(1) DVs shall have at least a ten percent (10%) service-connected disability and be domiciled in California.

(2) The principal office of the firm shall be located in the United States, and cannot be a branch or subsidiary of a foreign corporation, foreign firm, or other foreign-based business.

(3) The business shall be at least fifty-one percent (51%) unconditionally owned by one or more DVs.

(4) The daily business operations shall be managed and controlled by one or more DVs. The DV(s) managing and controlling the business is/(are) not required to be the same individuals as the DV business owner(s).

(5) The DVBE shall have filed federal tax returns and submitted copies to OSDS in accordance with Military and Veterans Code section 999.2, subdivision (g).

(1) It is a sole proprietorship with at least fifty-one percent (51%) ownership by one or more DVs. The individual federal tax return submitted by the sole proprietorship shall demonstrate that the qualifying DV is the majority owner. There shall be no formal or informal restrictions that limit DV owner control.

(2) It is a partnership with at least fifty-one percent interest unconditionally owned by one or more DVs. The partnership agreement shall reflect each owner's interest. There shall be no formal or informal restrictions that limit DV owner control.

(3) It is a limited liability company (LLC) with a showing of one hundred percent (100%) unconditional ownership by one or more DVs pursuant to Public Contract Code section 10115.9. The operating agreement shall reflect each DV owner's interest as a member, manager and/or officer. There shall be no formal or informal restrictions that limit the DV owner control.

(4) It is a corporation with at least fifty-one percent (51%) unconditional ownership of all outstanding stock, including but not limited to voting stock owned by one or more DVs. DV owners shall control the board of directors. There shall be no formal or informal restrictions that limit voting power or control of DV owners.

(5) It is a subsidiary that is wholly owned by a parent corporation, but only if at least fifty-one percent (51%) of the voting stock of the parent corporation is unconditionally owned by one or more disabled veterans. If the subsidiary is an LLC that is wholly owned by a parent corporation, then one hundred percent (100%) of the voting stock of the parent corporation must be unconditionally owned by one or more DVs.

(6) Ownership by a living trust shall be equivalent to ownership by a DV, only if the trust reflects the DV owner(s) have at least fifty-one percent (51%) ownership and the DV owner(s) is/are the grantor(s) and/or trustee(s).

(7) DV ownership as documented in an employee stock ownership plan is allowable only if non-DV employee ownership under the plan does not exceed forty-nine percent (49%).

(8) Unconditional ownership by one or more DVs shall mean that ownership is not subject to conditions precedent, conditions subsequent, executory agreements, voting trusts, restrictions on or assignments of voting rights, or other arrangements of voting rights, or arrangements causing or potentially causing ownership benefits to go to another (other than after death or incapacity). The pledge or encumbrance of stock or other ownership interest as collateral, including seller-financed transactions, does not affect the unconditional nature of ownership if the terms follow normal commercial practices and the owner retains control absent violations of the terms. Unexercised stock options or similar agreements (including rights to convert non-voting stock or debentures into voting stock) held by DVs are disregarded. However, any unexercised stock options or similar agreements, held by Non-DVs (including rights to convert non-voting stock or debentures into voting stock), will be treated as exercised.

(9) One or more DV owners must be entitled to receive:

(1) DV owners shall have managerial control of the overall direction of the business, shaping its destiny. DV owners and/or DV managers shall demonstrate responsibility for the critical areas of the business's operations and be personally responsible for, including but not limited to, the following:

(2) To have operational control of the day-to-day operations, DV owners and/or DV managers shall demonstrate independent decisions for the day-to-day operations. Absentee or titular management by qualifying DVs is not considered operational control. DV owners and/or DV managers shall demonstrate an active role in controlling the business. Operational control is demonstrated by, including but not limited to, all of the following:

(3) A DV or DVs controlling the business shall:

(4) In the case of a partnership, one or more DVs shall serve as general partners, with control over all partnership decisions. A partnership in which no DV is a general partner will be ineligible for certification.

(5) In the case of LLCs, one or more DVs shall serve as managing members, with control over all decisions of the LLC.

(6) In the case of a corporation, one or more DVs shall control the board of directors.

(7) Non-DVs involved in the management of the DVBE or as minority stockholders, partners, officers, or directors, shall not exercise overall organizational control or dominance, or power to control the business.

(8) Non-DVs who transfer majority stock ownership of the business to DVs within two years, prior to the submission of a request for certification, and remain involved in the business, in any capacity, are presumed to control the business. This presumption may be rebutted by documenting that DV majority stockholders meet all management and control requirements and have the experience necessary to manage and control all activities of the business. The rebuttal shall be submitted by DV stockholder(s).

(9) Non-DVs or entities may be found to control or have the power to control in the following situations, including but not limited to:

(1) Whether the business, with its own facilities performs the primary activities in transforming inorganic or organic substances into the end item being acquired, and is not a packager, or, in the case of kits, a final assembler. The end item must possess characteristics that did not exist before the original substances, parts, or components were assembled or transformed, as a result of mechanical, chemical, or human action. The end item may be finished and ready for utilization or consumption, or it may be semi-finished as a raw material to be used in further manufacturing, and

(2) Whether more than fifty percent (50%) of its annual gross receipts, as determined by the Department, result from the manufacture and sale of products manufactured by the business.