CSLB Law & Business ExamBusiness Organization and LicensingMedium
A qualifying individual already serves as the RMO for Company A. She wants to also qualify Company B, a separate corporation with no ownership overlap with Company A. Under CSLB rules, what happens?
- AShe may qualify Company B only if Company A is inactive
- BShe may freely qualify both companies with no restrictions
- CShe must resign from Company A before qualifying Company B
- DShe may qualify Company B only if the two companies have at least 20% common ownership
Show answer & explanationAnswer & explanation
Correct answer: D. She may qualify Company B only if the two companies have at least 20% common ownership
CSLB regulations generally prohibit a qualifying individual from acting as the qualifier for more than one licensed entity, unless the entities share at least 20% common ownership (common corporate officers, partners, or LLC members/managers).
Why the other options are wrong
- A. Inactivity of the first license is not the relevant exception under this rule.
- B. Qualifying multiple unrelated entities without common ownership violates CSLB rules.
- C. Resignation is not required if the common ownership exception applies.
Dual Qualification Rule
A qualifying individual may only qualify more than one license if the entities have at least 20% common ownership.
- Default rule: one qualifier per license
- 20% common ownership creates an exception
- Prevents 'qualifier for hire' abuse across unrelated companies
Memory trick: '20% ties the qualifier's hands together.'