SECTIONS 19880-19883 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 19880-19883

19880. In addition to the requirements of Section 19852, in order
to be eligible to receive a gambling license as the owner of a
gambling enterprise, a corporation shall comply with all of the
following requirements:
(a) Maintain an office of the corporation in the gambling
establishment.
(b) Comply with all of the requirements of the laws of this state
pertaining to corporations.
(c) Maintain, in the corporation's principal office in California
or in the gambling establishment, a ledger that meets both of the
following conditions:
(1) At all times reflects the ownership of record of every class
of security issued by the corporation.
(2) Is available for inspection by the department at all
reasonable times without notice.
(d) Supply supplemental forms and information, in accordance with
Section 19865, with the initial license application, and thereafter
only on request, to the department, which shall include, but not be
limited to, all of the following:
(1) The organization, financial structure, and nature of the
business to be operated, including the names, personal and criminal
history, and fingerprints of all officers and directors, and the
names, addresses, and number of shares held by all stockholders of
record.
(2) The rights and privileges acquired by the holders of different
classes of authorized securities, including debentures.
(3) The terms on which securities are to be offered.
(4) The terms and conditions on all outstanding loans, mortgages,
trust deeds, pledges, or any other indebtedness or security interest.
(5) The extent of the equity security holdings in the corporation
of all officers, directors, and underwriters, and their remuneration
as compensation for services, in the form of salary, wages, fees, or
otherwise.
(6) The amount of remuneration to persons other than directors and
officers in excess of one hundred thousand dollars ($100,000) per
annum.
(7) Bonus and profit-sharing arrangements.
(8) Management, consultant, and service contracts related to the
operation of controlled gaming.
(9) Options existing, or to be created, in respect of their
securities or other interests.
(10) Financial statements for at least three fiscal years
preceding the year of registration, or, if the corporation has not
been in existence for a period of three years, financial statements
from the date of its formation. All financial statements shall be
prepared in accordance with generally accepted accounting principles
and audited by a licensee of the California Board of Accountancy.
(11) Any further financial data that the department, with the
approval of the commission, may deem necessary or appropriate for the
protection of the state.
(12) An annual profit-and-loss statement and an annual balance
sheet, and a copy of its annual federal income tax return, within 30
calendar days after that return is filed with the Internal Revenue
Service.

19881. (a) No corporation is eligible to receive a license to own a
gambling enterprise unless the conduct of controlled gambling is
among the purposes stated in its articles of incorporation and the
articles of incorporation have been submitted to and approved by the
commission.
(b) The Secretary of State shall not accept for filing any
articles of incorporation of any corporation that include as a stated
purpose the conduct of controlled gambling, or any amendment
thereto, or any amendment that adds this purpose to articles of
incorporation already filed, unless the articles have, or amendment
has, been approved by the commission.

19881.5. The commission may delegate to staff the approval of
articles of incorporation, statements of limited partnership, and
other entity filings that are required to specifically state that
gambling is one of the purposes for which the business entity is
formed.

19882. (a) If at any time the commission denies a license to, or
revokes the license of, an individual owner of any security issued by
a corporation that applies for or holds an owner license, the
commission shall immediately notify the individual and the
corporation of that fact. The owner of the security shall sell the
security for an amount not greater than fair market value, within 60
calendar days of the denial or revocation. Upon a showing of due
diligence, the commission may extend the time for selling the
security.
(b) Beginning upon the date when the commission serves notice of
the denial upon the corporation, it is unlawful for the denied
security owner to do any of the following:
(1) Receive any dividend, income, or interest upon any security
described in subdivision (a), except dividends equal to the good
faith estimate of the owner's personal share of any income tax due on
the ownership interest until the date of the sale, as determined in
writing by an independent certified public accountant, or as may be
necessary to protect the election of the gambling enterprise to be
treated as an "S corporation" under Subchapter S (commencing with
Section 1361) of Chapter 1 of Subtitle A of the Internal Revenue
Code.
(2) Exercise, directly or through any trustee or nominee, any
voting right conferred by any security described in subdivision (a).
(3) Receive any remuneration in any form from the corporation for
services rendered or for any other purpose.
(c) Every security issued by a corporate owner licensee shall bear
a statement, on both sides of the certificate evidencing the
security, of the restrictions imposed by this section.

19883. (a) To the extent required by this chapter, officers and
directors, shareholders, lenders, holders of evidence of
indebtedness, underwriters, agents, or employees of a corporate owner
licensee shall be licensed individually. The corporation shall
require these persons to apply for a gambling license, and shall
notify the department of every change of corporate officers,
directors, or key employees within 10 business days after the change.
An officer, director, or key employee who is required to apply for a
license shall apply for the license within 30 calendar days after he
or she becomes an officer, director, or key employee.
(b) The corporation shall immediately remove any officer or
director required to apply for a license from any office or
directorship if any of the following apply to that officer or
director:
(1) He or she fails to apply for the license within 30 calendar
days after becoming an officer or director.
(2) He or she is denied a license.
(3) His or her license is revoked.
(c) If the license of any officer or director is suspended, the
corporation, immediately and for the duration of the suspension,
shall suspend that officer or director.
(d) If any shareholder who is required to apply for a gambling
license fails to apply for the license within the time required, the
shareholder shall be deemed to have been denied a license for
purposes of subdivision (b) of Section 19882.
(e) If any person, other than an officer, director, or
shareholder, who is required to apply for a gambling license fails to
do so, the failure may be deemed to be a failure of the corporate
owner licensee to require the application.