28820. In this article, unless the context otherwise requires:
(a) (1) "Associate," when used with respect to a licensee, means
all of the following:
(A) Any principal shareholder, director, officer, manager, agent,
or adviser of the licensee.
(B) Any director, officer, partner, general manager, agent,
employer, or employee of any person referred to in subparagraph (A).
(C) Any person who controls, is controlled by, or is under common
control with, any person referred to in subparagraph (A), directly or
indirectly, through one or more intermediaries.
(D) Any close relative of any person referred to in subparagraph
(A).
(E) Any person of whom any person referred to in subparagraphs (A)
to (D), inclusive, is a director or officer.
(F) Any person in whom any person referred to in subparagraphs (A)
to (D), inclusive, or any combination of persons acting in concert
owns or controls, directly or indirectly, a 10-percent or greater
equity interest.
(2) For purposes of this subdivision, any person who is in any of
the relationships referred to in subparagraphs (A) to (F), inclusive,
of paragraph (1) within six months before or after a licensee
provides financing assistance shall be deemed to be in the
relationship as of the date when the licensee provides the financing
assistance.
(3) For purposes of this subdivision, if a licensee, in order to
protect its interests, designates any person to serve as a director
of, officer of, or in any capacity in the management of, a small
business firm to which the licensee provides financing assistance,
the person shall not, on that account, be deemed to have any
relationship with the small business firm. However, this paragraph
shall not apply in any case where the person has, directly or
indirectly, any other financial interest in the small business firm
or where the person, at any time before the licensee provides the
financing assistance, served as a director of, officer of, or in any
other capacity in the management of, the small business firm for a
period of 30 days or more.
(b) "Close relative" means ancestor, lineal descendant, brother or
sister and lineal descendants of either, spouse, father-in-law,
mother-in-law, son-in-law, brother-in-law, daughter-in-law, or
sister-in-law.
28821. (a) A licensee shall not provide financial or managerial
assistance to, or for the benefit of, any person to the detriment of
a small business firm or smaller business firm, the licensee, its
shareholders, or partners. Unless a licensee obtains a prior written
exemption from the commissioner for special instances in which
providing financial assistance may further the purposes of this
division despite presenting a conflict of interest, a licensee shall
not directly or indirectly do any of the following:
(1) Provide financial assistance to any of the licensee's
associates.
(2) Provide financial assistance to an associate of another
licensee, if one of the licensee's associates has received or will
receive any direct or indirect financial assistance or a commitment
from that licensee or a third licensee, including financial
assistance or commitments received under any understanding,
agreement, or cross dealing, reciprocal or circular arrangement.
(3) Borrow money from any of the following:
(A) A small business firm or smaller business firm to which the
licensee has provided financial assistance.
(B) An officer, director, or owner of at least a 10-percent equity
interest in the business.
(C) A close relative of a person described in subparagraph (B).
(4) Provide financial assistance to a small business firm or
smaller business firm to discharge an obligation to a licensee's
associate or to make other funds available to pay the obligation,
except if the obligation is to an associate lending institution and
is a line of credit or other obligation incurred in the normal course
of business.
(5) Provide financial assistance to a small business firm or
smaller business firm for the purpose of purchasing property from a
licensee's associate.
(b) Without the commissioner's prior written approval, a licensee'
s associates shall not, directly or indirectly, do either of the
following:
(1) Borrow money from any person described in paragraph (3) of
subdivision (a).
(2) Receive from a small business firm or smaller business firm
any compensation in connection with any financial assistance a
licensee provides or anything of value for procuring, attempting to
procure, or influencing a licensee's action with respect to that
financial assistance.
(c) (1) Without the commissioner's prior written approval, a
licensee shall not provide financial assistance to any business in
which the licensee's associate has either a voting equity interest,
or total equity interests, including potential interests, of at least
5 percent.
(2) If a licensee and its associate provide financial assistance
to the same small business firm or smaller business firm, whether at
the same time or different times, a licensee shall demonstrate to the
commissioner's satisfaction that the terms and conditions are, or
were, fair and equitable to the licensee, taking into account any
differences in the timing of each party's financial transactions.
(3) Financial assistance that meets either of the following
criteria is exempt from the prior approval requirement in paragraph
(1) and shall be presumed to be fair and equitable to the licensee
for the purposes of paragraph (2):
(A) The licensee's associate is a lending institution that is
providing financing under a credit facility in order to meet the
operational needs of a small business firm or smaller business firm,
and the terms of that financing are usual and customary.
(B) The licensee's associate invests in the small business firm or
smaller business firm on the same terms and conditions and at the
same time as the licensee.
(d) To protect a licensee's investment, a licensee may designate
an associate to serve as an officer, director, or other participant
in the management of a small business firm or smaller business firm.
The licensee shall identify this associate in the licensee's records
maintained and made available for the commissioner's review. Without
the commissioner's prior written approval, the associate shall not do
any of the following:
(1) Have any other direct or indirect financial interest in the
small business firm or smaller business firm that exceeds, or has the
potential to exceed, 5 percent of the firm's equity.
(2) Have served for more than 30 days as an officer, director, or
other participant in the management of the small business firm or
smaller business firm before the licensee provided the financial
assistance.
(3) Receive any income or anything of value from the small
business firm or smaller business firm unless it is for the licensee'
s benefit, with the exception of director's fees, expenses, and
distributions based upon the associate's ownership interest in the
small business firm or smaller business firm.
28820. In this article, unless the context otherwise requires:
(a) (1) "Associate," when used with respect to a licensee, means
all of the following:
(A) Any principal shareholder, director, officer, manager, agent,
or adviser of the licensee.
(B) Any director, officer, partner, general manager, agent,
employer, or employee of any person referred to in subparagraph (A).
(C) Any person who controls, is controlled by, or is under common
control with, any person referred to in subparagraph (A), directly or
indirectly, through one or more intermediaries.
(D) Any close relative of any person referred to in subparagraph
(A).
(E) Any person of whom any person referred to in subparagraphs (A)
to (D), inclusive, is a director or officer.
(F) Any person in whom any person referred to in subparagraphs (A)
to (D), inclusive, or any combination of persons acting in concert
owns or controls, directly or indirectly, a 10-percent or greater
equity interest.
(2) For purposes of this subdivision, any person who is in any of
the relationships referred to in subparagraphs (A) to (F), inclusive,
of paragraph (1) within six months before or after a licensee
provides financing assistance shall be deemed to be in the
relationship as of the date when the licensee provides the financing
assistance.
(3) For purposes of this subdivision, if a licensee, in order to
protect its interests, designates any person to serve as a director
of, officer of, or in any capacity in the management of, a small
business firm to which the licensee provides financing assistance,
the person shall not, on that account, be deemed to have any
relationship with the small business firm. However, this paragraph
shall not apply in any case where the person has, directly or
indirectly, any other financial interest in the small business firm
or where the person, at any time before the licensee provides the
financing assistance, served as a director of, officer of, or in any
other capacity in the management of, the small business firm for a
period of 30 days or more.
(b) "Close relative" means ancestor, lineal descendant, brother or
sister and lineal descendants of either, spouse, father-in-law,
mother-in-law, son-in-law, brother-in-law, daughter-in-law, or
sister-in-law.
28821. (a) A licensee shall not provide financial or managerial
assistance to, or for the benefit of, any person to the detriment of
a small business firm or smaller business firm, the licensee, its
shareholders, or partners. Unless a licensee obtains a prior written
exemption from the commissioner for special instances in which
providing financial assistance may further the purposes of this
division despite presenting a conflict of interest, a licensee shall
not directly or indirectly do any of the following:
(1) Provide financial assistance to any of the licensee's
associates.
(2) Provide financial assistance to an associate of another
licensee, if one of the licensee's associates has received or will
receive any direct or indirect financial assistance or a commitment
from that licensee or a third licensee, including financial
assistance or commitments received under any understanding,
agreement, or cross dealing, reciprocal or circular arrangement.
(3) Borrow money from any of the following:
(A) A small business firm or smaller business firm to which the
licensee has provided financial assistance.
(B) An officer, director, or owner of at least a 10-percent equity
interest in the business.
(C) A close relative of a person described in subparagraph (B).
(4) Provide financial assistance to a small business firm or
smaller business firm to discharge an obligation to a licensee's
associate or to make other funds available to pay the obligation,
except if the obligation is to an associate lending institution and
is a line of credit or other obligation incurred in the normal course
of business.
(5) Provide financial assistance to a small business firm or
smaller business firm for the purpose of purchasing property from a
licensee's associate.
(b) Without the commissioner's prior written approval, a licensee'
s associates shall not, directly or indirectly, do either of the
following:
(1) Borrow money from any person described in paragraph (3) of
subdivision (a).
(2) Receive from a small business firm or smaller business firm
any compensation in connection with any financial assistance a
licensee provides or anything of value for procuring, attempting to
procure, or influencing a licensee's action with respect to that
financial assistance.
(c) (1) Without the commissioner's prior written approval, a
licensee shall not provide financial assistance to any business in
which the licensee's associate has either a voting equity interest,
or total equity interests, including potential interests, of at least
5 percent.
(2) If a licensee and its associate provide financial assistance
to the same small business firm or smaller business firm, whether at
the same time or different times, a licensee shall demonstrate to the
commissioner's satisfaction that the terms and conditions are, or
were, fair and equitable to the licensee, taking into account any
differences in the timing of each party's financial transactions.
(3) Financial assistance that meets either of the following
criteria is exempt from the prior approval requirement in paragraph
(1) and shall be presumed to be fair and equitable to the licensee
for the purposes of paragraph (2):
(A) The licensee's associate is a lending institution that is
providing financing under a credit facility in order to meet the
operational needs of a small business firm or smaller business firm,
and the terms of that financing are usual and customary.
(B) The licensee's associate invests in the small business firm or
smaller business firm on the same terms and conditions and at the
same time as the licensee.
(d) To protect a licensee's investment, a licensee may designate
an associate to serve as an officer, director, or other participant
in the management of a small business firm or smaller business firm.
The licensee shall identify this associate in the licensee's records
maintained and made available for the commissioner's review. Without
the commissioner's prior written approval, the associate shall not do
any of the following:
(1) Have any other direct or indirect financial interest in the
small business firm or smaller business firm that exceeds, or has the
potential to exceed, 5 percent of the firm's equity.
(2) Have served for more than 30 days as an officer, director, or
other participant in the management of the small business firm or
smaller business firm before the licensee provided the financial
assistance.
(3) Receive any income or anything of value from the small
business firm or smaller business firm unless it is for the licensee'
s benefit, with the exception of director's fees, expenses, and
distributions based upon the associate's ownership interest in the
small business firm or smaller business firm.
28820. In this article, unless the context otherwise requires:
(a) (1) "Associate," when used with respect to a licensee, means
all of the following:
(A) Any principal shareholder, director, officer, manager, agent,
or adviser of the licensee.
(B) Any director, officer, partner, general manager, agent,
employer, or employee of any person referred to in subparagraph (A).
(C) Any person who controls, is controlled by, or is under common
control with, any person referred to in subparagraph (A), directly or
indirectly, through one or more intermediaries.
(D) Any close relative of any person referred to in subparagraph
(A).
(E) Any person of whom any person referred to in subparagraphs (A)
to (D), inclusive, is a director or officer.
(F) Any person in whom any person referred to in subparagraphs (A)
to (D), inclusive, or any combination of persons acting in concert
owns or controls, directly or indirectly, a 10-percent or greater
equity interest.
(2) For purposes of this subdivision, any person who is in any of
the relationships referred to in subparagraphs (A) to (F), inclusive,
of paragraph (1) within six months before or after a licensee
provides financing assistance shall be deemed to be in the
relationship as of the date when the licensee provides the financing
assistance.
(3) For purposes of this subdivision, if a licensee, in order to
protect its interests, designates any person to serve as a director
of, officer of, or in any capacity in the management of, a small
business firm to which the licensee provides financing assistance,
the person shall not, on that account, be deemed to have any
relationship with the small business firm. However, this paragraph
shall not apply in any case where the person has, directly or
indirectly, any other financial interest in the small business firm
or where the person, at any time before the licensee provides the
financing assistance, served as a director of, officer of, or in any
other capacity in the management of, the small business firm for a
period of 30 days or more.
(b) "Close relative" means ancestor, lineal descendant, brother or
sister and lineal descendants of either, spouse, father-in-law,
mother-in-law, son-in-law, brother-in-law, daughter-in-law, or
sister-in-law.
28821. (a) A licensee shall not provide financial or managerial
assistance to, or for the benefit of, any person to the detriment of
a small business firm or smaller business firm, the licensee, its
shareholders, or partners. Unless a licensee obtains a prior written
exemption from the commissioner for special instances in which
providing financial assistance may further the purposes of this
division despite presenting a conflict of interest, a licensee shall
not directly or indirectly do any of the following:
(1) Provide financial assistance to any of the licensee's
associates.
(2) Provide financial assistance to an associate of another
licensee, if one of the licensee's associates has received or will
receive any direct or indirect financial assistance or a commitment
from that licensee or a third licensee, including financial
assistance or commitments received under any understanding,
agreement, or cross dealing, reciprocal or circular arrangement.
(3) Borrow money from any of the following:
(A) A small business firm or smaller business firm to which the
licensee has provided financial assistance.
(B) An officer, director, or owner of at least a 10-percent equity
interest in the business.
(C) A close relative of a person described in subparagraph (B).
(4) Provide financial assistance to a small business firm or
smaller business firm to discharge an obligation to a licensee's
associate or to make other funds available to pay the obligation,
except if the obligation is to an associate lending institution and
is a line of credit or other obligation incurred in the normal course
of business.
(5) Provide financial assistance to a small business firm or
smaller business firm for the purpose of purchasing property from a
licensee's associate.
(b) Without the commissioner's prior written approval, a licensee'
s associates shall not, directly or indirectly, do either of the
following:
(1) Borrow money from any person described in paragraph (3) of
subdivision (a).
(2) Receive from a small business firm or smaller business firm
any compensation in connection with any financial assistance a
licensee provides or anything of value for procuring, attempting to
procure, or influencing a licensee's action with respect to that
financial assistance.
(c) (1) Without the commissioner's prior written approval, a
licensee shall not provide financial assistance to any business in
which the licensee's associate has either a voting equity interest,
or total equity interests, including potential interests, of at least
5 percent.
(2) If a licensee and its associate provide financial assistance
to the same small business firm or smaller business firm, whether at
the same time or different times, a licensee shall demonstrate to the
commissioner's satisfaction that the terms and conditions are, or
were, fair and equitable to the licensee, taking into account any
differences in the timing of each party's financial transactions.
(3) Financial assistance that meets either of the following
criteria is exempt from the prior approval requirement in paragraph
(1) and shall be presumed to be fair and equitable to the licensee
for the purposes of paragraph (2):
(A) The licensee's associate is a lending institution that is
providing financing under a credit facility in order to meet the
operational needs of a small business firm or smaller business firm,
and the terms of that financing are usual and customary.
(B) The licensee's associate invests in the small business firm or
smaller business firm on the same terms and conditions and at the
same time as the licensee.
(d) To protect a licensee's investment, a licensee may designate
an associate to serve as an officer, director, or other participant
in the management of a small business firm or smaller business firm.
The licensee shall identify this associate in the licensee's records
maintained and made available for the commissioner's review. Without
the commissioner's prior written approval, the associate shall not do
any of the following:
(1) Have any other direct or indirect financial interest in the
small business firm or smaller business firm that exceeds, or has the
potential to exceed, 5 percent of the firm's equity.
(2) Have served for more than 30 days as an officer, director, or
other participant in the management of the small business firm or
smaller business firm before the licensee provided the financial
assistance.
(3) Receive any income or anything of value from the small
business firm or smaller business firm unless it is for the licensee'
s benefit, with the exception of director's fees, expenses, and
distributions based upon the associate's ownership interest in the
small business firm or smaller business firm.
