Text: HF02489 Text: HF02491 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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PAG LIN 1 1 Section 1. NEW SECTION. 15E.175 SESQUICENTENNIAL 1 2 BUSINESS DEVELOPMENT FUNDS – PURPOSE. 1 3 The purpose of this division is to encourage and strengthen 1 4 economic development in Iowa by increasing the availability of 1 5 development capital to new businesses in Iowa, by promoting 1 6 the growth of existing Iowa businesses, and by stimulating the 1 7 expansion of business activities that promote and maintain the 1 8 economic stability of the state. To carry out this purpose, a 1 9 refund is authorized for sesquicentennial business development 1 10 funds which make investments under this division. 1 11 Sec. 2. NEW SECTION. 15E.176 SESQUICENTENNIAL BUSINESS 1 12 DEVELOPMENT FUNDS ESTABLISHED – QUALIFICATIONS. 1 13 A sesquicentennial business development fund, to qualify 1 14 for the refund under section 15E.177, shall meet the following 1 15 requirements: 1 16 1. The fund shall not be a governmental entity. 1 17 2. The fund may be either a for profit or not for profit 1 18 entity created for the purpose of making capital available to 1 19 businesses. 1 20 3. The fund shall register with the securities bureau of 1 21 the insurance division of the department of commerce. 1 22 Information to be filed with the securities bureau includes at 1 23 least the following: 1 24 a. The name of the fund, which must be unique, and contain 1 25 the words "sesquicentennial business development fund". 1 26 b. The principal place of business of the fund, which 1 27 shall be in Iowa. 1 28 c. That the fund has an initial capitalization of at least 1 29 ten million dollars. 1 30 d. That the fund manager certifies that the fund makes 1 31 debt, equity, or other investments in qualified businesses or 1 32 in other businesses which may be located outside of the state. 1 33 e. Only investments in qualified businesses shall qualify 1 34 for the refund. 1 35 4. To remain a qualified fund under this division, the 2 1 fund must renew its registration with the securities bureau 2 2 annually, recertifying the facts upon which the initial 2 3 qualification was based. The fund shall also file a report 2 4 with the securities bureau detailing its investments upon 2 5 dissolution of the fund. 2 6 Applications for registration and renewal of registration 2 7 shall be on forms prescribed by the administrator of the 2 8 securities bureau. The administrator may require supporting 2 9 documentation to be filed with an application. All 2 10 applications shall be signed by the administrator or 2 11 authorized agent of the fund. 2 12 Sec. 3. NEW SECTION. 15E.177 INVESTMENT REFUND – 2 13 APPORTIONMENT TO INVESTORS – APPROPRIATION. 2 14 1. A qualified sesquicentennial business development fund 2 15 shall receive the following refunds on investments made by the 2 16 fund in qualified businesses: 2 17 a. Twenty-five percent of the share of an early-phase 2 18 investment in a qualified business. 2 19 b. Twelve percent of the share of a growth-phase 2 20 investment in a qualified business. 2 21 c. Six percent of the share of a mezzanine-phase 2 22 investment in a qualified business. 2 23 2. For the purposes of this division: 2 24 a. "Early-phase investment" means an investment in a 2 25 qualified business which was formed within the last three 2 26 years and which has annual gross revenue during that period of 2 27 one million dollars or less, determined in accordance with 2 28 generally accepted accounting principles. 2 29 b. "Growth-phase investment" means an investment in a 2 30 qualified business with an annual gross revenue between one 2 31 million and five million dollars, determined in accordance 2 32 with generally accepted accounting principles. 2 33 c. "Mezzanine-phase investment" means an investment in a 2 34 qualified business with annual gross revenue of over five 2 35 million dollars but not more than twenty-five million dollars, 3 1 determined in accordance with generally accepted accounting 3 2 principles. 3 3 d. To qualify for a refund under this section, an 3 4 investment must be in an unaffiliated and nonrelated qualified 3 5 business, person, partnership, or corporation. 3 6 3. An investor, in order to be qualified to receive a 3 7 refund from the fund, must invest in a qualified fund and 3 8 shall not withdraw moneys invested in the fund for at least 3 9 three hundred sixty-five consecutive days following the date 3 10 of original investment. 3 11 4. The fund holds debt, equity, or other investments of 3 12 the same value for at least three hundred sixty-five 3 13 consecutive days following the date of the investment except 3 14 that the debt, equity, or other investment may be divested and 3 15 replaced with other eligible investments of the same type 3 16 prior to the end of the three hundred sixty-five day period. 3 17 5. A qualified sesquicentennial business development fund 3 18 may apply once each year to the department of revenue and 3 19 finance for an investment refund. A fund shall only receive 3 20 one refund per qualified investment in a qualified business. 3 21 The application shall contain the information and be on a form 3 22 prescribed by the department, and shall specify the amount of 3 23 refund being claimed for each type of investment under 3 24 subsection 1. The department shall review the application and 3 25 shall issue a warrant in the amount of the combined refunds 3 26 under subsection 1 to the fund. 3 27 6. The fund shall apportion the refund received among the 3 28 qualified investors in the fund in proportion to moneys 3 29 invested in the fund by each qualified investor. 3 30 Apportionment shall be made within forty-five days of the 3 31 receipt of the refund from the department. An investor shall 3 32 only receive one refund per qualified investment in a 3 33 qualified fund. 3 34 7. There is appropriated from the general fund of the 3 35 state for each fiscal year beginning on or after July 1, 1997, 4 1 eight million dollars, to be used to pay refunds under this 4 2 division. Refunds under this division shall be paid in full 4 3 in the order in which the requests for refunds are received. 4 4 Sec. 4. NEW SECTION. 15E.178 QUALIFIED BUSINESS. 4 5 As used in this division, "qualified business" means a 4 6 business which is unable to obtain adequate financing on 4 7 suitable terms from conventional sources in order to remain 4 8 viable or to commence or expand its ability to provide goods 4 9 or services, and which meets the following requirements: 4 10 1. The business complies with the requirements of chapter 4 11 502 and is designated a qualified business pursuant to a 4 12 registration with the securities bureau which contains at 4 13 least the following: 4 14 a. A financial statement for the most recent fiscal year 4 15 or years which has been prepared and certified by an 4 16 independent certified public accountant. 4 17 b. The business could not be subject to a stop order under 4 18 section 502.209 for either of the reasons stated in section 4 19 502.207A, subsection 7, paragraphs "a" or "b". 4 20 c. That the business engages in one of the following 4 21 activities: 4 22 (1) Interstate or intrastate commerce for the purpose of 4 23 manufacturing, processing, or assembling products. 4 24 (2) Agricultural, fishery, or forestry processing. 4 25 (3) Software development. 4 26 (4) The provision of services in intrastate or interstate 4 27 commerce, excluding retail, real estate, insurance, or 4 28 professional services. 4 29 (5) Research and development of products and processes 4 30 associated with any of the activities enumerated in 4 31 subparagraph (1), (2), or (3). 4 32 d. The business meets the income requirements for early, 4 33 growth, or mezzanine-phase investments. 4 34 2. To remain a qualified business, the business shall 4 35 renew its registration annually by applying for renewal with 5 1 the securities division. The application shall at least 5 2 contain a financial statement for the most recent fiscal year 5 3 and information sufficient to show that the business continues 5 4 to be a early, growth, or mezzanine-phase business. 5 5 3. Applications for registration and renewal of 5 6 registration under this section shall be on forms prescribed 5 7 by the administrator of the securities bureau. The 5 8 administrator may require supporting documentation to be filed 5 9 with applications. All applications shall be signed by a 5 10 person with the authority to enter into contracts on behalf of 5 11 the business. 5 12 Sec. 5. NEW SECTION. 15E.179 EXAMINATIONS. 5 13 The administrator of the securities bureau may examine the 5 14 business records of a sesquicentennial business development 5 15 fund at the times and in the manner the administrator 5 16 determines to be necessary. The administrator may obtain the 5 17 services of private persons with expertise in securities 5 18 matters to conduct the examinations. Examinations of a fund 5 19 may be made without prior notice to the fund. Expenses 5 20 reasonably attributable to the examination shall be paid by 5 21 the fund whose investments are being examined. The 5 22 administrator is directed to cooperate with other state 5 23 agencies to minimize duplicative examinations. 5 24 The administrator of the securities bureau may also conduct 5 25 an examination of a qualified business to determine if it has 5 26 met the requirements of this division. 5 27 Sec. 6. NEW SECTION. 15E.180 VIOLATIONS – REMEDIES – 5 28 CRIMINAL PENALTY. 5 29 1. In addition to any other penalties, a violation of any 5 30 of the provisions of this division is grounds for loss of 5 31 status as a qualifying business. A business alleged to have 5 32 violated a provision of this division shall be allowed a one 5 33 hundred twenty-day grace period to remedy the violation or to 5 34 comply with the provisions of this division. 5 35 2. In addition to any other penalties, a violation of the 6 1 provisions in this division shall be grounds for revocation of 6 2 the registration of the fund as a qualified sesquicentennial 6 3 business development fund. A fund alleged to have violated 6 4 this division or to be out of compliance with this division 6 5 shall be allowed a one hundred twenty-day grace period to 6 6 remedy the violation or to comply with the provisions of this 6 7 division. Revocation shall cause the forfeiture of any right 6 8 to a refund under this section and shall cause the total 6 9 amount of a refund for all years under this section to be due 6 10 and payable with interest from the time registration is 6 11 effective. 6 12 3. A person who willfully attempts in any manner to 6 13 violate a provision of this division for the purposes of 6 14 obtaining an investment or a refund commits a class "D" 6 15 felony. 6 16 Sec. 7. NEW SECTION. 15E.181 LEGISLATIVE REVIEW AND 6 17 OVERSIGHT. 6 18 The director of the department of revenue and finance and 6 19 the administrator of the securities bureau of the insurance 6 20 division shall each report on an annual basis in accordance 6 21 with section 7A.11 concerning sesquicentennial funds receiving 6 22 refunds under this division. 6 23 EXPLANATION 6 24 This bill provides for the creation of sesquicentennial 6 25 business development funds to provide capital for small 6 26 businesses as a means to promote economic development in the 6 27 state. The bill does the following: 6 28 1. Section 15E.176 authorizes the establishment of 6 29 sesquicentennial business development funds. Funds are to be 6 30 nongovernmental entities which must register with the 6 31 securities bureau of the insurance division of the department 6 32 of commerce. Funds are limited to making debt, equity, or 6 33 other investments in Iowa or foreign businesses. 6 34 2. Section 15E.177 provides that a fund is to receive a 6 35 payment from the state based upon the amount of investments 7 1 made in qualified businesses. The payment is 25 percent of an 7 2 early-phase investment by the fund in a qualified business, 12 7 3 percent of a growth-phase investment in a qualified business, 7 4 and 6 percent of a mezzanine-phase investment by the fund in a 7 5 qualified business. 7 6 An early-phase investment is an investment in a qualified 7 7 business which was formed within the past three years and has 7 8 less than $1 million in gross revenue each year. A growth- 7 9 phase investment is an investment in a qualified business 7 10 which has annual revenues between $1 million and $5 million. 7 11 A mezzanine-phase investment is an investment in a qualified 7 12 business with over $5 million but not more than $25 million in 7 13 annual revenues. 7 14 A sesquicentennial business development fund which receives 7 15 a payment shall apportion the moneys received among the 7 16 investors of the fund within 45 days. A standing 7 17 appropriation of $8 million is made to fund the payments 7 18 beginning in fiscal year 1998. 7 19 3. Section 15E.178 sets out the requirements for a 7 20 qualified business. A qualified business is one which 7 21 complies with chapter 502 regarding securities issuance, meets 7 22 the requirements for early, growth, or mezzanine-phase 7 23 investments, has its principal place of business in Iowa and 7 24 most of its employees in Iowa, and engages in certain 7 25 activities, including interstate or intrastate manufacturing 7 26 or processing of products, agricultural processing, software 7 27 development, or research and development. The business must 7 28 show that it meets eligibility requirements annually with the 7 29 securities bureau of the insurance division. 7 30 4. Section 15E.179 provides for examinations of a fund and 7 31 of businesses in which a fund invests and examinations of 7 32 sesquicentennial funds by the administrator of the securities 7 33 bureau. Examinations shall be in cooperation with those of 7 34 other agencies to minimize duplication of effort. 7 35 5. Section 15E.180 provides that a business or fund which 8 1 violates a provision or requirement regarding investment or 8 2 qualifications has 120 days to remedy the violation or be 8 3 subject to loss of qualification status. A person who 8 4 willfully attempts to violate a provision regarding a fund or 8 5 business for the purposes of obtaining an investment or refund 8 6 commits a class "D" felony. 8 7 6. Section 15E.181 requires the director of the department 8 8 of revenue and finance and the administrator of the securities 8 9 bureau to report to the general assembly regarding the 8 10 payments received by sesquicentennial business development 8 11 funds. 8 12 LSB 4035HZ 76 8 13 mk/sc/14
Text: HF02489 Text: HF02491 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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