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GTMBC CERTIFICATION POLICY AND PROCEDURES MANUAL

The purpose of the GTMBC CERTIFICATION POLICY AND PROCEDURES MANUAL document is to set forth the policies and procedures which are to be followed in the certification of Small Business entities as bona fide Minority/Women Business Enterprises/Small Disadvantaged Business/Historically Underutilized Business/Disadvantaged Business Enterprises.  

GTMBC is without comparison the organization dedicated to increasing procurement and business opportunities for minority, women-owned, and small businesses, and maximizing procurement opportunities for M/WBE/SDB/HUB/DBE/SDB/HUB/DBE/VET with Corporations and public sector contract buying companies and organizations. GTMBC was formed to consolidate and provide a focal point for delivery of services in coordination of activities to assist minority and women businesses (M/WBE/SDB/HUB/DBE/SDB/HUB/DBE/VET), which historically have been under-served and under-utilized because of racial and cultural prejudice.  It is the goal of the GTMBC to assist minority businesses in becoming long-term, qualified entities capable of competing in the local, regional, state-wide, national and global economic mainstream market.  


The Golden Triangle Minority Business Council Glossary of Terms is an alphabetical collection list of special terms and wording.  The GTMBC Glossary of Terms are words often used as terms in relation to the minority and women owned small business industry and at times are referred to in the historically underutilized economic business sector.  The terms and definitions below may have slightly different understandings and other implications.  These words can also be referenced in dictionaries, and other word list supplements.

“Affidavit” - A notarized document that swears/affirms that the foregoing information and statements are true and correct that have been provided in the application for certification.

“Affiliate” - To associate oneself as a subordinate, subsidiary or member with another.

“Applicant” -A business enterprise which has applied for certification as an M/WBE/SDB/HUB/DBE.

“Application” -A form which must be completed by applicant requesting M/WBE/SDB/HUB/DBE certification.  Other documents, as specified in these procedures, must also be submitted with the application.

“Articles of Incorporation” –The title of the document filed in many states to create a corporation. Also known as the certificate of incorporation or corporate charter.

“Articles of Organization” - The title of the document filed in many states to register a limited liability company (LLC) with the state. Also known as articles of Information.

“Assume Name” –A name other than the true name, under which a corporation or others business organization conducts business. Also referred to as a fictitious name, a trade name or “doing business as” (d/b/a).

“Authorized shares” –The maximum number of shares that a corporation may issue pursuant to its articles of incorporation.

“Board of Directors” –The governing body of a corporation who is elected by majority vote. The directors are responsible for electing the officers and the supervision and general control of the corporation.

“Bylaws” –The regulations of a corporation that, subject to statutory law and the articles of incorporation, provide the basic rules for the conduct of the corporation’s business and affairs.

 “Business Enterprise” - A for profit proprietorship, partnership or corporation regardless of size that is not a joint venture.

“Buying Organizations” - Any entity, public or private, which seeks to purchase goods or services and therefore can contract with minority business enterprises.

“Certification (GTMBC)” - The result of the process by which a business enterprise is determined by the GTMBC to be an M/WBE/SDB/HUB/DBE in a specified commodity.  The service area as defined by at least 51% owned, controlled, and operated by a minority group member, who is a U.S. citizen, in accordance with this document.  Certification speaks only to the issues of ownership and control.  Services provided by the council and the quality of products and services offered by M/WBE/SDB/HUB/DBEs are not part of the certification process.“Certification Committee” -The Certification Committee composed of members of the Board of Directors conducts their investigation as "confidential" on an advisory status to the Board of Directors on minority certification, and reports their findings to the Board of Directors for final approval/denial of the minority/women business enterprise (M/WBE) applicant.  Their purpose of which is to ensure that companies applying for membership in the Council are in fact owned, operated and controlled by minority group members.  The Certification Committee appointed by the Chairman of the Board shall consist of not less than five (5) members, who meet on a regular basis.

“Certificate of good standing” –A certificate issued by a state official as conclusive evidence that a corporation is in existence or authorized to transact business in the state. The certificate generally sets forth the corporation’s name; that it is duly incorporated or authorized to transact business; that all fees, taxes and penalties owed the state have been paid; that is most recent annual report has been filed; and, that articles of dissolution have not been filed. Also known as a certificate of existence or certificate of authorization.

“Certificate of Incorporation” – The title of the document filed in many states to create a corporation. Also known as the articles of incorporation or corporate charter.

“Certification Term” - The MBE or WBE certification of a business issued for a one-year term with updates required on an annual basis.

“Challenge” - A formal filing, that must be submitted in writing, by a third party to rebut the presumption that a particular firm does not meet the standards for being certified as an MBE or WBE business and shall be addressed by the GTMBC within the issued certification one-year term.

“Corporate seal” –A corporate seal is a device made to either emboss or imprint certain company information onto documents. This information usually includes the company’s name and date and state information. Corporate seals are often required when opening corporate or LLC bank accounts, distributing stock or membership certificates or conducting other corporate business. Active Filings, LLC includes custom-made corporate seals as part of its corporate Kit.

“Control” - To have and exercise the authority to independently control the daily and long-term business decisions of the M/WBE/SDB/HUB/DBE.  Characteristics of control include, but are not limited to:

1.    Signing checks, bids, and contracts

2.    Making decisions in price negotiations

3.    Incurring liabilities for the business

4.    Making final GTMBC Staffing decisions

5.    Making policy

6.    Making general company management decisions

Control is interpreted so as to ensure that the M/WBE/SDB/HUB/DBE not only directs the management of the business, but also guides its operation.  For purposes of this program, minority group members must have operational, managerial, and fiscal control.

“Corporation” - A business concern in which minorities or women own at least 51% of an existing legal entity created for liability purposes.

“Corporate Members” - Those national and local corporations and other buying organizations which have paid dues as required and meet all membership qualifications for participation in this network.

“Denial” - The Agency’s action of denying certification to a firm that does not meet the certification eligibility criteria as outlined in this manual and other regulations promulgated by Board of Directors.

“Dealership” - A franchise to sell specific products or services in a specific area or geographical location.  Regardless of product or service, the dealership must be able to demonstrate minority ownership and control consistent with the 51% requirements for all other business concerns.

“Debt Instrument” - A document which reflects the debt one owes or is obligated to pay such as a contract, loan, deed, etc.

“Directors” –The individuals who, acting as a group known as the board of directors, manage the business and affairs of a corporation.

“Dissolution” –The statutory procedure that terminate the existence of a domestic corporation.

“Distributors” - Individuals or companies who sell or disseminate a product for another company or corporation.  They can hold title and/or take possession of the product(s) they are distributing but it is not mandatory.  The term "distributor" can be distinguished from "broker" in that a distributor effects transactions of his own account and keeps inventory for resale and a broker effects transactions for the accounts of others.

“Dividend” –A distribution of a corporation’s earnings to its shares holders.

“Federal Employer Identification Number” - The Federal Tax Identification Number (also known as a "95 Number" or "EIN Number") is a number assigned to a corporation or L.L.C. by the Federal Government for purposes of taxation. The Federal Tax ID Number is to a corporation or L.L.C. as a Social Security Number is to an individual. Most banks require that a corporation or L.L.C. obtain a Federal Tax Identification Number as a prerequisite to opening a bank account regardless of whether the company will have employees.

“Fictitious name” - A name other than the true name, under which a corporation or other business organization conducts business. Also referred to as an assumed name, a trade name or "doing business as" (d/b/a).

“Franchise Tax” - A tax or fee usually levied annually upon a corporation, limited liability company or similar business entity for the right to exist or do business in a particular state. Failure to pay the franchise tax or similar fees may result in the administration dissolution of the company and forfeiture of the charter.

“Going public” - The process by which a corporation first sells its shares to the public.

“Holding Company” - A corporation whose primary business owns the stock, perhaps all the stock, of another or other corporations.  Holding companies are often used to own and control regulated enterprises so that the holding company will not be affected by the regulatory mechanism.  For corporate reporting purposes, stock ownership in a holding company shall be reported in the following manner:

1.    If the holding company is 100% minority-owned and the held companies are 100% minority owned, payments to held companies shall be reported as 100% of purchases.

2.    If the holding company is 100% minority-owned and the held companies are a minimum of 51% minority-owned, payments to held companies shall be reported as 100% of purchases.

3.    If the holding company is less than 100% minority-owned, and the held companies are less than 100% minority-owned, then the percentage of the minority ownership shall be computed by multiplying the percentage of minority ownership of the holding company times the percentage of minority ownership of the held company to determine if the minimum 51% requirement is met.  If so, the reporting formula above shall be used.

“Immediate Family Member” - Any relative that can be considered a father, mother, husband, wife, son, daughter, brother, sister, grandmother, grandfather, grandson, granddaughter, mother-in-law, or father-in-law of the applicant(s).

“Incorporation” - The act of creating or organizing a corporation under the laws of a specific jurisdiction.

“Incorporator” - The person(s) who perform the act of incorporation and who sign the articles of incorporation and deliver them for filing.

“Indemnification” - Financial protection provided by a corporation to its directors, officers, and employees against expenses and liabilities incurred by them in lawsuits alleging that they breached some duty in their service to or on behalf of the corporation.

“Independent” -The firm must not be affiliated or associated with another, non-minority firm through common ownership, management, employees, inventory, equipment, etc.  A firm may, however, lease equipment and employees for production runs through non-exclusive contractual relationships when supervision is employed and maintained by the minority firm, and separation of charges is easily verifiable.

“Joint Venture” - For purposes of this program, an association of M/WBE/SDB/HUB/DBEs with one or more businesses (sole proprietorships, corporations or any combination thereof) formed to carry on a single for-profit business activity which may be varied in its scope or duration.  Because it consists of enterprises brought together, a joint venture can never be certified.  A joint venture relationship may result in the creation of an independently incorporated company, established by those companies making up the Joint Venture; both must provide proof verifying that each company is registered to do business in the State of Texas with the Secretary of State, which can be certified if said new company meets GTMBC's certification criteria.  For corporate reporting purposes, payments to joint ventures of M/WBE/SDB/HUB/DBE firms with non-M/WBE/SDB/HUB/DBE firms shall be credited toward M/WBE/SDB/HUB/DBE expenditures based on the proportion of the M/WBE/SDB/HUB/DBE's share in the profit, share of risk of loss and control/management of responsibilities in the joint venture.  The percentage of the joint venture contract credited as M/WBE/SDB/HUB/DBE participation may be adjusted to reflect risk of loss and/or control or management where the M/WBE/SDB/HUB/DBE's share of profit is not commensurate with its overall contribution to performance of the joint venture contract.“Legally Organized” -The firm must be legally registered by the appropriate governmental unit, according to its organizational structure - sole proprietorship, partnership, or corporation.  Self-employed or free-lance persons and agents for a single company that are not separately established are not properly included in the category of a business enterprise.  They may, however, be registered by the Council as Self-employed/Freelance/Agents under the approved Patron Member classification.

“Leveraged Buy-Out” - Acquisition of a business by the incurrence of debt secured by the underlying assets of the business being acquired.  The debt incurred generally exceeds the equity investment of the acquiring party or parties.

“Limited Liability Company” - A limited liability company is an incorporated form of a business organization, similar to a general or limited partnership, but possessing a limited 'shield' which protects its owners from liability to the same extent that stockholders or a corporation are insulated from the debts and obligations of the corporation.

If properly structured, the LLC will be treated as a partnership (or pass-through entity) for federal and state income tax purposes.  The LLC can offer flexibility in the allocation of profits, losses and distributions, a factor which usually has great significance to investors. GTMBC certification requires the LLC to meet minority ownership criteria and documentation of equity, and profit/loss distribution formula.  The operating agreement must meet all requirements reflecting minority ownership, management, and control.

“Limited Partnership” - A statutory form of partnership consisting of one or more general partners who manage the business and are liable for its debts, and one or more limited partners who invest in the business and have limited personal liability. 

“Living Trust” - A recent strategy employed to reduce tax obligations, of an inheritance, on the beneficiaries.  This action does not, on its oval, affect an M/WBE/SDB/HUB/DBE certification status.

“Majority” - More than 50 percent; commonly used as the percentage of votes required to approve certain corporate actions.

“Managers” - The individuals who are responsible for the maintenance, administration and management of the affairs of a limited liability company (LLC). In most states, the managers serve a particular term and report to and serve at the discretion of the members. Specific duties of the managers may be detailed in the articles of organization or the operating agreement of the LLC. In some states, the members of an LLC may also serve as the managers.

“Members” - The owner(s) of a limited liability company (LLC). Unless the articles of organization or operating agreement provide otherwise, management of an LLC is vested in the members in proportion to their ownership interest in the company.

“Merger” - The statutory combination of two or more corporations in which one of the corporations survives and the other corporations cease to exist.

“Minutes” - The corporate minutes are the written record of transactions taken or authorized by the board of directors or shareholders. These are usually kept in the corporate minute book in diary fashion.

“Management and Daily Business Operation” - The Chief Executive Officer (CEO) must be a minority and be involved in, and in all areas in ultimate control of, all areas of the business (finance, accounting, marketing, production, delivery of service, purchasing, etc.), depending on the stage of development of the business, and within the constraints of good management practices.  The majority owner and the CEO need not be the same person, but both must be minority individuals.

“Manufacturer's Representative” - An independent sales agent for a manufacturer or a group of manufacturers (principal) in a described sales territory who takes neither title nor possession of the merchandise he or she sells.  This person or business cannot be certified.

“Minority Business Enterprise - For purposes of this program, an independent business entity which is at least 51% owned operated and controlled by minority group member(s) who are U.S. citizen(s).  The business must meet the following requirements:

1.         The minority group member(s) ownership interest in the firm must be real, substantial and continuing.  Such interest is characterized by:

a)       Risk of loss/share of profit commensurate with the proportional ownership and

b)      Receipt of the customary incidents of ownership, such as salary and/or intangible benefits

2.         The business must perform a useful business function according to custom and practice in the industry.  For example, acting merely as a conduit for funds to a non-minority firm when that is unnecessary to accomplish the business transaction does not constitute a "useful business function according to custom and practice in the industry."“Minority Corporation” -A corporation is a body formed and authorized by law to act as single person although constituted by one or more persons and legally endowed with various rights and duties.  To be considered a minority corporation, minorities, as defined previously, must own 51% of the stock without certain restrictions.

“Minority Group Member” - For purposes of this program, an individual who is at least 1/4 or 25% minimum (documentation to support claim of 25% will be required from applicant) of the following:

·    African American - A U.S. citizen having origins in any of the Black racial groups of America.

·      Hispanic American - A U.S. citizen of true-born Hispanic heritage (true-born meaning "authentically" or "genuinely" as per Webster), from any of the Spanish speaking areas of Latin America or the following regions: Mexico, Central America, South America and the Caribbean basin only.  Brazilians shall be listed under Hispanic designation for review and certification purposes.

·      Native American - A person who is an American Indian, Eskimo, Aleut or Native Hawaiian and regarded as such by the community of which the person claims to be a part.  Native Americans must be documented members of a North American tribe, band or otherwise organized group of native people who are indigenous to the continental United States and proof can be provided through a Native American Blood Degree Certificate (i.e. tribal registry letter, tribal roll register number). GTMBC will accept those tribes recognized by either the federal government or state government.  In the case of American Indian listing on the tribal registry and acceptance by the tribe can be substituted for the 25% blood line requirement.

·      Asian-Pacific American – A U.  S. citizen whose origins are from Japan, China, Taiwan, Korea, Vietnamese, Laos, Cambodia, the Philippines, Samoa, Guam, the U.S. Trust Territories of the Pacific or the Northern Marinas.

·      Asian-Indian American - U.S. citizens whose origins are in India, Pakistan and Bangladesh.

·      American Women – Includes women of all races who are U. S. citizens, born or naturalized, who:
            Operate - To be actively involved in the day-to-day management of the business.
            Own - To have possession of at least 51% of the business.  Ownership is interpreted so as to ensure that the minority group member(s) enjoy the normal and customary incidents of ownership.         

 “Minority Individuals” -"Minority Individuals" include the following:  African-Americans, Asian-Indian Americans, Asian-Pacific Americans, Hispanic Americans, Native Americans, and Women of all racesThe term "Native Americans" include American Indians, American Eskimos, American Aleuts and Native Hawaiians.  The term "Hispanic Americans" include U. S. Citizens of Mexican, Puerto Rican, and Cuban, Central or South American origin or Hispanic culture or descent.  The term "Asian-Pacific Americans" include U. S. Citizens whose origins are from Japan, China, The Philippines, Viet Nam, Korea, Samoa, Guam, the United States,  and; The Trust Territories of the Pacific, Northern Marianas, Laos, Cambodia and Taiwan.  The term "Asian-Indian Americans" include U. S. Citizens whose origins are from India, Pakistan and Bangladesh.

“M/WBE Profile” -The information submitted by the applicant to the Certification Committee to substantiate its M/WBE status shall be treated as confidential information.  The applicant may authorize the Council to release all or a portion of the information to enhance business opportunities when appropriate written authorization is deemed necessary and given to the Council.

“Name registration” - The filing of a document in a foreign state to protect the corporate name, often in anticipation of qualification in the state.

“Name reservation” - A procedure that allows a corporation to obtain exclusive use of a corporate name for a specified period of time

“Officers” - Individuals appointed by the board of directors who are responsible for carrying out the board's policies and for making day-to-day decisions.

“Organizational meetings” - Meetings of incorporators or initial directors that are held after the filing of the articles of incorporation to complete the organization of the corporation.

“Ownership” – The business structure of the firm under the definitions for “sole proprietorship, partnership and corporation”.

“Partnership” - A business concern in which minorities or women own at least 51 percent of the partnership assets or interests.

“Primary Industry Classification” - The six-digit number assigned by the North American Industrial Classification System (NAICS) or a comparable classification system identified by the Board of Directors.

“Principal Place of Business” – The business location where the individuals who manage the firm’s day-to-day operations spend most working hours and where top management’s business records are kept. If the offices from which management is directed and where business records are kept are in different locations, the Agency will determine the principal place of business for MBE/WBE program purposes.

“Registered Agent” - A person or entity designated to receive important tax and legal documents on behalf of the corporation. The Registered Agent must be located and available at a legal address within the specified jurisdiction at all times. Failure to maintain a Registered Agent in the jurisdiction in which the corporation is registered, may result in the forfeiture of the corporate status. Also known as a Resident Agent.

“Registered Office” - The statutory address of a corporation. In states requiring the appointment of a Registered Agent, it is usually the address of the Registered Agent.

“Resident Alien” - A resident alien is a legal resident of the United States but not a naturalized citizen.  He/She is provided a green card to verify their resident status.  A resident alien is not eligible for participation and/or certification as an M/WBE/SDB/HUB/DBE in the GTMBC network.

“S Corporation” - A corporation granted a special tax status as specified under the Internal Revenue Code. The code is very explicit on how and when this election is made and the number of shareholders this type of corporation can have. Since this type of corporation pays no income tax, all gains and losses of the corporation pass through to the individual shareholders in proportion to their holdings.

“Share” - The unit into which the ownership interest in a corporation is divided.

“Separate Martial Agreement” - A legal binding agreement between a husband and wife, of which the husband relinquishes his ownership interest in the wife's sole and separate property in the applicant firm. This must take the form of an affidavit sworn to by the owner (s) of the applicant firm before a person who is authorized by state law to administer oaths and filed in the county in which the couple resides.

“Shareholders” - Shareholders are the owners of a corporation based on their holdings. They own an interest in the corporation rather than specific corporate property. Also known as stockholders.

“Site Visit” - An inspection of the minority business operation, done by a representative from an affiliated council, to ensure an existing business and review and confirm the racial make-up of the entity as detailed in the written application for certification.

“Sole proprietorship” - An unincorporated business with a sole owner in which the owner may be personally liable for business debts and claims against the business.

“Tax-exempt organization” - Any organization that is determined by the Internal Revenue Service to be exempt from federal taxation of income. A tax-exempt may be required to operate exclusively for charitable, religious, literary, educational or similar types of purposes.

“Trademark” - A word or mark that distinctly indicates the ownership of a product or service, and that is legally reserved for the exclusive use of that owner.

“Trust” - Stock held in trust is not counted to determine ownership.  The trustee for said trust fund must, in those cases where they control the company as a result of stock held in trust must be a minority individual.  In those cases where stock is in trust and the trustee is minority or a non-minority trustee does not control the board or 51% of the stock and thus the ownership remains minority, the company is eligible for certification. The determination of control (management/administration) must be careful reviewed.  The control of said business must also remain in the hands of minorities.  This applies most specifically when a trustee becomes the Chief Executive Officer (CEO) or equivalent position but lacking any background or familiarity in the field, hires a Chief Operating Officer (COO).  Under this scenario, the COO must be a minority member.

“Viable Business Concern” - A firm that has been in business for at least 90 calendar days.

“Venture Capital Company” - Venture Capital companies and their relationship with minority business enterprises should be treated in the same way we treat banking relationships during the certification process.

“Women Business Enterprise (WBE)” - A business concern which

a. is at least 51 percent owned and controlled by one or more women, or in the case of any publicly owned business, at least 51 percent of the stock is owned by one or more women; and,

b. whose management and daily business operations are controlled by one or more women who own it.