Current through Register Vol. 47, No. 6, September 18, 2024
Pursuant to the authority of Iowa Code section
15108(7).,
the authority has established standards to certify targeted small businesses.
These standards are intended to indicate whether a business is owned, operated
and actively managed by targeted group persons.
(1) The applicant shall be an independent
business. The following list describes elements of a business which indicate
independent status.
a. The targeted group
person owner(s) shall enjoy the customary incidents and profits of ownership
and shall share in the risks commensurate with the owner's ownership interest.
Independence of ownership shall be demonstrated by the substance rather than
the form of the arrangements. Title and authority shall be commensurate with
ownership and control.
b. The
business shall be owned and operated by the same targeted group persons, a
single management.
c. A board of
directors and stockholders shall each have a membership comprised of at least
51 percent targeted group persons.
d. The applicant business shall be
compensated for facilities, inventory, equipment, labor, or other items which
it owns and shares with any other business. Compensation shall not vary from
common industry practice.
e. The
targeted group person owner(s) shall have independent authority and ability to
incur liability and to decide financial and policy questions. The business
arrangements of owners, directors, officers or key employees with businesses
which are not minority-, woman-, person with disability-, or service-disabled
veteran-owned shall not vary from common industry practice. Each industry has
practices which differ from other industries.
f. Independent authority and ability to hire
and to fire all personnel shall be vested in the targeted group person
owner(s).
g. Recognition of the
business as a separate entity for tax or corporate purposes is not solely
sufficient for certification as a targeted small business.
(2) The targeted group person owner(s) shall
make the business decisions for the business without any restrictions, either
formal or informal. This includes, but is not limited to, bylaw provisions,
partnership agreements, charter requirements for cumulative voting rights, or
employment agreements.
(3) The
targeted group person owner(s) shall direct or cause the direction of the
business. The owner(s) shall make day-to-day decisions as well as major
decisions on management policy and operation of the business. The authority
will consider particular positions to determine who has major responsibility in
a company. These people include, but are not limited to, those who:
a. Hold any applicable license;
b. Devote substantial time to the
business;
c. Supervise or direct
the supervision of management and field operations;
d. Manage financial affairs;
e. Prepare or approve bids or estimates;
f. Participate in price and
bidding negotiations;
g. Make final
decisions about staff and personnel;
h. Sign contracts and checks or authorize
action on behalf of the business.
(4) Any relationship between a TSB and a
business which is not a TSB, but which has an interest in the TSB, shall be
carefully reviewed to determine if the interest of the non-TSB conflicts with
the ownership and control requirements of this rule.
(5) The contributions of capital and
expertise by the targeted group person owner(s) to acquire interest in the
business shall be real and substantial.
a. The
following list includes acceptable elements of ownership.
(1) Company documents, such as stock
certificates, articles of incorporation, minutes of board meetings, partnership
agreements, or income tax returns reflect targeted group person
ownership;
(2) Independent
contributions of capital are made by the targeted group person owner(s). Proof
of this independent contribution of capital made by the targeted group person
owner(s) to acquire interest in the business must accompany the certification
application;
(3) Independent
contributions of expertise are made by the targeted group person owner(s). The
targeted group person owner(s) must have an overall understanding of,
managerial and technical competence in, and expertise directly related to the
type of business in which the firm is engaged and in the firm's operations.
Generally, expertise limited to office management, administration, or
bookkeeping functions unrelated to the activities of the business is
insufficient to demonstrate control of the business;
(4) Independent risk of loss and share of
profit by the targeted group person owner(s) is commensurate with the owner's
proportion of ownership.
b. Fifty-one percent or more of securities
which constitute ownership or control of a corporation for purposes of
establishing it as a TSB shall be held directly by targeted group
persons.
c. An inherited business
may be eligible for targeted small business status. Capital contribution,
expertise and experience in the inherited business are not required. All other
standards apply.
d. Documentation
may be required to prove compliance with all standards.
