§ 31.40.060. Prohibited loans -- Exception
(1) Either by itself or in concert with a director, officer, principal shareholder, or affiliate, or with another licensee, a licensee shall not hold control of a business firm to which it has made a loan under section 7(a) of the federal small business investment act of 1958, 15 U.S.C. Sec. 636(a), except that, to the extent necessary to protect the licensee's interest as creditor of the business firm, a licensee that provides financing assistance to a business firm may acquire and hold control of that business firm. Unless the director approves a longer period, a licensee holding control of a business firm under this section shall divest itself of the interest which constitutes holding control as soon as practicable or within five years after acquiring that interest, whichever is sooner.
(2) For the purposes of subsection (1) of this section, "hold control" means alone or in concert with others:
(a) Ownership, directly or indirectly, of record or beneficially, of voting securities greater than:
(i) For a business firm with outstanding voting securities held by fewer than fifty shareholders, forty percent of the outstanding voting securities;
(ii) For a business firm with outstanding voting securities held by fifty or more shareholders, twenty-five percent of the outstanding voting securities;
(b) Being able to elect or control the election of a majority of the board of directors.
[1994 c 92 § 265; 1989 c 212 § 6.]
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