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23.16.117    TRANSFER OF INTEREST TO NEW OWNER

(1) Except as provided in (7) , (8) , and (9) , an ownership interest may not be transferred to a new owner until a new gambling license application reflecting the proposed transfer is submitted to the department and the department approves the transfer.

(2) The gambling license application must include:

(a) the annual license fee, if applicable, and the processing fee required for the specific license; and

(b) a copy of the proposed agreement to transfer the interest.

(3) The department shall conduct an investigation to determine whether the proposed transfer meets the licensure requirements in 23-5-176 , MCA, and department rules. In any case of the transfer of an ownership interest to a new owner, the department must determine that the transferred ownership interest will be independently exercised by the new owner and will not remain under the control of the transferor before approving the transfer.

(4) Within 90 days after receiving the completed application, the department shall approve the proposed transfer by issuing a gambling license, notify the applicant of the denial of the license, or take other action.

(5) After the gambling license has been issued, the department shall issue the appropriate gambling permits to the licensee upon submission of completed applications and payment of permit fees.

(6) A certificate, stock, or other evidence of ownership may not be registered in the licensee's records until the gambling license has been issued by the department.

(7) The provisions of this rule do not apply to the:

(a) transfer of a security interest in a licensed gambling operation; or

(b) transfer of less than 5% interest in a publicly-traded corporation. Transfers of an interest of 5% or more in a publicly-traded corporation are subject to the provisions of this rule, except that the transfer may occur without prior department approval. The department reserves the right to act under 23-5-136 , MCA, in this situation if it determines that the transfer violates Montana gambling law or the rules in this chapter.

(8) (a) Transfers of ownership in a gambling operator license resulting from foreclosure on a contract for deed or other instrument of transfer require an amended application. The gambling activity may continue pending the outcome of the investigation under the following conditions:

(i) the party foreclosing is the licensee's immediate predecessor;

(ii) the foreclosure takes place within five years or half the term of the contract, whichever is less; an amended license application is required up to two years following the sale; after two years, a new license application is required including all applicable fees, but the business will be allowed to operate as long as the owner meets the criteria contained in (i) , (iii) and (v) ;

(iii) the foreclosing party is suitable for licensure;

(iv) all applicable permit fees are paid; and

(v) the former licensee has notified the department of the foreclosure at the time the foreclosure is executed; notification must be made within five working days of execution and an application must be received by the department within 30 working days following notification; failure to notify the department within this time frame may result in department action to cause gambling operations to cease immediately.

(b) Transfers resulting from foreclosure that do not meet all of the conditions set forth in (8) (a) require a new license application to be filed and gambling activities to cease pending approval of the application.

(9) Transfers of ownership control of a licensed gambling operation into a receivership, trust or an estate mandated by court order require an amended application to be filed.

(a) Under this circumstance, gambling activity may continue pending the outcome of the license investigation if the following documents are submitted and determinations are made:

(i) documentation of the event precipitating the transfer of the licensed gambling operation into a receivership, trust, or estate, i.e., death certificate;

(ii) documents naming/appointing a person to exercise ownership control, i.e. receiver, personal representative, trustee;

(iii) personal history statement, (Form 10) as that form is described in ARM 23.16.102(3) (b) , for the person designated to act in the capacity of a receiver or trustee;

(iv) a complete set of fingerprints, on a form (Form FD-258) provided by the department, obtained and certified by a local law enforcement agency, the department or a private security company approved by the department for each person required to complete a personal history statement;

(v) authorization to disclose form, (Form 1) as that form is described in ARM 23.16.102(3) (a) , filed in the name of the receivership, trust or estate; and

(vi) the department determines the receiver is suitable to hold or own a license.

(b) Upon the dissolution of a receivership, trust or estate licensed under this section, if ownership interests are distributed to strangers to the license, a new license application must be filed and all applicable rules and procedures must be followed.

History: 23-5-115, MCA; IMP, 16-4-414, 23-5-115, 23-5-118, 23-5-176, MCA; NEW, 1991 MAR p. 1942, Eff. 10/18/91; AMD, 1993 MAR p. 2786, Eff. 11/25/93; AMD, 1994 MAR p. 2834, Eff. 10/28/94; AMD, 1997 MAR p. 404, Eff. 2/25/97; AMD, 2003 MAR p. 1989, Eff. 9/12/03.

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