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(A) Business Categories. An applicant may seek to be certified for preference in one (1) of the following two (2) categories:

(1) Tribal Business. A Tribal entity must own, operate, manage and control one hundred (100) percent of the day-to-day operations of the business.

(2) Tribal Member Business. Enrolled Karuk Tribal members must own, operate, manage and control at least fifty-one (51) percent of the day-to-day management and operations of the business.

(B) Requirements for Certification. The TERO Office will evaluate the application for certification based on factors, including, but not limited to, the following:

(1) Ownership. The firm must be fifty-one (51) percent or more enrolled Karuk Tribal member-owned. The applicant must demonstrate the following:

(a) Formal Ownership. That the enrolled Karuk Tribal member own(s) fifty-one (51) percent or more of the partnership, corporation, or other arrangement for which the application is being submitted. Such ownership must be embodied in the firm’s originating documents, such as its stock ownership or partnership agreement. Ownership includes:

(b) Assets. The enrolled Karuk Tribal member owns fifty-one (51) percent or more of the assets and equipment, will receive fifty-one (51) percent or more of the firm’s assets upon dissolution, and will receive fifty-one (51) percent or more of the profits, and interest.

(c) Control. The enrolled Karuk Tribal member’s fifty-one (51) percent or more ownership provides him or her with a majority of voting rights or other decisional authority and that all decisions of the firm are to be made by a majority vote except where otherwise required by law.

(d) Value. The enrolled Karuk Tribal member provided real value for his or her fifty-one (51) percent or more ownership by providing capital, equipment, real property, or similar assets commensurate with the value of his or her ownership share. It will not be considered “real value” if the enrolled Karuk Tribal member purchased his or her ownership share, directly or indirectly, through a promissory note, the ultimate creditor of which is the non-Karuk Tribal member owner of the firm or an immediate relation thereof, or any similar arrangement, unless a convincing showing can be made that the enrolled Karuk Tribal member brought such special skills, marketing connections, or similar benefits to the firm that there is a good reason to believe the arrangement would have been entered into even if there was no Tribal preference program in existence. Where the enrolled Karuk Tribal member participant can demonstrate that he or she could not pay good value for his or her fifty-one (51) percent or more Indian ownership because the normal capital sources were closed to him or her because he or she is an Indian, that person may satisfy this requirement by demonstrating further that he or she extended his or her capital-raising capability as far as possible, such that the enrolled Karuk Tribal member participant clearly is at risk in the business in relationship to his or her means.

(e) Profit. The enrolled Karuk Tribal member owner(s) will receive fifty-one (51) percent or more of all profits. If there is any provision that gives the non-Karuk owner a greater share of the profits, in whatever form and under whatever name, such as through management fees, equipment rental fees, or bonuses tied to profits, certification will be denied. Salary scales will be reviewed to ensure the relative salaries being paid Indian and non-Indian owners are consistent with the skills of the parties and are not being used to circumvent the requirement that enrolled Karuk Tribal member owners receive fifty-one (51) percent or more of the profits.

(2) Management and Control. The firm must be under significant Indian management and control. The firm must be able to demonstrate that: one (1) or more of the Indian owners must be substantially involved, as a senior level official, in the day-to-day management of the firm as his or her primary employment activity.

The Indian owner does not have to be the “chief executive officer.”

However, he or she must, through prior experience or training, have substantial occupational ties to the area of business in which the firm is engaged such that he or she is qualified to serve in the senior level position and is sufficiently knowledgeable about the firm’s activities to be accountable to the Tribe for the firm’s activities.

This provision may be waived when:

(a) The firm is one hundred (100) percent Indian-owned and the chief executive officer is the spouse and/or parent of the owner(s), the family lives on or near the Tribe’s service area, and the majority of employees are Indian; or

(b) The firm is modeled on a publicly held corporation such that it is owned by ten (10) or more persons, is at least seventy (70) percent Indian-owned, the chief executive officer and the highest-salaried employee in the firm is/are Indian, and a majority of the employees are Indian.

(3) Integrity of Structure. There must be good reason to believe that the firm was not established solely or primarily to take advantage of the Indian preference program. In evaluating an applicant under this criterion the TERO will consider the factors set out below. The TERO shall exercise broad discretion in applying these criteria in order to preserve the integrity of the Indian preference program and in questionable cases shall deny certification.

(a) History of the Firm. Whether the history of the firm provides reason to believe it was established primarily to take advantage of the Tribal preference program, and in particular whether the firm, a portion of the firm, or key actors in the firm originally were associated with a non-Indian-owned business that gained little of business value in terms of capital, expertise, equipment, etc., by adding ownership or by merging with an Indian firm.

(b) Employees. Whether key non-Indian employees of the applicant are former employees of a non-Indian firm with which the Indian firm is or has been affiliated, through a joint venture or other arrangement, such that there is reason to believe the non-Indian firm is controlling the applicant. Whether Indians are employed in all or most of the positions for which qualified Indians are available. A high percentage of non-Indian employees in such positions will provide reason to believe the firm was established primarily to benefit non-Indians.

(c) Relative Experience and Resources. Whether the experience, expertise, resources, etc., of the non-Indian partner(s) is so much greater than that of the Indian(s) that there is little sound business reason for the non-Indian to accept a junior role in the firm other than to be able to take advantage of the Indian preference program.

(4) Brokers. Brokers will be certified only if they are dealers who own, operate, or maintain a store, warehouse, or other establishment in which the commodities being supplied are bought, kept in stock, and sold to the public in the usual course of business; provided, that this requirement shall not apply where the applicant demonstrates that it is customary and usual in the area of trade for a broker/dealer not to maintain an establishment and to keep the commodities in stock.

(5) Manufacturing Companies. In determining whether or not a manufacturing firm is fifty-one (51) percent Indian-owned and controlled, the Commission shall be guided by the Small Business Administration Standard Operating Procedures on certifying firms as eligible for the 8(a) program. [Ord. 4 § 2.7, 4/16/2015.]