Individual determinations of social and economic disadvantage. Firms owned and controlled by individuals who are not presumed to be socially and economically disadvantaged including individuals whose presumed disadvantage has been rebutted may apply for DBE certification.
The certifier must make a case-by-case determination of whether each individual whose ownership and control are relied upon for DBE certification is socially and economically disadvantaged. In such a proceeding, the applicant firm has the burden of demonstrating to the certifier, by a preponderance of the evidence, that the individuals who own and control it are socially and economically disadvantaged. In making these determinations, use the guidance found in Appendix E of this part.
The certifier must require that applicants provide sufficient information to permit determinations under the guidance of appendix E of this part. In determining whether the socially and economically disadvantaged participants in a firm own the firm, the certifier must consider all the facts in the record viewed as a whole, including the origin of all assets and how and when they were used in obtaining the firm. All transactions for the establishment and ownership or transfer of ownership must be in the normal course of business, reflecting commercial and arms-length practices.
To be an eligible DBE, a firm must be at least 51 percent owned by socially and economically disadvantaged individuals. In the case of a corporation, such individuals must own at least 51 percent of the each class of voting stock outstanding and 51 percent of the aggregate of all stock outstanding.
In the case of a partnership, 51 percent of each class of partnership interest must be owned by socially and economically disadvantaged individuals. In the case of a limited liability company, at least 51 percent of each class of member interest must be owned by socially and economically disadvantaged individuals. Proof of contribution of capital should be submitted at the time of the application. When the contribution of capital is through a loan, there must be documentation of the value of assets used as collateral for the loan.
The disadvantaged owners must enjoy the customary incidents of ownership, and share in the risks and be entitled to the profits and loss commensurate with their ownership interests, as demonstrated by the substance, not merely the form, of arrangements. This may be indicative of a pro forma arrangement that does not meet the requirements. This type of contribution is not of a continuing nature. All securities that constitute ownership of a firm shall be held directly by disadvantaged persons.
Except as provided in this paragraph d , no securities or assets held in trust, or by any guardian for a minor, are considered as held by disadvantaged persons in determining the ownership of a firm. However, securities or assets held in trust are regarded as held by a disadvantaged individual for purposes of determining ownership of the firm, if— The beneficial owner of securities or assets held in trust is a disadvantaged individual, and the trustee is the same or another such individual; or the beneficial owner of a trust is a disadvantaged individual who, rather than the trustee, exercises effective control over the management, policy-making, and daily operational activities of the firm.
Assets held in a revocable living trust may be counted only in the situation where the same disadvantaged individual is the sole grantor, beneficiary, and trustee. The contributions of capital or expertise by the socially and economically disadvantaged owners to acquire their ownership interests must be real and substantial. These records must clearly show the contribution of expertise and its value to the firm. The individual whose expertise is relied upon must have a significant financial investment in the firm.
For purposes of determining ownership, all interests in a business or other assets obtained by the individual as the result of a final property settlement or court order in a divorce or legal separation, provided that no term or condition of the agreement or divorce decree is inconsistent with this section; or through inheritance, or otherwise because of the death of the former owner.
Ownership obtained or other assets obtained by the individual as the result of a gift, or transfer without adequate consideration, from any non-disadvantaged individual or non-DBE firm who is—involved in the same firm for which the individual is seeking certification, or an affiliate of that firm; involved in the same or a similar line of business; or engaged in an ongoing business relationship with the firm, or an affiliate of the firm, for which the individual is seeking certification.
To overcome this above presumption and permit the interests or assets to be counted, the disadvantaged individual must demonstrate to the certifier, by clear and convincing evidence, that the gift or transfer to the disadvantaged individual was made for reasons other than obtaining certification as a DBE; and the disadvantaged individual actually controls the management, policy, and operations of the firm, notwithstanding the continuing participation of a non-disadvantaged individual who provided the gift or transfer.
The certifier must apply the following rules in situations in which marital assets form a basis for ownership of a firm: when marital assets other than the assets of the business in question , held jointly or as community property by both spouses, are used to acquire the ownership interest asserted by one spouse, the certifier must deem the ownership interest in the firm to have been acquired by that spouse with his or her own individual resources, provided that the other spouse irrevocably renounces and transfers all rights in the ownership interest in the manner sanctioned by the laws of the state in which either spouse or the firm is domiciled.
The certifier do not count a greater portion of joint or community property assets toward ownership than state law would recognize as belonging to the socially and economically disadvantaged owner of the applicant firm. The certifier may consider the following factors in determining the ownership of a firm. However, the certifier must not regard a contribution of capital as failing to be real and substantial, or find a firm ineligible, solely because a socially and economically disadvantaged individual acquired his or her ownership interest as the result of a gift, or transfer without adequate consideration, other than the types set forth in paragraph h of this section; there is a provision for the co-signature of a spouse who is not a socially and economically disadvantaged individual on financing agreements, contracts for the purchase or sale of real or personal property, bank signature cards, or other documents; or ownership of the firm in question or its assets is transferred for adequate consideration from a spouse who is not a socially and economically disadvantaged individual to a spouse who is such an individual.
In this case, the certifier must give particularly close and careful scrutiny to the ownership and control of a firm to ensure that it is owned and controlled, in substance as well as in form, by a socially and economically disadvantaged individual. In determining whether socially and economically disadvantaged owners control a firm, the certifier must consider all the facts in the record, viewed as a whole. Only an independent business may be certified as a DBE.
An independent business is one the viability of which does not depend on its relationship with another firm or firms. In considering factors related to the independence of a potential DBE firm, the certifier must consider the consistency of relationships between the potential DBE and non-DBE firms with normal industry practice. A DBE firm must not be subject to any formal or informal restrictions, which limit the customary discretion of the socially and economically disadvantaged owners.
There can be no restrictions through corporate charter provisions, by-law provisions, contracts or any other formal or informal devices e. The socially and economically disadvantaged owners must possess the power to direct or cause the direction of the management and policies of the firm and to make day-to-day as well as long-term decisions on matters of management, policy and operations.
A disadvantaged owner must hold the highest officer position in the company e. In a corporation, disadvantaged owners must control the board of directors. In a partnership, one or more disadvantaged owners must serve as general partners, with control over all partnership decisions. Such individuals must not, however possess or exercise the power to control the firm, or be disproportionately responsible for the operation of the firm.
The socially and economically disadvantaged owners of the firm may delegate various areas of the management, policymaking, or daily operations of the firm to other participants in the firm, regardless of whether these participants are socially and economically disadvantaged individuals. Such delegations of authority must be revocable, and the socially and economically disadvantaged owners must retain the power to hire and fire any person to whom such authority is delegated.
Court Rulings. Document Storage. Mechanic's Liens. Pension Plans. Public Improvements. Public Labor Agreement. Public Prompt Payment Act.
May Emily Hermreck. Chantal Mehill. Tags: contractors. This certification affirms the business is woman-owned, operated and controlled. We recognize the commitment to supplier diversity that is embraced by corporations and government agencies today and we can add diversity to your corporation.
Whenever projects are funded or assisted by the U. Since July 18, , Safety Resources, Inc. WHO : Company Owners, Safety Directors, Project Managers, Facility Managers, Foremen, Supervisors, Superintendents, or anyone else involved in the construction industry, manufacturing industry, service industry, or anyone who shares a common interest in safety.
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