Chapter Adm 82

Adm 82.22 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11; correction made under s. 13.92 (4) (b) 7., Stats., Register September 2011 No. 669.

Adm 82.24 Adm 82.24 Determination of ownership.

Adm 82.24(1) (1) An applicant shall meet all of the following eligibility standards:

Adm 82.24(1)(a) (a)

Adm 82.24(1)(a)1. 1. The ownership by one or more disabled veterans is real, substantial and continuing, going beyond the pro-forma ownership of the business as reflected in its ownership documents.

Adm 82.24(1)(a)2. 2. Each disabled veteran owner shares in all risk and profits commensurate with his or her ownership interest as demonstrated by a detailed examination of the substance of his or her business arrangements with others.

Adm 82.24(1)(a)3. 3. Each disabled veteran owner receives 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 82.24(1)(b) (b) The contributions of capital and expertise by the disabled veteran owner or owners to acquire their interest in the business is real and substantial, and in proportion to the interest acquired.

Adm 82.24(2) (2) Contributions of personal or professional services alone are not real and substantial for the purposes of this section, except these contributions shall receive consideration when given in conjunction with other tangible forms of investment. Other insufficient contributions include promises to contribute capital or expertise in the future, a note payable to the business or to its owners who are not disabled veterans, or the mere participation as an employee.

Adm 82.24(3) (3) Disabled veterans shall hold at least 51 percent of the securities that constitute ownership of a business.

Adm 82.24(4) (4) Securities or assets of a business that are held in trust are not considered as held by a disabled veteran in determining the ownership of a business, except under the following circumstances:

Adm 82.24(4)(a) (a) The beneficial owner of the securities or assets held in trust is a disabled veteran, and the trustee is a disabled veteran.

Adm 82.24(4)(b) (b) A disabled veteran is the sole grantor of assets held in a revocable living trust, and a disabled veteran is the beneficiary and trustee.

Adm 82.24(5) (5) The department may not consider securities that are held by any guardian for a minor, in determining ownership and control.

Adm 82.24(6) (6) An ownership interest arising in a spouse who is not a disabled veteran, solely because of the operation of marital property laws, may not disqualify an applicant from certification if both spouses certify that the disabled veteran or his or her duly authorized representative performs the majority of the control and management of the business.

Adm 82.24 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.25 Adm 82.25 Documentation of ownership.

Adm 82.25(1) (1) 

Adm 82.25(1)(a) (a) An applicant shall submit documentation showing ownership of at least 51 percent of the business by a disabled veteran. This documentation may include, but is not limited to, the three preceding years of business taxes, a current business financial statement, business licenses, buy-out agreements and financial agreements.

Adm 82.25(1)(b) (b) For a sole proprietorship, additional documentation may include, but is not limited to, canceled checks used to purchase ownership.

Adm 82.25(1)(c) (c) For a partnership, additional documentation may include, but is not limited to, partnership agreements, purchase agreements, and salary and profit-sharing records.

Adm 82.25(1)(d) (d) For a corporation, additional documentation may include, but is not limited to, articles of incorporation, corporate by-laws, a corporate-borrowing resolution, stock certificates, stock-affirmation forms, and salary and profit-sharing records.

Adm 82.25(1)(e) (e) For a joint venture, additional documentation may include, but is not limited to, a joint venture agreement that is written and signed by all of the joint venturers. Each joint venture agreement shall specify all of the following:

Adm 82.25(1)(e)1. 1. The capital contribution made by each joint venturer, the control each will exercise, and the distribution of profit and loss. The agreement shall allocate the control and the distribution of profit and loss in proportion to the contributions of the joint venturers.

Adm 82.25(1)(e)2. 2. The useful business function the joint venture will perform and the part of the work each joint venturer will do.

Adm 82.25(2) (2) The department may require documentation showing how and when the disabled veteran’s interest in the business was acquired.

Adm 82.25(3) (3) 

Adm 82.25(3)(a) (a) The department shall apply the following rules in situations in which marital assets form a basis for ownership of a business:

Adm 82.25(3)(a)1. 1. When marital assets other than the assets of the business in question are held jointly or as marital property by both spouses, and are used to acquire the ownership interest asserted by the disabled veteran, the department shall conclude that the disabled veteran acquired his or her ownership interest in the business with his or her own individual resources, provided that the other spouse irrevocably renounces and transfers all rights in the ownership interest in the manner sanctioned by the laws of the state in which either spouse or the business is domiciled. The department may not count a greater portion of joint or marital property assets toward ownership than state law would recognize as belonging to the qualifying member of the business.

Adm 82.25(3)(a)2. 2. The application for DVB certification shall include a copy of the document that is used for legally transferring and renouncing the rights as required in subd. 1.

Adm 82.25(3)(b) (b) In instances where a disabled veteran and a person who is not a disabled veteran are married and the marital ownership is not clearly established, the department may request a marital-property waiver form in which both spouses certify that only the disabled veteran spouse or his or her duly authorized representative controls and manages the business, or an affidavit stating that the spouses have signed a marital-property agreement in which the spouse who is not a disabled veteran relinquishes control and management of the business.

Adm 82.25 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.28 Adm 82.28 Determination of control.

Adm 82.28(1) (1) Factors that the department may consider in determining whether one or more disabled veteran owners control a business include the following:

Adm 82.28(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 82.28(1)(b) (b) Membership of one or more disabled veteran owners on the board of directors.

Adm 82.28(1)(c) (c) Holdings by disabled veteran owners of the voting interests in the business.

Adm 82.28(1)(d) (d) The managerial experience, knowledge and expertise of the disabled veteran owners in such areas as finance, budgeting, personnel, production, marketing and research.

Adm 82.28(1)(e) (e) Whether the disabled veteran owners have the authority to make policy decisions in such areas as finance, budgeting, personnel, production, marketing and research.

Adm 82.28(1)(f) (f) Whether the daily business operations are controlled by one or more duly authorized representatives of one or more disabled veterans.

Adm 82.28(1)(g) (g) Whether the disabled veteran owners or their duly authorized representatives are substantially unconnected with the principal place of business, such as by being incarcerated.

Adm 82.28(2) (2) An applicant’s assertion of being independent from a business that is owned by other than a disabled veteran may not rest solely on recognition of the disabled veteran owners by governmental taxing authorities. Other test criteria may include the following:

Adm 82.28(2)(a) (a) An applicant’s relationship with any business that is not owned by a disabled veteran, which involves any long-term contract or lease agreements.

Adm 82.28(2)(b) (b) The existence of working agreements with any business that is not owned by a disabled veteran.

Adm 82.28(2)(c) (c) An applicant’s status as a party to any contract or lease agreement on terms at variance with industry standards or prudent business practices.

Adm 82.28(2)(d) (d) The existence of restrictive financing agreements with any business that is not owned by a disabled veteran or any financial institution which impose undue limitations on the applicant.

Adm 82.28(2)(e) (e) Interlocking stock ownership of the applicant and any business that is not owned by a disabled veteran in the same industry.

Adm 82.28(2)(f) (f) Common directors or officers between the applicant and any business that is not owned by a disabled veteran.

Adm 82.28(2)(g) (g) An applicant’s use of employees, equipment, expertise, facilities, or other resources from a business that is not owned by a disabled veteran.

Adm 82.28(2)(h) (h) The receipt of financial benefits, such as profits and wages, that are not commensurate with the duties performed, by a business that is not owned by a disabled veteran.

Adm 82.28(2)(i) (i) An applicant that cannot operate without licenses, permits or insurance held by another business.

Adm 82.28(2)(j) (j) An applicant that does not possess all legal requirements necessary to its operation.

Adm 82.28 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.29 Adm 82.29 Documentation of control.

Adm 82.29(1) (1) An applicant shall submit evidence that one or more disabled veteran owners or their duly authorized representatives have control over the business. The evidence may include any of the following:

Adm 82.29(1)(a) (a) Signed bids and contracts.

Adm 82.29(1)(b) (b) Signed debt instruments.

Adm 82.29(1)(c) (c) Signed hiring decisions.

Adm 82.29(1)(d) (d) Bank signature cards and bank resolution authorizations, for savings, checking and other financial accounts.

Adm 82.29(1)(e) (e) Written proof that the organizational and governing documents of an applicant, such as limited liability company operating agreements, partnership agreements, or articles of incorporation and by-laws, do not contain any provision which restricts the disabled veteran owner or his or her duly authorized representative from exercising control of the business.

Adm 82.29(1)(f) (f)

Adm 82.29(1)(f)1. 1. Documentation, such as résumés, showing that the disabled veteran owners or their duly authorized representatives have the managerial experience, knowledge and expertise — in such areas as finance, budgeting, personnel, production, marketing and research — needed for exercising day-to-day control over the business.

Adm 82.29(1)(f)2. 2. The department may waive the managerial experience required in subd. 1., when a disabled veteran is starting a disabled veteran-owned business, financial adviser, or investment firm.

Adm 82.29(1)(g) (g) Documentation establishing the representation authorization prescribed in s. 45.04 (1) (a), Stats., if another person is acting for the disabled veteran.

Adm 82.29 Note Note: Section 45.04 (1) (a) of the Statutes defines “duly authorized representative” and is reprinted under section Adm 82.12 (20).

Adm 82.29(2) (2) The managerial experience, knowledge and expertise of the disabled veteran owners or their duly authorized representatives substantially demonstrates their ability to make independent and unilateral business decisions necessary to guide the future and destiny of the business. The applicant may document this ability and control in a number of ways. For a disabled veteran owner or his or her duly authorized representative to demonstrate the extent of this control, the department may consider the following or other aspects of a business:

Adm 82.29(2)(a) (a) Authority to sign payroll checks and letters of credit.

Adm 82.29(2)(b) (b) Signature responsibility for insurance or bonds.

Adm 82.29(2)(c) (c) Authority to negotiate and execute contracts and financial services agreements.

Adm 82.29(2)(d) (d) Ability to obtain bank authorization resolutions.

Adm 82.29(3) (3) Agreements for support services are permitted as long as the power of the disabled veteran owner or his or her duly authorized representative to control the company is not restricted or impaired, as determined by the department.

Adm 82.29 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.32 Adm 82.32 Determination of active management. Factors that the department may consider in determining whether one or more disabled veteran owners or their duly authorized representatives actively manage a business include the following:

Adm 82.32(1) (1) Direct operational management.

Adm 82.32(1)(a) (a) The operational management of the disabled veteran owner or his or her duly authorized representative is the demonstrated extent to which the disabled veteran owner or his or her duly authorized representative actually operates the day-to-day business.

Adm 82.32(1)(b) (b) Departmental assessments of operational management shall rest upon the peculiarities of the industry of which the business is a part. In order to clarify the level of operational management of the disabled veteran owner or his or her duly authorized representative, the department may consider each of the following:

Adm 82.32(1)(b)1. 1. ‘Experience.’ The disabled veteran owner or his or her duly authorized representative has education, demonstrable working knowledge or experience in the area of specialty or industry claimed in the application.

Adm 82.32(1)(b)2. 2. ‘Responsibility for decision-making.’

Adm 82.32(1)(b)2.a. a. The disabled veteran owner or his or her duly authorized representative makes basic decisions pertaining to the daily operation of the business, such as the purchase of goods, equipment, business inventory and services.

Adm 82.32(1)(b)2.b. b. The disabled veteran owner or his or her duly authorized representative supervises the business’s employees.

Adm 82.32(1)(b)3. 3. ‘Technical competence.’

Adm 82.32(1)(b)3.a. a. The disabled veteran owner or his or her duly authorized representative has technical competence in the industry or specialty of the business or a working knowledge of the technical requirements of the business sufficient to critically evaluate the work of subordinates.

Adm 82.32(1)(b)3.b. b. The disabled veteran owner or his or her duly authorized representative has the ability to perform in his or her area of specialty or expertise without substantial reliance upon finances and resources – such as equipment, automobiles and facilities – of entities that are not owned by disabled veterans.

Adm 82.32(1)(b)4. 4. ‘Connection to the principal place of business.’ The disabled veteran owner or his or her duly authorized representative is not substantially removed from the principal place of business, such as by being incarcerated.

Adm 82.32(2) (2) Delegated operational management. Where the actual day-to-day operational management is delegated to a person other than a disabled veteran owner or his or her duly authorized representative, the active-management requirements may be met if the disabled veteran owner or his or her duly authorized representative has the ultimate power to hire and fire that person.

Adm 82.32(3) (3) Potential constraints on operational management. In reviewing governance documents and issues, the department shall give special attention to the extent to which all of the following aspects affect the ability of the disabled veteran owner or his or her duly authorized representative to direct the management and policies of the business:

Adm 82.32(3)(a) (a) The composition of the business’s governing body.

Adm 82.32(3)(b) (b) The functioning of the governing body.

Adm 82.32(3)(c) (c) The content of shareholder’s agreements, bylaws, or state incorporation statutes.