act rulemaking requirements and not subject to procedural or substantive review by OAL) (Register 2018, No. 39).

Note: Authority cited: Section 83112, Government Code. Reference: Sections 87100, 87102.5, 87102.6, 87102.8 and 87103, Government Code.

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