Effective Date of Rule: Thirty-one days after filing.

     Purpose: This change will no longer require spouses of officers of charitable or nonprofit organizations (C/NP), or officers and board members of publicly traded entities or subsidiaries of publicly traded entities to undergo background checks. Staff has found that these spouses typically have little to no decision-making power or influence over the operations of the companies. If evidence is found to the contrary, an investigation will be conducted to determine if they qualify as a substantial interest holder.

     Reasons Supporting Proposal: Removing the requirement of fingerprinting spouses will save resources as we will spend considerably less time obtaining fingerprints from these individuals, as well as the cost of processing the fingerprints. Furthermore, it will save licensees time and money for fingerprinting.

     Citation of Existing Rules Affected by this Order: Amending WAC 230-03-045 and 230-03-065.

     Statutory Authority for Adoption: RCW 9.46.070.

      Adopted under notice filed as WSR 12-22-044 on November 2, 2012.

     Changes Other than Editing from Proposed to Adopted Version: After this proposed rule change was filed for discussion under WSR 12-22-044, a licensee asked us to consider no longer backgrounding spouses of officers of publicly traded companies, and officers or board members of subsidiaries of publicly traded entities. Staff worked with the licensee to incorporate the changes after it was determined there were no regulatory concerns.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 1, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 1, Repealed 0.

     Date Adopted: April 15, 2013.

Susan Newer

Rules Coordinator

OTS-5085.3

AMENDATORY SECTION(Amending Order 457, filed 3/22/06, effective 1/1/08)

WAC 230-03-045   Defining substantial interest holder.   (1) "Substantial interest holder" means a person who has actual or potential influence over the management or operation of any organization, association, or other business entity.

     (2) Evidence of substantial interest may include, but is not limited to:

     (a) Directly or indirectly owning, operating, managing, or controlling an entity or any part of an entity; or

     (b) Directly or indirectly profiting from an entity or assuming liability for debts or expenditures of the entity; or

     (c) Being an officer or director or managing member of an entity; or

     (d) Owning ten percent or more of any class of stock in a privately or closely held corporation; or

     (e) Owning five percent or more of any class of stock in a publicly traded corporation; or

     (f) Owning ten percent or more of the membership shares/units in a privately or closely held limited liability company; or

     (g) Owning five percent or more of the membership shares/units in a publicly traded limited liability company; or

     (h) Providing ten percent or more of cash, goods, or services for the start up of operations or the continuing operation of the business during any calendar year or fiscal year. To calculate ten percent of cash, goods, or services, take the operational expenses of the business over the past calendar or fiscal year, less depreciation and amortization expenses, and multiply that number by ten percent; or

     (i) Receiving, directly or indirectly, a salary, commission, royalties, or other form of compensation based on the gambling receipts.

     (3) Spouses of officers of charitable or nonprofit organizations and spouses of officers or board members of publicly traded entities or subsidiaries of publicly traded entities are not considered substantial interest holders, unless there is evidence to the contrary. If so, then an investigation will be conducted to determine if they qualify as a substantial interest holder.

[Statutory Authority: RCW 9.46.070. 06-07-157 (Order 457), § 230-03-045, filed 3/22/06, effective 1/1/08.]

     (2) If you are a licensed employee of a gambling operation, officer of a charitable or nonprofit organization, or an officer or a board member of a publicly traded entity or subsidiary of a publicly traded entity, your spouse does not need to meet the licensing qualifications, unless they are deemed to be a substantial interest holder.

[Statutory Authority: RCW 9.46.070. 06-07-157 (Order 457), § 230-03-065, filed 3/22/06, effective 1/1/08.]