Your Committee on Commerce and Economic Development , to which was referred Senate Bill 405 , has had the same under consideration and begs leave to report the same back to the House with the recommendation that said bill be amended as follows:
Delete the title and insert the following:
A BILL FOR AN ACT to amend the Indiana Code concerning economic development.
Delete everything after the enacting clause and insert the following:
contributes capital to a local certified equity pool.
Sec. 7. As used in this article, "local certified equity pool" means a for-profit partnership, corporation, trust, or limited liability company that:
(1) is located, headquartered, and registered to conduct business in Indiana;
(2) has as its primary business activity the investment of cash in qualified Indiana businesses; and
(3) is certified by the authority as meeting the criteria of this article.
Sec. 8. As used in this article, "person" means an individual or entity, including a corporation, general or limited partnership, trust, or limited liability company.
Sec. 9. As used in this article, "qualified Indiana business" means an independently owned and operated business that:
(1) is a seed, start-up, or early stage venture as defined by the authority in its written guidelines, taking into account the United States Small Business Administration's definition of a small business (13 CFR 121.301(c));
(2) is a high growth company with high skilled jobs (as defined in IC 4-4-10.9-9.5);
(3) has its headquarters in Indiana;
(4) employs at least seventy percent (70%) of its employees in Indiana, of which ninety-five percent (95%) are Indiana residents;
(5) is in need of venture capital and is unable to obtain capital using conventional financing; and
(6) is not involved in any of the following enterprises:
(A) Real estate.
(B) Real estate development.
(D) Professional services provided by:
(ii) lawyers; or
(E) Retail sales, except when the primary purpose of the business is developing or supporting electronic commerce
using the Internet.
(F) Gas and oil exploration.
Sec. 10. As used in this article, "qualified investment" means an investment of cash by a local certified equity pool in a manner that enables the local certified equity pool to acquire capital in a qualified Indiana business.
Sec. 11. As used in this article, "restricted capital" means either:
(1) the portion of an investor's capital that may only be invested in qualified Indiana businesses; or
(2) the portion of a local certified equity pool's funds that may only be invested in qualified Indiana businesses.
Sec. 12. As used in this article, "state tax liability" means a taxpayer's total tax liability that is incurred under:
(1) IC 6-2.1 (the gross income tax);
(2) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(3) IC 6-3-8 (the supplemental net income tax);
(4) IC 6-5-10 (the bank tax);
(5) IC 6-5-11 (the savings and loan association tax);
(6) IC 27-1-18-2 (the insurance premiums tax); and
(7) IC 6-5.5 (the financial institutions tax);
as computed after the application of the credits that under IC 6-3.1-1-2 are to be applied before the credit provided by this article.
Sec. 13. As used in this article, "unrestricted capital" means either:
(1) the portion of an investor's capital that may be invested in a business other than a qualified Indiana business; or
(2) the portion of a local certified equity pool's funds that may be invested in businesses other than a qualified Indiana business.
Chapter 3. Tax Credit
Sec. 1. The aggregate amount of tax credits that may be allowed under this chapter may not exceed forty million dollars ($40,000,000).
Sec 2. The authority may allocate, through a competitive process, up to the forty million dollars ($40,000,000) in tax credits allowed under section 1 of this chapter to qualified local certified
equity pools before January 1, 2005.
Sec. 3. The cumulative tax credits awarded to a local certified equity pool may not exceed seven million five hundred thousand dollars ($7,500,000).
Sec. 4. An investor that invests restricted capital in a local equity pool is entitled to a credit against the investor's state tax liability. The credits equals the amount of the investor's restricted capital that is invested by the local certified equity pool in qualified Indiana businesses multiplied by forty percent (40%).
Sec. 5. An investor may claim a tax credit allowed under this chapter at any time within five (5) years after the date the investor's restricted capital is invested in a qualified Indiana business.
Sec. 6. Before March 31 of each year, the authority shall determine how many new tax credits may be claimed for the preceding calendar year and shall notify the state department of revenue of its determination.
Sec. 7. The authority shall consider geographic diversity of the local certified equity pools and shall take affirmative steps to ensure that a portion of the tax credits allocated under this chapter are made available to local certified equity pools with their place of business located outside the area within the Indianapolis Metropolitan Statistical Area designated by the federal Office of Management and Budget (FIPS Code 3480).
Chapter 4. Initial Certification
Sec. 1. An applicant for certification may request that certain information submitted by the applicant be kept confidential. The authority shall make a determination of confidentiality as soon as practicable. If the authority determines that the information should not be kept confidential, the applicant may withdraw its application and the authority must return the information.
Sec. 2. The authority shall establish guidelines for the preliminary and final certification of applicants as local certified equity pools and grant each qualifying pool tax credits through a competitive process. The authority shall consider the following in making its preliminary certification determination:
(1) The projected leverage of the fund.
(2) The experience of fund managers and investors.
twenty million dollars ($20,000,000) in the investment banking,
finance, or venture capital industry.
Sec. 7. Not later than sixty (60) business days after the date of final application, the authority shall inform the applicant in writing of the authority's decision to either certify the pool or refuse certification.
Sec. 8. Before making a proposed investment in a particular business, a local certified equity pool may request from the authority a written opinion that the business in which it proposes to invest is a qualified Indiana business. The authority shall provide a written opinion not later than ten (10) days after receiving the request.
Sec. 9. An offering of material involving the sale of securities of a local certified equity pool must have printed on the front, in bold and capital letters the following statement:
"BY AUTHORIZING THE FORMATION OF A LOCAL CERTIFIED EQUITY POOL, THE STATE OF INDIANA DOES NOT ENDORSE THE QUALITY OF MANAGEMENT OR THE POTENTIAL FOR EARNINGS OF A PARTICULAR BUSINESS AND IS NOT LIABLE FOR DAMAGES OR LOSSES TO AN INVESTOR IN THE BUSINESS. THE USE OF THE WORD "CERTIFIED" IN AN OFFERING DOES NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE INVESTMENT BY THE INDIANA DEVELOPMENT FINANCE AUTHORITY, THE STATE OF INDIANA, OR ANY OF THEIR RESPECTIVE OFFICERS, EMPLOYEES, OR AGENTS. INVESTMENTS IN A PROSPECTIVE LOCAL CERTIFIED EQUITY POOL BEFORE THE TIME THE POOL IS CERTIFIED ARE NOT ELIGIBLE FOR TAX CREDITS. IF CERTAIN PROVISIONS OF IC 4-35 ARE VIOLATED, THE STATE OF INDIANA MAY REQUIRE FORFEITURE OF UNUSED TAX CREDITS.".
Chapter 5. Requirements for Continued Certification; Decertification
S ec. 1. To continue to be certified, a local certified equity pool must adhere to the following guidelines:
(1) The local certified equity pool may not hold restricted
capital for longer than thirty (30) days after it has been called
upon for a qualified investment.
(2)The local certified equity pool must use all tax credits allocated to it by investing all restricted capital in qualified Indiana businesses within five (5) years after receiving an allocation of tax credits. If a pool fails to make significant progress toward using its allocated tax credits, it may be subject to decertification by the authority.
(3) A single qualified investment may not exceed a percentage, set in the authority's written guidelines, of the total capital of the local certified equity pool at the time of investment.
(4)The local certified equity pool must comply with any limits, set in the authority's written guidelines, on outside leverage.
(5) The unrestricted capital in the pool must equal the restricted capital in the pool.
(6) The local certified equity pool may not make an investment in an affiliate of the local certified equity pool. If a legal entity is not an affiliate before a local certified equity pool initially invests in the entity, it is not an affiliate if a local certified equity pool provides additional investment in the entity after its initial investment.
(7)The local certified pool may not have engaged in any fraudulent activities and may not be under investigation by the federal Securities Exchange Commission or the securities division of the office of the secretary of state.
(8) The local certified equity pool must fully comply with this article, including any requirement for timely reporting.
Sec. 2. The following are grounds for decertification of a local certified equity pool:
(1) A material violation of this article.
(2) A material misrepresentation made in connection with the application process.
(3) A finding of fraud by the federal Securities Exchange Commission or the securities division of the office of the secretary of state.
The authority shall provide written notice to the principal or manager of the local certified equity pool or to whomever is designated on the certification application to receive notice on
behalf of the pool that the pool shall be decertified not later than
one hundred twenty (120) days from the date of mailing of the
notice unless the pool corrects the deficiencies to the satisfaction of
Sec. 3. If the local certified equity pool remains out of compliance at the end of the one hundred twenty (120) day period described in section 2 of this chapter, the authority shall send a notice of decertification to the pool and to the state department of revenue.
Sec. 4. If a local certified equity pool is decertified for reasons of fraud or misrepresentation, or both, the authority shall recapture the total amount of tax credits awarded to the local certified equity pool. Not later than thirty (30) days after receiving a notice of decertification under section 3 of this chapter, the pool shall repay to the authority an amount equal to the tax credits claimed by its investors at the time of decertification. The decertified pool must provide written notice by certified mail, return receipt requested, to all of its investors informing them of the authority's decision.
Sec. 5. The authority shall send written notice by certified mail, return receipt requested, to each investor of the decertified local certified equity pool explaining the following:
(1) The decertification of the local certified equity pool.
(2) The authority's recapture of the tax credit from the local certified equity pool.
(3) The forfeiture of all future tax credits to be claimed by the investor with respect to the investments in the local certified equity pool.
The notice shall be sent to the address shown on the investor's last tax filing or, if no filing has been made, to address provided by the pool.
Sec. 6. If the local certified equity pool does not meet the requirements for recertification at the end of the one hundred twenty (120) day period described in section 2 of this chapter, the authority must issue a written opinion not later than one hundred twenty (120) days after the end of the period. The authority shall promptly send a copy of the written opinion by registered mail to the local certified equity pool.
consistent with this article, without having to comply with
Sec. 2. This article expires January 1, 2013.
and when so amended that said bill do pass.