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Ch. 387
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2002 LAWS OF MARYLAND
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(ii) An eligible minority business enterprise shall be an
independent business. The ownership and control by minorities shall be real,
substantial, and continuing and shall go beyond the pro forma ownership of the
business as reflected in its ownership documents. The minority owners shall enjoy the
customary incidents of ownership and shall share in the risks and profits
commensurate with their ownership interests as demonstrated by an examination of
the substance rather than form of arrangements. Recognition of the business as a
separate entity for tax or corporate purposes is not necessarily sufficient for
recognition as a minority business enterprise. In determining whether a potential
minority business enterprise is an independent business, the certifying agency shall
consider all relevant factors, including the date the business 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:
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