Adm 84.05
Adm 84.05
Determination of ownership. An applicant shall meet the following standards in order to satisfy the ownership requirement:
Adm 84.05(1)
(1) Minority persons must legitimately hold at least 51% of the beneficial ownership interests in the business.
Adm 84.05(2)
(2) The minority ownership's interest in the firm shall be real, substantial and continuing. Such interest shall include:
Adm 84.05(2)(a)
(a) A risk of loss and share of profit commensurate with the proportional ownership; and,
Adm 84.05(2)(b)
(b) Receipt of the customary incidents of ownership, such as salary, rights to dividends, ownership of assets and ownership of intangible assets such as copyrights and patents.
Adm 84.05(3)
(3) The contributions of capital and expertise by the minority owner or owners to acquire his or her interest in the firm shall be real and substantial. Contributions of personal or professional services alone shall not be considered real and substantial for the purposes of this section, although they shall receive consideration when given in conjunction with other tangible forms of investment.
Adm 84.05(4)
(4) All securities and ownership interests which constitute ownership or control of the firm for the purposes of establishing it as a minority business enterprise shall be held directly by the minority owner or owners. No securities or ownership interest held in trust, or by any guardian for a minor, shall be considered as being held by the minority owner or owners in determining ownership and control of the business. The right to purchase stock in the business in the future shall not be considered as being held by the minority owner or owners in determining ownership and control of the business.
Adm 84.05(5)
(5) An ownership interest arising in a nonapplicant nonminority spouse solely because of the operation of marital property laws shall not disqualify the applicant minority spouse from certification if both spouses certify that only the minority spouse participates in the control and management of the business.
Adm 84.05 History
History: Cr.
Register, September, 1987, No. 381, eff. 10-1-87.
Adm 84.06
Adm 84.06
Documentation of ownership. The department shall require documentation of the ownership of at least 51% of the business by a minority owner or owners:
Adm 84.06(1)
(1) Documentation may include, but is not limited to, the following: current business income tax return, current business financial statement, business licenses, buy-out agreements and financial agreements.
Adm 84.06(1)(a)
(a) In the case of a sole proprietorship, additional documentation may include, but is not limited to, canceled checks used to purchase ownership.
Adm 84.06(1)(b)
(b) In the case of a partnership, additional documentation may include, but is not limited to, partnership agreements, purchase agreements, salary and profit sharing records.
Adm 84.06(1)(c)
(c) In the case of a corporation, additional documentation may include, but is not limited to, articles of incorporation, corporate by-laws, corporate borrowing resolution, stock certificates, stock affirmation forms, salary and profit sharing records.
Adm 84.06 Note
Note: A stock affirmation form may be obtained, at no charge, from: WI Supplier Diversity Program, Department of Administration, P.O. Box 7970, Madison, WI 53707-7970.
Adm 84.06(1)(d)
(d) In the case of a joint venture, additional documentation may include, but is not limited to, a joint venture agreement which is written and signed by all of the joint venturers. Each joint venture agreement shall specify:
Adm 84.06(1)(d)1.
1. The capital contribution made by each joint venturer; the control each will exercise; and the distribution of profit and loss. Each of these elements must be allocated in proportion to their contribution; and
Adm 84.06(1)(d)2.
2. The useful business function the joint venture will perform and the part of the work each joint venturer will do.
Adm 84.06(2)
(2) The department may require documentation showing how and when the minority owner's or owners' interest in the business was acquired.
Adm 84.06(3)
(3) In those instances when an ownership interest arises in a nonapplicant nonminority spouse because of the operation of marital property laws, the department may request a signed marital property waiver form in which both spouses certify that only the minority spouse controls and manages the business or an affidavit stating that a marital property agreement has been signed in which the nonminority spouse relinquishes control and management of the business.
Adm 84.06 Note
Note: A marital property waiver form may be obtained, at no charge, from: WI Supplier Diversity Program, Department of Administration, P.O. Box 7970, Madison, WI 53707-7970.
Adm 84.06 History
History: Cr.
Register, September, 1987, No. 381, eff. 10-1-87.
Adm 84.07
Adm 84.07
Determination of control. Adm 84.07(1)(1)
Factors which shall be considered in determining whether the applicant meets the control requirement include, but are not limited to, the following:
Adm 84.07(1)(a)
(a) Authority and restrictions as indicated in the articles of incorporation, by-laws, minutes of corporate meetings, bank signature cards, partnership and joint venture agreements and other business agreements and documents.
Adm 84.07(1)(b)
(b) Membership of minority persons on the board of directors.
Adm 84.07(1)(c)
(c) Holdings by minority persons of the voting interests in the firm.
Adm 84.07(1)(d)
(d) The managerial experience, knowledge and expertise of the minority owner or owners in such areas as finance, budgeting, personnel, production, marketing and research.
Adm 84.07(1)(e)
(e) Whether the minority owner or owners have the authority to make policy decisions in such areas as finance, budgeting, personnel, production, marketing and research.
Adm 84.07(1)(f)
(f) The existence of working agreements with nonminority firms.
Adm 84.07(1)(g)
(g) The existence of restrictive financing agreements with nonminority firms or financial institutions which impose undue limitations on the minority firm.
Adm 84.07(2)
(2) Absentee ownership or titular ownership by an individual who does not take an active role in controlling the business is not consistent with the eligibility criteria for certification as a minority business enterprise.
Adm 84.07 History
History: Cr.
Register, September, 1987, No. 381, eff. 10-1-87.
Adm 84.08
Adm 84.08
Documentation of control. The department shall require evidence that the minority owner or owners have at least 51% control over the business. Such evidence may include, but is not limited to, the following:
Adm 84.08(1)
(1) Documentation that the minority owner or owners have the authority to:
Adm 84.08(1)(d)
(d) Control savings, checking and other financial accounts.
Adm 84.08(2)
(2) Documentation, such as a resume, that the minority owner or owners have managerial experience, knowledge and expertise in such areas as finance, budgeting, personnel, production, marketing and research.
Adm 84.08(3)
(3) Documentation that the minority owner's or owners' authority to control the business is not restricted in any way.
Adm 84.08 History
History: Cr.
Register, September, 1987, No. 381, eff. 10-1-87.
Adm 84.09
Adm 84.09
Determination of active management. Adm 84.09(1)(1)
Factors which shall be considered in determining whether the applicant meets the active management requirement include, but are not limited to, the following:
Adm 84.09(1)(a)
(a) Whether the minority owner or owners are responsible for making business decisions affecting the day-to-day operations of the firm, such as the purchase of goods, equipment, business inventory and services.
Adm 84.09(1)(b)
(b) Whether the minority owner or owners have the responsibility for the supervision of the firm's employees.
Adm 84.09(1)(c)
(c) Whether the minority owner or owners have a working knowledge of the technical requirements of the business.
Adm 84.09(2)
(2) Where the actual day-to-day management is delegated to a nonminority individual, the minority management requirement may be met if the minority owner or owners have the ultimate power to hire and fire the manager.
Adm 84.09 History
History: Cr.
Register, September, 1987, No. 381, eff. 10-1-87.
Adm 84.10
Adm 84.10
Documentation of active management. Adm 84.10(1)(1)
The department shall require evidence that the minority owner or owners actively manage the business. Such evidence may include, but is not limited to, the following:
Adm 84.10(1)(b)
(b) Evidence that the minority owner or owners have delegated work assignments to the firm's employees.
Adm 84.10(1)(c)
(c) Documentation, such as a resume, that the minority owner or owners have the education or work experience in the skill areas required to produce the product or service provided by the business.
Adm 84.10(2)
(2) Where the actual day-to-day management is delegated to a nonminority individual, documentation, such as a signed contract, that the minority owner or owners have the ultimate power to hire and fire the manager.
Adm 84.10 History
History: Cr.
Register, September, 1987, No. 381, eff. 10-1-87.
Adm 84.11
Adm 84.11
Determination of performance of a useful business function. Factors which shall be considered in determining whether the applicant is performing a useful business function include, but are not limited to, the following:
Adm 84.11(1)
(1) The degree to which the business has customers other than the state.
Adm 84.11(2)
(2) The adequacy of the business' resources to carry out its business functions.
Adm 84.11(3)
(3) The degree to which the business is independent of control or substantial influence by another business. Business relationships which tend to defeat the useful business function include, but are not limited to, shared space, equipment, employees or other resources and financing agreements.
Adm 84.11(4)
(4) Whether the business acts as a conduit to transfer funds to a nonminority business, unless doing so is a normal industry practice.
Adm 84.11 Note
Note: Brokering arrangements are an example of the type of business activity which might be considered to be acting as a conduit. However, if such brokering arrangements are prevalent within the industry, such as in the oil distribution industry, the department would not consider the business to be acting as a conduit.
Adm 84.11 History
History: Cr.
Register, September, 1987, No. 381, eff. 10-1-87.
Adm 84.12
Adm 84.12
Documentation of performance of a useful business function. The department shall require evidence that the business is performing a useful business function. Such evidence may include, but is not limited to, the following:
Adm 84.12(1)
(1) Contracts, purchase orders, invoices and other documents demonstrating that the business has customers other than the state.
Adm 84.12(2)
(2) Evidence that the quantity, type and condition of the business' equipment and inventory are adequate to carry out its business functions.
Adm 84.12(3)
(3) Loan and other financing agreements, leases, employee contracts, payroll records and other documents demonstrating that the business relationships with a nonminority business do not preclude it from performing a useful business function.
Adm 84.12(4)
(4) Contracts, purchase orders, invoices and other documents showing that the business has a diversity of suppliers and is not acting as a conduit for a single supplier.
Adm 84.12 History
History: Cr.
Register, September, 1987, No. 381, eff. 10-1-87.
Adm 84.13
Adm 84.13
Special circumstances. Any one of the following circumstances creates a presumption that the minority business does not satisfy the eligibility standards for certification as a minority business enterprise. In such instances, the applicant has the burden of establishing to the department's satisfaction that the minority owner or owners meet the eligibility standards despite the existence of one or more of the following factors:
Adm 84.13(1)
(1) Firms formed within one year prior to an application for certification.
Adm 84.13(2)
(2) Firms whose ownership or control has changed within one year prior to an application for certification.
Adm 84.13(3)
(3) Transfers of shares of stock from nonminorities to minorities that occur within one year prior to an application for certification.
Adm 84.13(4)
(4) Firms with authorized but unissued shares which, if issued, could result in less than 51% minority ownership of the business or in less than dominant control by minority owners.
Adm 84.13(5)
(5) Firms subject to conversion rights which, if exercised, would result in less than 51% minority ownership of the business or in less than dominant control by minority owners.
Adm 84.13(6)
(6) Firms in which one or more of the minority owners is a former or current employee of a nonminority person or business firm which has an ownership interest in or a business relationship with the applicant firm, particularly if the nonminority person or firm is in a substantially similar line of business.
Adm 84.13(7)
(7) Firms whose directors, management or both, are substantially the same as those of a nonminority firm which has an ownership interest in, an investment in, or a business relationship with the applicant firm, particularly if the nonminority firm is in a substantially similar line of business.
Adm 84.13(8)
(8) Firms which share indistinguishable facilities, such as office space, production, distribution or storage facilities, machinery and equipment or employees with a nonminority firm.
Adm 84.13 History
History: Cr.
Register, September, 1987, No. 381, eff. 10-1-87.
Adm 84.14
Adm 84.14
Certification procedure for Wisconsin businesses. Adm 84.14(1)(a)
(a) Any business that meets the standards for certification may file an official application with the department.
Adm 84.14 Note
Note: Application forms are available from and should be submitted to: WI Supplier Diversity Program, Department of Administration, P.O. Box 7970, Madison, WI 53707-7970.
Adm 84.14(1)(b)
(b) Upon receipt of the application, the department shall review the application for completeness and for compliance with the requirements of s.
16.287, Stats., and s.
Adm 84.03.
Adm 84.14(1)(c)
(c) The department may request applicants to provide additional information or documentation to provide clarification and substantiation of or to resolve any ambiguities or inconsistencies in their application form.
Adm 84.14(1)(d)
(d) The department may impose a time limit of not less than 30 days in which the applicant must provide the requested information. A reasonable extension may be given by the department for good cause shown by the applicant. Requests for time extensions should be made to the program and should specify the length of time for which the extension is being requested and the reasons for the request.
Adm 84.14(1)(e)
(e) The department may conduct an on-site visit of the applicant's operations. The on-site visit may be scheduled or unannounced. The visit may include, but is not limited to, the following:
Adm 84.14(1)(e)2.
2. An examination of the applicant's physical plant, inventory, machinery and equipment, financial records, customer accounts, and legal records.
