SECTIONS 19890-19893 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 19890-19893

19890. In addition to the requirements of Section 19852, in order
to be eligible to receive a gambling license to own a gambling
enterprise, a partnership shall comply with all of the following
requirements:
(a) Be registered as may be required under the laws of this state.
(b) Maintain an office of the partnership in the gambling
establishment.
(c) Comply with all of the requirements of the laws of this state
pertaining to partnerships.
(d) Maintain an ongoing ledger in an office of the partnership in
California that shall meet both of the following conditions:
(1) At all times reflects the ownership of all interests in the
partnership.
(2) Be available for inspection by the department at all
reasonable times without notice.
(e) Supply the following supplemental forms and information in
accordance with Section 19865 with the initial license application,
and thereafter upon request, to the department, which shall include,
but not be limited to:
(1) The organization, financial structure, and nature of the
business to be operated, including the name, address, personal
history, interest, and fingerprints of each partner and manager.
(2) The rights, privileges, and relative priorities of any
partners as to the return of contributions to capital, and the right
to receive income, accept losses, and incur liabilities.
(3) The terms on which partnership interests 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 holding in the partnership of all
underwriters, and their remuneration as compensation for services, in
the form of salary, wages, fees, or otherwise.
(6) The remuneration to persons other than general partners in
excess of one hundred thousand dollars ($100,000) per annum.
(7) Bonus and profit-sharing arrangements.
(8) Management, consulting, and service contracts related to the
operation of controlled gambling.
(9) Options existing or to be created.
(10) Financial statements for at least three fiscal years
preceding the year of registration, or, if the partnership 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 in
accordance with generally accepted auditing standards.
(11) Any further financial data that the department reasonably
deems necessary or appropriate for the protection of the state.
(12) An annual profit-and-loss statement, an annual balance sheet,
and a copy of its annual federal income tax return, within 30
calendar days after the return is filed with the Internal Revenue
Service.

19890.5. In addition to the requirements of Section 19852, in order
to be eligible to receive a gambling license to own a gambling
enterprise, a limited liability company shall comply with all of the
following requirements:
(a) Be registered to do business in California.
(b) Maintain an office in the gambling establishment.
(c) Comply with all of the requirements of the laws of this state
pertaining to a limited liability company.
(d) Maintain an ongoing ledger in an office of the limited
liability company in California that shall meet both of the following
conditions:
(1) At all times reflect the ownership, membership, and management
interests.
(2) Be available for inspection by the department at all
reasonable times without notice.
(e) Supply the following supplemental forms and information in
accordance with Section 19865 with the initial application, and
thereafter upon 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 members and managers, and the name,
address, and interest of each owner, member, and manager.
(2) The rights, privileges, and relative priorities of members as
to the return of contributions to capital, and the right to receive
income, accept losses, and incur liabilities.
(3) The terms on which membership interests 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 holding in the limited liability company of
all underwriters, and their remuneration as compensation for
services, in the form of salary, wages, fees, or otherwise.
(6) The remuneration to persons other than managers or members in
excess of one hundred thousand dollars ($100,000) per annum.
(7) Bonus and profit-sharing arrangements.
(8) Management, consulting, and service contracts related to the
operation of controlled gambling.
(9) Options existing or to be created.
(10) Financial statements for at least three fiscal years
preceding the year of application, or, if the limited liability
company 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 in accordance with generally accepted auditing
standards.
(11) Any further financial data that the department reasonably
deems necessary or appropriate for the protection of the state.
(12) An annual profit-and-loss statement, an annual balance sheet,
and a copy of its annual federal income tax return, within 30
calendar days after the return is filed with the Internal Revenue
Service.

19891. No limited partnership is eligible to receive a license to
own a gambling enterprise unless the conduct of gambling is among the
purposes stated in the certificate of limited partnership.

19892. (a) The purported sale, assignment, transfer, pledge, or
other disposition of any interest in a partnership or limited
liability company that holds a gambling license, or the grant of an
option to purchase the interest, is void unless approved in advance
by the commission.
(b) If at any time the commission denies a license to, or revokes
the license of, an individual owner of any interest described in
subdivision (a), the commission shall immediately notify the
individual and the partnership or limited liability company of that
fact. The individual denied a license, or whose license is revoked,
shall sell his or her interest in 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.
(c) Beginning upon the date when the commission serves a notice of
denial upon the partnership or limited liability company, it is
unlawful for the denied owner of the interest to do any of the
following:
(1) Receive any share of the revenue or interest upon the
partnership or limited liability company interest, except
distributions 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.
(2) Exercise, directly or through any trustee or nominee, any
voting right conferred by that interest.
(3) Receive any remuneration in any form from the partnership, for
services rendered or for any other purpose.
(d) Every certificate of limited partnership of any limited
partnership or limited liability company holding a gambling license
shall contain a statement of the restrictions imposed by this
section.

19893. To the extent required by this chapter, general partners,
limited partners, lenders, members, managers, holders of evidence of
indebtedness, underwriters, agents, or employees of a partnership or
limited liability company that holds or applies for a license to own
a gambling enterprise shall be licensed individually. The partnership
or limited liability company shall require these persons to apply
for and obtain a gambling license. A person who is required to be
licensed by this section as a partner, manager, or member shall not
hold that position until he or she secures the required approval of,
or a temporary license issued by, the commission. A person who is
required to be licensed pursuant to a decision of the commission
shall apply for a license within 30 days after the commission
requests him or her to do so.