Ch. 491

1997 LAWS OF MARYLAND

was established, the adequacy of its resources for the work of the contract, and the degree
to which financial, equipment leasing, and other relationships with nonminority
businesses vary from industry practice.

(iii) The minority owners shall also possess the power to direct or cause
the direction of the management and policies of the business and to make the day-to-day
as well as major decisions on matters of management, policy, and operations. The
business may not be subject to any formal or informal restrictions, through bylaw
provisions, partnership agreements, or charter requirements for cumulative voting rights
or otherwise that prevent the minority owners, without the cooperation or vote of any
owner who is not a minority, from making a business decision of the business.

(iv) If the owners of the business who are not minorities are
disproportionately responsible for the operation of the firm, the firm is not controlled by
minorities and may not be considered a minority business enterprise within the meaning
of this section. Where the actual management of the business is contracted out to
individuals other than the owner, those persons who have the ultimate power to hire and
fire the managers may, for the purposes of this section, be considered as controlling the
business.

(v) All securities which constitute ownership or control of a
corporation for purposes of establishing it as a minority business enterprise under this
section shall be held directly by minorities. No securities held in trust, or by any guardian
for a minor, shall be considered as held by minorities in determining the ownership or
control of a corporation.

(vi) The contributions of capital or expertise by the minority owners to
acquire their interests in the business shall be real and substantial. Insufficient
contributions include a promise to contribute capital, a note payable to the business or its
owners who are not socially and economically disadvantaged, or the mere participation as
an employee, rather than as a manager.

(vii) The certifying agency shall give special consideration to the
following additional circumstances in determining eligibility:

1. Newly formed businesses and businesses whose ownership or
control has changed since the date of the advertisement of the contract are closely
scrutinized to determine the reasons for the timing of the formation of or change in the
businesses;

2. A previous or continuing employer-employee relationship
between or among present owners is carefully reviewed to ensure that the
employee-owner has management responsibilities and capabilities discussed in this
section; and

3. Any relationship between a minority business enterprise and
a business which is not a minority business enterprise which has an interest in the
minority business enterprise is carefully reviewed to determine if the interest of the
nonminority business conflicts with the ownership and control requirements of this
section.

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