10/30/2019 by Michael L. Sterling, Esq.
The Virginia Department of Small Business and Supplier Diversity (DSBSD) administers the small, women-owned and minority-owned (SWaM) business program. The DSBSD SWaM Certification Division reviews initial and recertification applications. DSBSD certification eligibility determinations are based on existing circumstances at the time of application. The criteria are in the Commonwealth of Virginia Administration Code regulations:
7VAC13-20-40. Eligible Small Business.
In general, a business may be certified as a small business if it meets the definition of small business provided in § 2.2-1604 of the Code of Virginia.
§ 2.2-1604. Definitions.
“Small business” means a business that is at least 51 percent independently owned and controlled by one or more individuals who are U.S. citizens or legal resident aliens and, together with affiliates, has 250 or fewer employees or average annual gross receipts of $10 million or less averaged over the previous three years. One or more of the individual owners shall control both the management and daily business operations of the small business.
The applicant must show evidence that the women, minority, or individual owners have control of the business. The following factors will be examined in determining who controls an applicant’s business:
a. The organizational and governing documents of an applicant (e.g., limited liability company operating agreements, partnership agreements, or articles of incorporation and bylaws) must not contain any provision that restricts the ability of the women, minority, or individual owners from exercising managerial control and operational authority of the business.
The DSBSD is scrutinizing company operating agreements, partnership agreements, articles of incorporation, and bylaws to assure that women and minority owners control the business. Even if a business was previously certified, the DSBSD might deny recertification based on its current more vigorous and technical review of the company documents that were previously approved. For example, provisions that require a non-woman or non-minority owner to be present for a quorum, or a supermajority vote might disqualify your company. Make sure to carefully review your documents before you apply.
A business whose application for certification has been denied may reapply for the same category of certification six months after the date on which the business receives the notice of denial. An applicant denied certification may apply for certification in any other category without delay if otherwise eligible. The applicant may request a waiver of the six-month reapplication period from the department director by submitting a written request for reconsideration and providing a reasonable basis for the waiver. However, these are rarely granted. For more information, please contact the authoring attorney.
About the Author:
Mike serves as the Managing Partner of the law firm and is located in the Firm’s Norfolk office. He has also served on the Executive Board and Chaired the firm’s Construction and Government Contracts Practice Group, Practice Management Committee, and Dispute Resolution Services.
Mike’s practice is concentrated on complex projects and disputes for international, national and local clients with particular focus on compliance and other regulatory issues. He also manages the law firm’s Dispute Resolution Services. He serves as an arbitrator and mediator for the American Arbitration Association (AAA), various courts and by private appointment. For more information, please contact Mike at email@example.com.