House Bill hb0243e1
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1 A bill to be entitled
2 An act relating to the Certified Capital
3 Company Act; amending s. 288.99, F.S.;
4 redefining the terms "early stage technology
5 business" and "qualified distribution";
6 defining the terms "Program One" and "Program
7 Two"; revising procedures and dates for
8 certification and decertification under Program
9 One and Program Two; revising the process for
10 earning premium tax credits; providing a
11 limitation on tax credits under Program Two;
12 providing for distributions under both
13 programs; requiring the Department of Revenue
14 to adopt certain rules; providing an effective
15 date.
16
17 Be It Enacted by the Legislature of the State of Florida:
18
19 Section 1. Subsections (3) and (4), paragraphs (a) and
20 (b) of subsection (5), paragraph (a) of subsection (6),
21 paragraphs (a), (c), (d), (e), (f), (g), and (h) of subsection
22 (7), paragraph (a) of subsection (8), paragraphs (a) and (b)
23 of subsection (9), paragraph (f) of subsection (10), and
24 subsection (11) of section 288.99, Florida Statutes, are
25 amended, and paragraph (i) is added to subsection (7) of said
26 section, to read:
27 288.99 Certified Capital Company Act.--
28 (3) DEFINITIONS.--As used in this section, the term:
29 (a) "Affiliate of an insurance company" means:
30 1. Any person directly or indirectly beneficially
31 owning, whether through rights, options, convertible
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1 interests, or otherwise, controlling, or holding power to vote
2 15 10 percent or more of the outstanding voting securities or
3 other voting ownership interests of the insurance company;
4 2. Any person 15 10 percent or more of whose
5 outstanding voting securities or other voting ownership
6 interest is directly or indirectly beneficially owned, whether
7 through rights, options, convertible interests, or otherwise,
8 controlled, or held with power to vote by the insurance
9 company;
10 3. Any person directly or indirectly controlling,
11 controlled by, or under common control with the insurance
12 company;
13 4. A partnership in which the insurance company is a
14 general partner; or
15 5. Any person who is a principal, director, employee,
16 or agent of the insurance company or an immediate family
17 member of the principal, director, employee, or agent.
18 (b) "Certified capital" means an investment of cash by
19 a certified investor in a certified capital company which
20 fully funds the purchase price of either or both its equity
21 interest in the certified capital company or a qualified debt
22 instrument issued by the certified capital company.
23 (c) "Certified capital company" means a corporation,
24 partnership, or limited liability company which:
25 1. Is certified by the department in accordance with
26 this act.
27 2. Receives investments of certified capital from two
28 or more unaffiliated certified investors.
29 3. Makes qualified investments as its primary
30 activity.
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1 (d) "Certified investor" means any insurance company
2 subject to premium tax liability pursuant to s. 624.509 that
3 invests contributes certified capital.
4 (e) "Department" means the Department of Banking and
5 Finance.
6 (f) "Director" means the director of the Office of
7 Tourism, Trade, and Economic Development.
8 (g) "Early stage technology business" means a
9 qualified business that is:
10 1. Involved, at the time of the certified capital
11 company's initial investment in such business, in activities
12 related to developing initial product or service offerings,
13 such as prototype development or the establishment of initial
14 production or service processes;. The term includes a
15 qualified business that is
16 2. Less than 2 years old and has, together with its
17 affiliates, less than $3 million in annual revenues for the
18 fiscal year immediately preceding the initial investment by
19 the certified capital company on a consolidated basis, as
20 determined in accordance with generally accepted accounting
21 principles;. The term also includes
22 3. The Florida Black Business Investment Board;,
23 4. Any entity that is majority owned by the Florida
24 Black Business Investment Board;, or
25 5. Any entity in which the Florida Black Business
26 Investment Board holds a majority voting interest on the board
27 of directors.
28 (h) "Office" means the Office of Tourism, Trade, and
29 Economic Development.
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1 (i) "Premium tax liability" means any liability
2 incurred by an insurance company under the provisions of s.
3 624.509.
4 (j) "Principal" means an executive officer of a
5 corporation, partner of a partnership, manager of a limited
6 liability company, or any other person with equivalent
7 executive functions.
8 (k) "Qualified business" means the Digital Divide
9 Trust Fund established under the State of Florida Technology
10 Office or a business that meets the following conditions as
11 evidenced by documentation required by department rule:
12 1. The business is headquartered in this state and its
13 principal business operations are located in this state.
14 2. At the time a certified capital company makes an
15 initial investment in a business, the business is a small
16 business concern as defined in 13 C.F.R. s. 121.301(c)
17 121.201, "Size Standards Used to Define Small Business
18 Concerns" of the United States Small Business Administration
19 which is involved in manufacturing, processing or assembling
20 products, conducting research and development, or providing
21 services.
22 3. At the time a certified capital company makes an
23 initial investment in a business, the business certifies in an
24 affidavit that:
25 a. The business is unable to obtain conventional
26 financing, which means that the business has failed in an
27 attempt to obtain funding for a loan from a bank or other
28 commercial lender or that the business cannot reasonably be
29 expected to qualify for such financing under the standards of
30 commercial lending;
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1 b. The business plan for the business projects that
2 the business is reasonably expected to achieve in excess of
3 $25 million in sales revenue within 5 years after the initial
4 investment, or the business is located in a designated Front
5 Porch community, enterprise zone, urban high crime area, rural
6 job tax credit county, or nationally recognized historic
7 district;
8 c. The business will maintain its headquarters in this
9 state for the next 10 years and any new manufacturing facility
10 financed by a qualified investment will remain in this state
11 for the next 10 years, or the business is located in a
12 designated Front Porch community, enterprise zone, urban high
13 crime area, rural job tax credit county, or nationally
14 recognized historic district; and
15 d. The business has fewer than 200 employees and at
16 least 75 percent of the employees are employed in this state.
17 For purposes of this subsection, the term "qualified business"
18 also includes the Florida Black Business Investment Board, any
19 entity majority owned by the Florida Black Business Investment
20 Board, or any entity in which the Florida Black Business
21 Investment Board holds a majority voting interest on the board
22 of directors.
23 4. The term does not include:
24 a. Any business predominantly engaged in retail sales,
25 real estate development, insurance, banking, lending, or oil
26 and gas exploration.
27 b. Any business predominantly engaged in professional
28 services provided by accountants, lawyers, or physicians.
29 c. Any company that has no historical revenues and
30 either has no specific business plan or purpose or has
31 indicated that its business plan is solely to engage in a
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1 merger or acquisition with any unidentified company or other
2 entity.
3 d. Any company that has a strategic plan to grow
4 through the acquisition of firms with substantially similar
5 business which would result in the planned net loss of
6 Florida-based jobs over a 12-month period after the
7 acquisition as determined by the department.
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9 A business predominantly engaged in retail sales, real estate
10 development, insurance, banking, lending, oil and gas
11 exploration, or engaged in professional services provided by
12 accountants, lawyers, or physicians does not constitute a
13 qualified business.
14 (l) "Qualified debt instrument" means a debt
15 instrument, or a hybrid of a debt instrument, issued by a
16 certified capital company, at par value or a premium, with an
17 original maturity date of at least 5 years after the date of
18 issuance, a repayment schedule which is no faster than a level
19 principal amortization over a 5-year period, and interest,
20 distribution, or payment features which are not related to the
21 profitability of the certified capital company or the
22 performance of the certified capital company's investment
23 portfolio.
24 (m) "Qualified distribution" means any distribution or
25 payment by to equity holders of a certified capital company
26 for:
27 1. Reasonable costs and expenses, including, but not
28 limited to, professional fees, of forming and, syndicating the
29 certified capital company, if no such costs or expenses are
30 paid to a certified investor, except as provided in
31 subparagraph (4)(f)2., and the total cash, cash equivalents,
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1 and other current assets permitted by sub-subparagraph
2 (5)(b)3.g. that can be converted into cash within 5 business
3 days available to the certified capital company at the time of
4 receipt of certified capital from certified investors, after
5 deducting the costs and expenses of forming and syndicating
6 the certified capital company, including any payments made
7 over time for obligations incurred at the time of receipt of
8 certified capital but excluding other future qualified
9 distributions and payments made under paragraph (9)(a), are an
10 amount equal to or greater than 50 percent of the total
11 certified capital allocated to the certified capital pursuant
12 to subsection (7);,
13 2. Reasonable costs of managing, and operating the
14 certified capital company, not exceeding 5 percent of the
15 certified capital in any single year, including an annual
16 management fee in an amount that does not exceed 2.5 percent
17 of the certified capital of the certified capital company;,
18 plus
19 3. Reasonable and necessary fees in accordance with
20 industry custom for professional services, including, but not
21 limited to, legal and accounting services, related to the
22 operation of the certified capital company; or.
23 4.2. Any projected increase in federal or state taxes,
24 including penalties and interest related to state and federal
25 income taxes, of the equity owners of a certified capital
26 company resulting from the earnings or other tax liability of
27 the certified capital company to the extent that the increase
28 is related to the ownership, management, or operation of a
29 certified capital company.
30 (n)1. "Qualified investment" means the investment of
31 cash by a certified capital company in a qualified business
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1 for the purchase of any debt, equity, or hybrid security of
2 any nature and description whatsoever, including a debt
3 instrument or security that which has the characteristics of
4 debt but which provides for conversion into equity or equity
5 participation instruments such as options or warrants.
6 2. The term does not include:
7 a. Any investment made after the effective date of
8 this act the contractual terms of which require the repayment
9 of any portion of the principal in instances, other than
10 default as determined by department rule, within 12 months
11 following the initial investment by the certified capital
12 company unless such investment has a repayment schedule no
13 faster than a level principal amortization of at least 2
14 years;
15 b. Any "follow-on" or "add-on" investment except for
16 the amount by which the new investment is in addition to the
17 amount of the certified capital company's initial investment
18 returned to it other than in the form of interest, dividends,
19 or other types of profit participation or distributions; or
20 c. Any investment in a qualified business or affiliate
21 of a qualified business that exceeds 15 percent of certified
22 capital.
23 (o) "Program One" means the $150 million in premium
24 tax credits issued under this section in 1999, the allocation
25 of such credits under this section, and the regulation of
26 certified capital companies and investments made by them
27 hereunder.
28 (p) "Program Two" means the $150 million in premium
29 tax credits to be issued under this section on April 1, 2003,
30 the allocation of such credits under this section, and the
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1 regulation of certified capital companies and investments made
2 by them hereunder.
3 (4) CERTIFICATION; GROUNDS FOR DENIAL OR
4 DECERTIFICATION.--
5 (a) To operate as a certified capital company, a
6 corporation, partnership, or limited liability company must be
7 certified by the department pursuant to this act.
8 (b) An applicant for certification as a certified
9 capital company must file a verified application with the
10 department on or before December 1, 1998, or November 1, 2002,
11 in the case of applicants for Program Two, in a form which the
12 department may prescribe by rule. The applicant shall submit
13 a nonrefundable application fee of $7,500 to the department.
14 The applicant shall provide:
15 1. The name of the applicant and the address of its
16 principal office and each office in this state.
17 2. The applicant's form and place of organization and
18 the relevant organizational documents, bylaws, and amendments
19 or restatements of such documents, bylaws, or amendments.
20 3. Evidence from the Department of State that the
21 applicant is registered with the Department of State as
22 required by law, maintains an active status with the
23 Department of State, and has not been dissolved or had its
24 registration revoked, canceled, or withdrawn.
25 4. The applicant's proposed method of doing business.
26 5. The applicant's financial condition and history,
27 including an audit report on the financial statements prepared
28 in accordance with generally accepted accounting principles.
29 The applicant must have, at the time of application for
30 certification, an equity capitalization of at least $500,000
31 in the form of cash or cash equivalents. The applicant must
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1 maintain this equity capitalization until the applicant
2 receives an allocation of certified capital pursuant to this
3 act showing net capital of not less than $500,000 within 90
4 days after the date the application is submitted to the
5 department. If the date of the application is more than 90
6 days after preparation of the applicant's fiscal year-end
7 financial statements, the applicant may file financial
8 statements reviewed by an independent certified public
9 accountant for the period subsequent to the audit report,
10 together with the audited financial statement for the most
11 recent fiscal year. If the applicant has been in business
12 less than 12 months, and has not prepared an audited financial
13 statement, the applicant may file a financial statement
14 reviewed by an independent certified public accountant.
15 6. Copies of any offering materials used or proposed
16 to be used by the applicant in soliciting investments of
17 certified capital from certified investors.
18 (c) On December 31, 1998, or December 31, 2002, in the
19 case of applicants for Program Two, the department shall grant
20 or deny certification as a certified capital company. If the
21 department denies certification within the time period
22 specified, the department shall inform the applicant of the
23 grounds for the denial. If the department has not granted or
24 denied certification within the time specified, the
25 application shall be deemed approved. The department shall
26 approve the application if the department finds that:
27 1. The applicant satisfies the requirements of
28 paragraph (b).
29 2. No evidence exists that the applicant has committed
30 any act specified in paragraph (d).
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1 3. At least two of the principals have a minimum of 5
2 years of experience making venture capital investments out of
3 private equity funds, with not less than $20 million being
4 provided by third-party investors for investment in the early
5 stage of operating businesses. At least one full-time manager
6 or principal of the certified capital company who has such
7 experience must be primarily located in an office of the
8 certified capital company which is based in this state.
9 4. The applicant's proposed method of doing business
10 and raising certified capital as described in its offering
11 materials and other materials submitted to the department
12 conforms with the requirements of this section.
13 (d) The department may deny certification or decertify
14 a certified capital company if the grounds for decertification
15 are not removed or corrected within 90 days after the notice
16 of such grounds is received by the certified capital company.
17 The department may deny certification or decertify a certified
18 capital company if the certified capital company fails to
19 maintain common stock or paid in capital a net worth of at
20 least $500,000, or if the department determines that the
21 applicant, or any principal or director of the certified
22 capital company, has:
23 1. Violated any provision of this section;
24 2. Made a material misrepresentation or false
25 statement or concealed any essential or material fact from any
26 person during the application process or with respect to
27 information and reports required of certified capital
28 companies under this section;
29 3. Been convicted of, or entered a plea of guilty or
30 nolo contendere to, a crime against the laws of this state or
31 any other state or of the United States or any other country
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1 or government, including a fraudulent act in connection with
2 the operation of a certified capital company, or in connection
3 with the performance of fiduciary duties in another capacity;
4 4. Been adjudicated liable in a civil action on
5 grounds of fraud, embezzlement, misrepresentation, or deceit;
6 or
7 5.a. Been the subject of any decision, finding,
8 injunction, suspension, prohibition, revocation, denial,
9 judgment, or administrative order by any court of competent
10 jurisdiction, administrative law judge, or any state or
11 federal agency, national securities, commodities, or option
12 exchange, or national securities, commodities, or option
13 association, involving a material violation of any federal or
14 state securities or commodities law or any rule or regulation
15 adopted under such law, or any rule or regulation of any
16 national securities, commodities, or options exchange, or
17 national securities, commodities, or options association; or
18 b. Been the subject of any injunction or adverse
19 administrative order by a state or federal agency regulating
20 banking, insurance, finance or small loan companies, real
21 estate, mortgage brokers, or other related or similar
22 industries.
23 (e) The certified capital company shall file a copy of
24 its certification with the office by January 31, 1999.
25 (e)(f) Any offering material involving the sale of
26 securities of the certified capital company shall include the
27 following statement: "By authorizing the formation of a
28 certified capital company, the State of Florida does not
29 endorse the quality of management or the potential for
30 earnings of such company and is not liable for damages or
31 losses to a certified investor in the company. Use of the
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1 word 'certified' in an offering does not constitute a
2 recommendation or endorsement of the investment by the State
3 of Florida. Investments in a certified capital company prior
4 to the time such company is certified are not eligible for
5 premium tax credits. If applicable provisions of law are
6 violated, the state may require forfeiture of unused premium
7 tax credits and repayment of used premium tax credits by the
8 certified investor."
9 (f)1.(g) No insurance company or any affiliate of an
10 insurance company shall, directly or indirectly, own, whether
11 through rights, options, convertible interests, or otherwise,
12 15 percent or more of the voting equity interests of or manage
13 or control the direction of investments of a certified capital
14 company. This prohibition does not preclude a certified
15 investor, insurance company, or any other party from
16 exercising its legal rights and remedies, which may include
17 interim management of a certified capital company, if a
18 certified capital company is in default of its obligations
19 under law or its contractual obligations to such certified
20 investor, insurance company, or other party. Nothing in this
21 subparagraph shall limit an insurance company's ownership of
22 nonvoting equity interests in a certified capital company.
23 2. A certified capital company may obtain a guaranty,
24 indemnity, bond, insurance policy or other payment undertaking
25 in favor of all of the certified investors of the certified
26 capital company and its affiliates; provided that the entity
27 from which such guaranty, indemnity, bond, insurance policy or
28 other payment undertaking is obtained may not be a certified
29 investor of, or be affiliated with more than one certified
30 investor of, the certified capital company.
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1 (g)(h) On or before December 31 of each year, each
2 certified capital company shall pay to the department an
3 annual, nonrefundable renewal certification fee of $5,000. If
4 a certified capital company fails to pay its renewal fee by
5 the specified deadline, the company must pay a late fee of
6 $5,000 in addition to the renewal fee on or by January 31 of
7 each year in order to continue its certification in the
8 program. On or before April 30 of each year, each certified
9 capital company shall file audited financial statements with
10 the department. No renewal fees shall be required within 6
11 months after the date of initial certification.
12 (h)(i) The department shall administer and provide for
13 the enforcement of certification requirements for certified
14 capital companies as provided in this act. The department may
15 adopt any rules necessary to carry out its duties,
16 obligations, and powers related to certification, renewal of
17 certification, or decertification of certified capital
18 companies and may perform any other acts necessary for the
19 proper administration and enforcement of such duties,
20 obligations, and powers.
21 (i)(j) Decertification of a certified capital company
22 under this subsection does not affect the ability of certified
23 investors in such certified capital company from claiming
24 future premium tax credits earned as a result of an investment
25 in the certified capital company during the period in which it
26 was duly certified.
27 (5) INVESTMENTS BY CERTIFIED CAPITAL COMPANIES.--
28 (a) To remain certified, a certified capital company
29 must make qualified investments according to the following
30 schedule:
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1 1. At least 20 percent of its certified capital must
2 be invested in qualified investments by December 31, 2000, or
3 in the case of certified capital raised under Program Two, by
4 December 31, 2004.
5 2. At least 30 percent of its certified capital must
6 be invested in qualified investments by December 31, 2001, or
7 in the case of certified capital raised under Program Two, by
8 December 31, 2005.
9 3. At least 40 percent of its certified capital must
10 be invested in qualified investments by December 31, 2002, or
11 in the case of certified capital raised under Program Two, by
12 December 31, 2006.
13 4. At least 50 percent of its certified capital must
14 be invested in qualified investments by December 31, 2003, or
15 in the case of certified capital raised under Program Two, by
16 December 31, 2007. At least 50 percent of such qualified
17 investments must be invested in early stage technology
18 businesses.
19 (b) All capital not invested in qualified investments
20 by the certified capital company:
21 1. Must be held in a financial institution as defined
22 by s. 655.005(1)(h) or held by a broker-dealer registered
23 under s. 517.12, except as set forth in sub-subparagraph 3.g.
24 2. Must not be invested in a certified investor of the
25 certified capital company or any affiliate of the certified
26 investor of the certified capital company, except for an
27 investment permitted by sub-subparagraph 3.g., provided
28 repayment terms do not permit the obligor to directly or
29 indirectly manage or control the investment decisions of the
30 certified capital company.
31 3. Must be invested only in:
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1 a. Any United States Treasury obligations;
2 b. Certificates of deposit or other obligations,
3 maturing within 3 years after acquisition of such certificates
4 or obligations, issued by any financial institution or trust
5 company incorporated under the laws of the United States;
6 c. Marketable obligations, maturing within 10 5 years
7 or less after the acquisition of such obligations, which are
8 rated "A" or better by any nationally recognized credit rating
9 agency;
10 d. Mortgage-backed securities, with an average life of
11 5 years or less, after the acquisition of such securities,
12 which are rated "A" or better by any nationally recognized
13 credit rating agency;
14 e. Collateralized mortgage obligations and real estate
15 mortgage investment conduits that are direct obligations of an
16 agency of the United States Government; are not private-label
17 issues; are in book-entry form; and do not include the classes
18 of interest only, principal only, residual, or zero; or
19 f. Interests in money market funds, the portfolio of
20 which is limited to cash and obligations described in
21 sub-subparagraphs a.-d.; or
22 g. Obligations that are issued by an insurance company
23 that is not a certified investor of the certified capital
24 company making the investment, that has provided a guarantee
25 indemnity bond, insurance policy, or other payment undertaking
26 in favor of the certified capital company's certified
27 investors as permitted by subparagraph (3)(m)1. or an
28 affiliate of such insurance company as defined by subparagraph
29 (3)(a)3. that is not a certified investor of the certified
30 capital company making the investment, provided that such
31 obligations are:
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1 (I) Issued or guaranteed as to principal by an entity
2 whose senior debt is rated "AA" or better by Standard & Poor's
3 Ratings Group or such other nationally recognized credit
4 rating agency as the department may by rule determine.
5 (II) Not subordinated to other unsecured indebtedness
6 of the issuer or the guarantor.
7 (III) Invested by such issuing entity in accordance
8 with sub-subparagraphs 3.a.-f.
9 (IV) Readily convertible into cash within 5 business
10 days for the purpose of making a qualified investment unless
11 such obligations are held to provide a guarantee, indemnity
12 bond, insurance policy, or other payment undertaking in favor
13 of the certified capital company's certified investors as
14 permitted by subparagraph (3)(m)1.
15 (6) PREMIUM TAX CREDIT; AMOUNT; LIMITATIONS.--
16 (a) Any certified investor who makes an investment of
17 certified capital shall earn a vested credit against premium
18 tax liability equal to 100 percent of the certified capital
19 invested by the certified investor. Certified investors shall
20 be entitled to use no more than 10 percentage points of the
21 vested premium tax credit earned under a particular program,
22 including any carryforward credits from such program under
23 this act, per year beginning with premium tax filings for
24 calendar year 2000 for credits earned under Program One and
25 calendar year 2004 for credits earned under Program Two. Any
26 premium tax credits not used by certified investors in any
27 single year may be carried forward and applied against the
28 premium tax liabilities of such investors for subsequent
29 calendar years. The carryforward credit may be applied
30 against subsequent premium tax filings through calendar year
31 2017.
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1 (7) ANNUAL TAX CREDIT; MAXIMUM AMOUNT; ALLOCATION
2 PROCESS.--
3 (a) The total amount of tax credits which may be
4 allocated by the office shall not exceed $150 million with
5 respect to Program One and $150 with respect to Program Two.
6 The total amount of tax credits which may be used by certified
7 investors under this act shall not exceed $15 million annually
8 with respect to credits earned under Program One and $15
9 million annually with respect to credits earned under Program
10 Two.
11 (c) Each certified capital company must apply to the
12 office for an allocation of premium tax credits for potential
13 certified investors by March 15, 1999, or by March 15, 2003,
14 in the case of credits allocable under Program Two, on a form
15 developed by the office with the cooperation of the Department
16 of Revenue. The form shall be accompanied by an affidavit
17 from each potential certified investor confirming that the
18 potential certified investor has agreed to make an investment
19 of certified capital in a certified capital company up to a
20 specified amount, subject only to the receipt of a premium tax
21 credit allocation pursuant to this subsection. No certified
22 capital company shall submit premium tax allocation claims on
23 behalf of certified investors that in the aggregate would
24 exceed the total dollar amount appropriated by the Legislature
25 for the specific program. No allocation shall be made to the
26 potential investors of a certified capital company under
27 Program Two unless such certified capital company has filed
28 premium tax allocation claims that would result in an
29 allocation to the potential investors in such certified
30 capital company of not less than $15 million in the aggregate.
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1 (d) On or before April 1, 1999, or April 1, 2003, in
2 the case of Program Two, the office shall inform each
3 certified capital company of its share of total premium tax
4 credits available for allocation to each of its potential
5 investors.
6 (e) If a certified capital company does not receive
7 certified capital equaling the amount of premium tax credits
8 allocated to a potential certified investor for which the
9 investor filed a premium tax allocation claim within 10
10 business days after the investor received a notice of
11 allocation, the certified capital company shall notify the
12 office by overnight common carrier delivery service of the
13 company's failure to receive the capital. That portion of the
14 premium tax credits allocated to the certified capital company
15 shall be forfeited. If the office must make a pro rata
16 allocation under paragraph (f), the office shall reallocate
17 such available credits among the other certified capital
18 companies on the same pro rata basis as the initial
19 allocation.
20 (f) If the total amount of capital committed by all
21 certified investors to certified capital companies in premium
22 tax allocation claims under Program Two exceeds the aggregate
23 cap on the amount of credits that may be awarded under Program
24 Two, the premium tax credits that may be allowed to any one
25 certified investor under Program Two shall be allocated using
26 the following ratio:
27
28 A/B = X/>$150,000,000
29
30 where the letter "A" represents the total amount of certified
31 capital certified investors have agreed to invest in any one
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1 certified capital company under Program Two, the letter "B"
2 represents the aggregate amount of certified capital that all
3 certified investors have agreed to invest in all certified
4 capital companies under Program Two, the letter "X" is the
5 numerator and represents the total amount of premium tax
6 credits and certified capital that may be allocated to a
7 certified capital company on April 1, 2003 in calendar year
8 1999, and $150 million is the denominator and represents the
9 total amount of premium tax credits and certified capital that
10 may be allocated to all certified investors in calendar year
11 2003 1999. Any such premium tax credits are not first
12 available for utilization until annual filings are made in
13 2001 for calendar year 2000 in the case of Program One, and
14 until annual filings are made in 2005 for calendar year 2004
15 in the case of Program Two, and the tax credits may be used at
16 a rate not to exceed 10 percent annually per program.
17 (g) The maximum amount of certified capital for which
18 premium tax allocation claims may be filed on behalf of any
19 certified investor and its affiliates by one or more certified
20 capital companies may not exceed $15 million for Program One
21 and $22.5 million for Program Two.
22 (h) To the extent that less than $150 million in
23 certified capital is raised in connection with the procedure
24 set forth in paragraphs (c)-(g), the department may adopt
25 rules to allow a subsequent allocation of the remaining
26 premium tax credits authorized under this section.
27 (i) The office shall issue a certification letter for
28 each certified investor, showing the amount invested in the
29 certified capital company under each program. The applicable
30 certified capital company shall attest to the validity of the
31 certification letter.
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1 (8) ANNUAL TAX CREDIT; CLAIM PROCESS.--
2 (a) On an annual basis, on or before January December
3 31, each certified capital company shall file with the
4 department and the office, in consultation with the
5 department, on a form prescribed by the office, for each
6 calendar year:
7 1. The total dollar amount the certified capital
8 company received from certified investors, the identity of the
9 certified investors, and the amount received from each
10 certified investor during the immediately preceding calendar
11 year.
12 2. The total dollar amount the certified capital
13 company invested and the amount invested in qualified
14 businesses, together with the identity and location of those
15 businesses and the amount invested in each qualified business
16 during the immediately preceding calendar year.
17 3. For informational purposes only, the total number
18 of permanent, full-time jobs either created or retained by the
19 qualified business during the immediately preceding calendar
20 year, the average wage of the jobs created or retained, the
21 industry sectors in which the qualified businesses operate,
22 and any additional capital invested in qualified businesses
23 from sources other than certified capital companies.
24 (9) REQUIREMENT FOR 100 PERCENT INVESTMENT; STATE
25 PARTICIPATION.--
26 (a) A certified capital company may make qualified
27 distributions at any time. In order to make a distribution to
28 its equity holders, other than a qualified distribution from
29 funds related to a particular program, a certified capital
30 company must have invested an amount cumulatively equal to 100
31 percent of its certified capital raised under such program in
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1 qualified investments. Payments to debt holders of a certified
2 capital company, however, may be made without restriction with
3 respect to repayments of principal and interest on
4 indebtedness owed to them by a certified capital company,
5 including indebtedness of the certified capital company on
6 which certified investors earned premium tax credits. A debt
7 holder that is also a certified investor or equity holder of a
8 certified capital company may receive payments with respect to
9 such debt without restrictions.
10 (b) Cumulative distributions from a certified capital
11 company from funds related to a particular program to its
12 certified investors and equity holders under such program,
13 other than qualified distributions, in excess of the certified
14 capital company's original certified capital raised under such
15 program and any additional capital contributions to the
16 certified capital company with respect to such program may be
17 audited by a nationally recognized certified public accounting
18 firm acceptable to the department, at the expense of the
19 certified capital company, if the department directs such
20 audit be conducted. The audit shall determine whether
21 aggregate cumulative distributions from the funds related to a
22 particular program made by the certified capital company to
23 all certified investors and equity holders under such program,
24 other than qualified distributions, have equaled the sum of
25 the certified capital company's original certified capital
26 raised under such program and any additional capital
27 contributions to the certified capital company with respect to
28 such program. If at the time of any such distribution made by
29 the certified capital company, such distribution taken
30 together with all other such distributions from the funds
31 related to such program made by the certified capital company,
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1 other than qualified distributions, exceeds in the aggregate
2 the sum of the certified capital company's original certified
3 capital raised under such program and any additional capital
4 contributions to the certified capital company with respect to
5 such program, as determined by the audit, the certified
6 capital company shall pay to the Department of Revenue 10
7 percent of the portion of such distribution in excess of such
8 amount. Payments to the Department of Revenue by a certified
9 capital company pursuant to this paragraph shall not exceed
10 the aggregate amount of tax credits used by all certified
11 investors in such certified capital company for such program.
12 (10) DECERTIFICATION.--
13 (f) Decertification of a certified capital company for
14 failure to meet all requirements for continued certification
15 under paragraph (5)(a) with respect to the certified capital
16 raised under a particular program may cause the recapture of
17 premium tax credits previously claimed by such company under
18 such program and the forfeiture of future premium tax credits
19 to be claimed by certified investors under such program with
20 respect to such certified capital company, as follows:
21 1. Decertification of a certified capital company
22 within 3 years after its certification date with respect to a
23 particular program shall cause the recapture of all premium
24 tax credits earned under such program and previously claimed
25 by such company and the forfeiture of all future premium tax
26 credits earned under such program which are to be claimed by
27 certified investors with respect to such company.
28 2. When a certified capital company meets all
29 requirements for continued certification under subparagraph
30 (5)(a)1. with respect to certified capital raised under a
31 particular program and subsequently fails to meet the
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1 requirements for continued certification under the provisions
2 of subparagraph (5)(a)2. with respect to certified capital
3 raised under such program, those premium tax credits earned
4 under such program which have been or will be taken by
5 certified investors within 3 years after the certification
6 date of the certified capital company with respect to such
7 program shall not be subject to recapture or forfeiture;
8 however, all premium tax credits earned under such program
9 that have been or will be taken by certified investors after
10 the third anniversary of the certification date of the
11 certified capital company for such program shall be subject to
12 recapture or forfeiture.
13 3. When a certified capital company meets all
14 requirements for continued certification under subparagraphs
15 (5)(a)1. and 2. with respect to a particular program and
16 subsequently fails to meet the requirements for continued
17 certification under the subparagraph (5)(a)3. with respect to
18 such program, those premium tax credits earned under such
19 program which have been or will be taken by certified
20 investors within 4 years after the certification date of the
21 certified capital company with respect to such program shall
22 not be subject to recapture or forfeiture; however, all
23 premium tax credits earned under such program that have been
24 or will be taken by certified investors after the fourth
25 anniversary of the certification date of the certified capital
26 company with respect to such program shall be subject to
27 recapture and forfeiture.
28 4. If a certified capital company has met all
29 requirements for continued certification under paragraph
30 (5)(a) with respect to certified capital raised under a
31 particular program, but such company is subsequently
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1 decertified, those premium tax credits earned under such
2 program which have been or will be taken by certified
3 investors within 5 years after the certification date of such
4 company with respect to such program shall not be subject to
5 recapture or forfeiture. Those premium tax credits earned
6 under such program to be taken subsequent to the 5th year of
7 certification with respect to such program shall be subject to
8 forfeiture only if the certified capital company is
9 decertified within 5 years after its certification date with
10 respect to such program.
11 5. If a certified capital company has invested an
12 amount cumulatively equal to 100 percent of its certified
13 capital raised under a particular program in qualified
14 investments, all premium tax credits claimed or to be claimed
15 by its certified investors under such program shall not be
16 subject to recapture or forfeiture.
17 (11) TRANSFERABILITY.--The premium tax credit
18 established pursuant to this act may be transferred or sold.
19 The Department of Revenue shall adopt rules to facilitate the
20 transfer or sale of such premium tax credits. A transfer or
21 sale shall not affect the time schedule for taking the premium
22 tax credit as provided in this act. Any premium tax credits
23 recaptured shall be the liability of the taxpayer who actually
24 claimed the premium tax credits. The claim of a transferee of
25 a certified investor's unused premium tax credit shall be
26 permitted in the same manner and subject to the same
27 provisions and limitations of this act as the original
28 certified investor. The term "transferee" means any person
29 who:
30 (a) Through the voluntary sale, assignment, or other
31 transfer of the business or control of the business of the
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1 certified investor, including the sale or other transfer of
2 stock or assets by merger, consolidation, or dissolution,
3 succeeds to all or substantially all of the business and
4 property of the certified investor;
5 (b) Becomes by operation of law or otherwise the
6 parent company of the certified investor;
7 (c) Directly or indirectly owns, whether through
8 rights, options, convertible interests, or otherwise,
9 controls, or holds power to vote 10 percent or more of the
10 outstanding voting securities or other ownership interest of
11 the certified investor;
12 (d) Is a subsidiary of the certified investor or 10
13 percent or more of whose outstanding voting securities or
14 other ownership interest are directly or indirectly owned,
15 whether through rights, options, convertible interests, or
16 otherwise, by the certified investor; or
17 (e) Directly or indirectly controls, is controlled by,
18 or is under the common control with the certified investor.
19 Section 2. Except as otherwise specifically provided
20 in this act, the provisions of this act shall apply only to
21 "Program Two" as defined in s. 288.99(3), Florida Statutes, as
22 amended by this act.
23 Section 3. This act shall take effect July 1, 2002.
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