Factors which shall be considered in determining whether the applicant is performing a useful business function include, but are not limited to, the following:

1. (1) The degree to which the business has customers other than the state.
2. (2) The adequacy of the business’ resources to carry out its business functions.
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.

4. (4) Whether the business acts as a conduit to transfer funds to a nonminority business, unless doing so is a normal industry practice.

   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.

History

History: Cr. Register, September, 1987, No. 381, eff. 10-1-87.