HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
CHAMBER ACTION
Senate House
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5 ORIGINAL STAMP BELOW
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11 Representative(s) Mack and Alexander offered the following:
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13 Amendment to Amendment (955409) (with title amendment)
14 On page 40, between lines 1 and 2,
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16 insert:
17 Section 20. Effective July 1, 2002, subsections (3)
18 and (4), paragraph (b) of subsection (5), paragraph (a) of
19 subsection (6), paragraphs (a), (c), (d), (e), (f), (g), and
20 (h) of subsection (7), paragraph (a) of subsection (8),
21 paragraphs (a) and (b) of subsection (9), paragraphs (b) and
22 (f) of subsection (10), and subsection (11) of section 288.99,
23 Florida Statutes, are amended, paragraph (i) is added to
24 subsection (7) of that section, and subsection (17) is added
25 to that section, to read:
26 288.99 Certified Capital Company Act.--
27 (3) DEFINITIONS.--As used in this section, the term:
28 (a) "Affiliate of an insurance company" means:
29 1. Any person directly or indirectly beneficially
30 owning, whether through rights, options, convertible
31 interests, or otherwise, controlling, or holding power to vote
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 15 10 percent or more of the outstanding voting securities or
2 other voting ownership interests of the insurance company;
3 2. Any person 15 10 percent or more of whose
4 outstanding voting securities or other voting ownership
5 interest is directly or indirectly beneficially owned, whether
6 through rights, options, convertible interests, or otherwise,
7 controlled, or held with power to vote by the insurance
8 company;
9 3. Any person directly or indirectly controlling,
10 controlled by, or under common control with the insurance
11 company;
12 4. A partnership in which the insurance company is a
13 general partner; or
14 5. Any person who is a principal, director, employee,
15 or agent of the insurance company or an immediate family
16 member of the principal, director, employee, or agent.
17 (b) "Certified capital" means an investment of cash by
18 a certified investor in a certified capital company which
19 fully funds the purchase price of either or both its equity
20 interest in the certified capital company or a qualified debt
21 instrument issued by the certified capital company.
22 (c) "Certified capital company" means a corporation,
23 partnership, or limited liability company which:
24 1. Is certified by the department in accordance with
25 this act.
26 2. Receives investments of certified capital from two
27 or more unaffiliated certified investors.
28 3. Makes qualified investments as its primary
29 activity.
30 (d) "Certified investor" means any insurance company
31 subject to premium tax liability pursuant to s. 624.509 that
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 invests contributes certified capital.
2 (e) "Department" means the Department of Financial
3 Services Banking and Finance.
4 (f) "Director" means the director of the Office of
5 Tourism, Trade, and Economic Development.
6 (g) "Early stage technology business" means a
7 qualified business that is:
8 1. Involved, at the time of the certified capital
9 company's initial investment in such business, in activities
10 related to developing initial product or service offerings,
11 such as prototype development or the establishment of initial
12 production or service processes;. The term includes a
13 qualified business that is
14 2. Less than 2 years old and has, together with its
15 affiliates, less than $3 million in annual revenues for the
16 fiscal year immediately preceding the initial investment by
17 the certified capital company on a consolidated basis, as
18 determined in accordance with generally accepted accounting
19 principles;. The term also includes
20 3. The Florida Black Business Investment Board;,
21 4. Any entity that is majority owned by the Florida
22 Black Business Investment Board;, or
23 5. Any entity in which the Florida Black Business
24 Investment Board holds a majority voting interest on the board
25 of directors.
26 (h) "Office" means the Office of Tourism, Trade, and
27 Economic Development.
28 (i) "Premium tax liability" means any liability
29 incurred by an insurance company under the provisions of s.
30 624.509 and s. 624.5091.
31 (j) "Principal" means an executive officer of a
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 corporation, partner of a partnership, manager of a limited
2 liability company, or any other person with equivalent
3 executive functions.
4 (k) "Qualified business" means the Digital Divide
5 Trust Fund established under the State of Florida Technology
6 Office or a business that meets the following conditions as
7 evidenced by documentation required by department rule:
8 1. The business is headquartered in this state and its
9 principal business operations are located in this state or at
10 least 75 percent of the employees are employed in this state.
11 2. At the time a certified capital company makes an
12 initial investment in a business, the business is a small
13 business concern as defined in 13 C.F.R. s. 121.301(c)
14 121.201, "Size Standards Used to Define Small Business
15 Concerns" of the United States Small Business Administration
16 which is involved in manufacturing, processing or assembling
17 products, conducting research and development, or providing
18 services.
19 3. At the time a certified capital company makes an
20 initial investment in a business, the business certifies in an
21 affidavit that:
22 a. The business is unable to obtain conventional
23 financing, which means that the business has failed in an
24 attempt to obtain funding for a loan from a bank or other
25 commercial lender or that the business cannot reasonably be
26 expected to qualify for such financing under the standards of
27 commercial lending;
28 b. The business plan for the business projects that
29 the business is reasonably expected to achieve in excess of
30 $25 million in sales revenue within 5 years after the initial
31 investment, or the business is located in a designated Front
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 Porch community, enterprise zone, urban high crime area, rural
2 job tax credit county, or nationally recognized historic
3 district;
4 c. The business will maintain its headquarters in this
5 state for the next 10 years and any new manufacturing facility
6 financed by a qualified investment will remain in this state
7 for the next 10 years, or the business is located in a
8 designated Front Porch community, enterprise zone, urban high
9 crime area, rural job tax credit county, or nationally
10 recognized historic district; and
11 d. The business has fewer than 200 employees and at
12 least 75 percent of the employees are employed in this state.
13 For purposes of this subsection, the term "qualified business"
14 also includes the Florida Black Business Investment Board, any
15 entity majority owned by the Florida Black Business Investment
16 Board, or any entity in which the Florida Black Business
17 Investment Board holds a majority voting interest on the board
18 of directors.
19 4. The term does not include:
20 a. Any business predominantly engaged in retail sales,
21 real estate development, insurance, banking, lending, or oil
22 and gas exploration.
23 b. Any business predominantly engaged in professional
24 services provided by accountants, lawyers, or physicians.
25 c. Any company that has no historical revenues and
26 either has no specific business plan or purpose or has
27 indicated that its business plan is solely to engage in a
28 merger or acquisition with any unidentified company or other
29 entity.
30 d. Any company that has a strategic plan to grow
31 through the acquisition of firms with substantially similar
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 business which would result in the planned net loss of
2 Florida-based jobs over a 12-month period after the
3 acquisition as determined by the department.
4
5 A business predominantly engaged in retail sales, real estate
6 development, insurance, banking, lending, oil and gas
7 exploration, or engaged in professional services provided by
8 accountants, lawyers, or physicians does not constitute a
9 qualified business.
10 (l) "Qualified debt instrument" means a debt
11 instrument, or a hybrid of a debt instrument, issued by a
12 certified capital company, at par value or a premium, with an
13 original maturity date of at least 5 years after the date of
14 issuance, a repayment schedule which is no faster than a level
15 principal amortization over a 5-year period, and interest,
16 distribution, or payment features which are not related to the
17 profitability of the certified capital company or the
18 performance of the certified capital company's investment
19 portfolio.
20 (m) "Qualified distribution" means any distribution or
21 payment by to equity holders of a certified capital company
22 for:
23 1. Reasonable costs and expenses, including, but not
24 limited to, professional fees, of forming and, syndicating the
25 certified capital company, if no such costs or expenses are
26 paid to a certified investor, except as provided in
27 subparagraph (4)(f)2., and the total cash, cash equivalents,
28 and other current assets permitted by sub-subparagraph
29 (5)(b)3.g. that can be converted into cash within 5 business
30 days available to the certified capital company at the time of
31 receipt of certified capital from certified investors, after
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 deducting the costs and expenses of forming and syndicating
2 the certified capital company, including any payments made
3 over time for obligations incurred at the time of receipt of
4 certified capital but excluding other future qualified
5 distributions and payments made under paragraph (9)(a), are an
6 amount equal to or greater than 50 percent of the total
7 certified capital allocated to the certified capital pursuant
8 to subsection (7);,
9 2. Reasonable costs of managing, and operating the
10 certified capital company, not exceeding 5 percent of the
11 certified capital in any single year, including an annual
12 management fee in an amount that does not exceed 2.5 percent
13 of the certified capital of the certified capital company;,
14 plus
15 3. Reasonable and necessary fees in accordance with
16 industry custom for professional services, including, but not
17 limited to, legal and accounting services, related to the
18 operation of the certified capital company; or.
19 4.2. Any projected increase in federal or state taxes,
20 including penalties and interest related to state and federal
21 income taxes, of the equity owners of a certified capital
22 company resulting from the earnings or other tax liability of
23 the certified capital company to the extent that the increase
24 is related to the ownership, management, or operation of a
25 certified capital company.
26 (n)1. "Qualified investment" means the investment of
27 cash by a certified capital company in a qualified business
28 for the purchase of any debt, equity, or hybrid security of
29 any nature and description whatsoever, including a debt
30 instrument or security that which has the characteristics of
31 debt but which provides for conversion into equity or equity
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 participation instruments such as options or warrants.
2 2. The term does not include:
3 a. Any investment made after the effective date of
4 this act the contractual terms of which require the repayment
5 of any portion of the principal in instances, other than
6 default as determined by department rule, within 12 months
7 following the initial investment by the certified capital
8 company unless such investment has a repayment schedule no
9 faster than a level principal amortization of at least 2
10 years;
11 b. Any "follow-on" or "add-on" investment except for
12 the amount by which the new investment is in addition to the
13 amount of the certified capital company's initial investment
14 returned to it other than in the form of interest, dividends,
15 or other types of profit participation or distributions; or
16 c. Any investment in a qualified business or affiliate
17 of a qualified business that exceeds 15 percent of certified
18 capital.
19 (o) "Program One" means the $150 million in premium
20 tax credits issued under this section in 1999, the allocation
21 of such credits under this section, and the regulation of
22 certified capital companies and investments made by them
23 hereunder.
24 (p) "Program Two" means the $150 million in premium
25 tax credits to be issued under subsection (17), the allocation
26 of such credits under this section, and the regulation of
27 certified capital companies and investments made by them
28 hereunder.
29 (4) CERTIFICATION; GROUNDS FOR DENIAL OR
30 DECERTIFICATION.--
31 (a) To operate as a certified capital company, a
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 corporation, partnership, or limited liability company must be
2 certified by the department pursuant to this act.
3 (b) An applicant for certification as a certified
4 capital company must file a verified application with the
5 department on or before December 1, 1998, or a date determined
6 in rules adopted pursuant to subsection (17) in the case of
7 applicants for Program Two, in a form which the department may
8 prescribe by rule. The applicant shall submit a nonrefundable
9 application fee of $7,500 to the department. The applicant
10 shall provide:
11 1. The name of the applicant and the address of its
12 principal office and each office in this state.
13 2. The applicant's form and place of organization and
14 the relevant organizational documents, bylaws, and amendments
15 or restatements of such documents, bylaws, or amendments.
16 3. Evidence from the Department of State that the
17 applicant is registered with the Department of State as
18 required by law, maintains an active status with the
19 Department of State, and has not been dissolved or had its
20 registration revoked, canceled, or withdrawn.
21 4. The applicant's proposed method of doing business.
22 5. The applicant's financial condition and history,
23 including an audit report on the financial statements prepared
24 in accordance with generally accepted accounting principles.
25 The applicant must have, at the time of application for
26 certification, an equity capitalization of at least $500,000
27 in the form of cash or cash equivalents. The applicant must
28 maintain this equity capitalization until the applicant
29 receives an allocation of certified capital pursuant to this
30 act showing net capital of not less than $500,000 within 90
31 days after the date the application is submitted to the
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 department. If the date of the application is more than 90
2 days after preparation of the applicant's fiscal year-end
3 financial statements, the applicant may file financial
4 statements reviewed by an independent certified public
5 accountant for the period subsequent to the audit report,
6 together with the audited financial statement for the most
7 recent fiscal year. If the applicant has been in business
8 less than 12 months, and has not prepared an audited financial
9 statement, the applicant may file a financial statement
10 reviewed by an independent certified public accountant.
11 6. Copies of any offering materials used or proposed
12 to be used by the applicant in soliciting investments of
13 certified capital from certified investors.
14 (c) Within 60 days after receipt of a verified
15 application On December 31, 1998, the department shall grant
16 or deny certification as a certified capital company. If the
17 department denies certification within the time period
18 specified, the department shall inform the applicant of the
19 grounds for the denial. If the department has not granted or
20 denied certification within the time specified, the
21 application shall be deemed approved. The department shall
22 approve the application if the department finds that:
23 1. The applicant satisfies the requirements of
24 paragraph (b).
25 2. No evidence exists that the applicant has committed
26 any act specified in paragraph (d).
27 3. At least two of the principals have a minimum of 5
28 years of experience making venture capital investments out of
29 private equity funds, with not less than $20 million being
30 provided by third-party investors for investment in the early
31 stage of operating businesses. At least one full-time manager
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 or principal of the certified capital company who has such
2 experience must be primarily located in an office of the
3 certified capital company which is based in this state.
4 4. The applicant's proposed method of doing business
5 and raising certified capital as described in its offering
6 materials and other materials submitted to the department
7 conforms with the requirements of this section.
8 (d) The department may deny certification or decertify
9 a certified capital company if the grounds for decertification
10 are not removed or corrected within 90 days after the notice
11 of such grounds is received by the certified capital company.
12 The department may deny certification or decertify a certified
13 capital company if the certified capital company fails to
14 maintain common stock or paid in capital a net worth of at
15 least $500,000, or if the department determines that the
16 applicant, or any principal or director of the certified
17 capital company, has:
18 1. Violated any provision of this section;
19 2. Made a material misrepresentation or false
20 statement or concealed any essential or material fact from any
21 person during the application process or with respect to
22 information and reports required of certified capital
23 companies under this section;
24 3. Been convicted of, or entered a plea of guilty or
25 nolo contendere to, a crime against the laws of this state or
26 any other state or of the United States or any other country
27 or government, including a fraudulent act in connection with
28 the operation of a certified capital company, or in connection
29 with the performance of fiduciary duties in another capacity;
30 4. Been adjudicated liable in a civil action on
31 grounds of fraud, embezzlement, misrepresentation, or deceit;
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 or
2 5.a. Been the subject of any decision, finding,
3 injunction, suspension, prohibition, revocation, denial,
4 judgment, or administrative order by any court of competent
5 jurisdiction, administrative law judge, or any state or
6 federal agency, national securities, commodities, or option
7 exchange, or national securities, commodities, or option
8 association, involving a material violation of any federal or
9 state securities or commodities law or any rule or regulation
10 adopted under such law, or any rule or regulation of any
11 national securities, commodities, or options exchange, or
12 national securities, commodities, or options association; or
13 b. Been the subject of any injunction or adverse
14 administrative order by a state or federal agency regulating
15 banking, insurance, finance or small loan companies, real
16 estate, mortgage brokers, or other related or similar
17 industries.
18 (e) The certified capital company shall file a copy of
19 its certification with the office by January 31, 1999.
20 (e)(f) Any offering material involving the sale of
21 securities of the certified capital company shall include the
22 following statement: "By authorizing the formation of a
23 certified capital company, the State of Florida does not
24 endorse the quality of management or the potential for
25 earnings of such company and is not liable for damages or
26 losses to a certified investor in the company. Use of the
27 word 'certified' in an offering does not constitute a
28 recommendation or endorsement of the investment by the State
29 of Florida. Investments in a certified capital company prior
30 to the time such company is certified are not eligible for
31 premium tax credits. If applicable provisions of law are
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 violated, the state may require forfeiture of unused premium
2 tax credits and repayment of used premium tax credits by the
3 certified investor."
4 (f)1.(g) No insurance company or any affiliate of an
5 insurance company shall, directly or indirectly, own, whether
6 through rights, options, convertible interests, or otherwise,
7 15 percent or more of the voting equity interests of or manage
8 or control the direction of investments of a certified capital
9 company. This prohibition does not preclude a certified
10 investor, insurance company, or any other party from
11 exercising its legal rights and remedies, which may include
12 interim management of a certified capital company, if a
13 certified capital company is in default of its obligations
14 under law or its contractual obligations to such certified
15 investor, insurance company, or other party. Nothing in this
16 subparagraph shall limit an insurance company's ownership of
17 nonvoting equity interests in a certified capital company.
18 2. A certified capital company may obtain a guaranty,
19 indemnity, bond, insurance policy or other payment undertaking
20 in favor of all of the certified investors of the certified
21 capital company and its affiliates; provided that the entity
22 from which such guaranty, indemnity, bond, insurance policy or
23 other payment undertaking is obtained may not be a certified
24 investor of, or be affiliated with more than one certified
25 investor of, the certified capital company.
26 (g)(h) On or before December 31 of each year, each
27 certified capital company shall pay to the department an
28 annual, nonrefundable renewal certification fee of $5,000. If
29 a certified capital company fails to pay its renewal fee by
30 the specified deadline, the company must pay a late fee of
31 $5,000 in addition to the renewal fee on or by January 31 of
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 each year in order to continue its certification in the
2 program. On or before April 30 of each year, each certified
3 capital company shall file audited financial statements with
4 the department. No renewal fees shall be required within 6
5 months after the date of initial certification.
6 (h)(i) The department shall administer and provide for
7 the enforcement of certification requirements for certified
8 capital companies as provided in this act. The department may
9 adopt any rules necessary to carry out its duties,
10 obligations, and powers related to certification, renewal of
11 certification, or decertification of certified capital
12 companies and may perform any other acts necessary for the
13 proper administration and enforcement of such duties,
14 obligations, and powers.
15 (i)(j) Decertification of a certified capital company
16 under this subsection does not affect the ability of certified
17 investors in such certified capital company from claiming
18 future premium tax credits earned as a result of an investment
19 in the certified capital company during the period in which it
20 was duly certified.
21 (5) INVESTMENTS BY CERTIFIED CAPITAL COMPANIES.--
22 (b) All capital not invested in qualified investments
23 by the certified capital company:
24 1. Must be held in a financial institution as defined
25 by s. 655.005(1)(h) or held by a broker-dealer registered
26 under s. 517.12, except as set forth in sub-subparagraph 3.g.
27 2. Must not be invested in a certified investor of the
28 certified capital company or any affiliate of the certified
29 investor of the certified capital company, except for an
30 investment permitted by sub-subparagraph 3.g., provided
31 repayment terms do not permit the obligor to directly or
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 indirectly manage or control the investment decisions of the
2 certified capital company.
3 3. Must be invested only in:
4 a. Any United States Treasury obligations;
5 b. Certificates of deposit or other obligations,
6 maturing within 3 years after acquisition of such certificates
7 or obligations, issued by any financial institution or trust
8 company incorporated under the laws of the United States;
9 c. Marketable obligations, maturing within 10 5 years
10 or less after the acquisition of such obligations, which are
11 rated "A" or better by any nationally recognized credit rating
12 agency;
13 d. Mortgage-backed securities, with an average life of
14 5 years or less, after the acquisition of such securities,
15 which are rated "A" or better by any nationally recognized
16 credit rating agency;
17 e. Collateralized mortgage obligations and real estate
18 mortgage investment conduits that are direct obligations of an
19 agency of the United States Government; are not private-label
20 issues; are in book-entry form; and do not include the classes
21 of interest only, principal only, residual, or zero; or
22 f. Interests in money market funds, the portfolio of
23 which is limited to cash and obligations described in
24 sub-subparagraphs a.-d.; or
25 g. Obligations that are issued by an insurance company
26 that is not a certified investor of the certified capital
27 company making the investment, that has provided a guarantee
28 indemnity bond, insurance policy, or other payment undertaking
29 in favor of the certified capital company's certified
30 investors as permitted by subparagraph (3)(m)1. or an
31 affiliate of such insurance company as defined by subparagraph
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 (3)(a)3. that is not a certified investor of the certified
2 capital company making the investment, provided that such
3 obligations are:
4 (I) Issued or guaranteed as to principal by an entity
5 whose senior debt is rated "AA" or better by Standard & Poor's
6 Ratings Group or such other nationally recognized credit
7 rating agency as the department may by rule determine.
8 (II) Not subordinated to other unsecured indebtedness
9 of the issuer or the guarantor.
10 (III) Invested by such issuing entity in accordance
11 with sub-subparagraphs 3.a.-f.
12 (IV) Readily convertible into cash within 5 business
13 days for the purpose of making a qualified investment unless
14 such obligations are held to provide a guarantee, indemnity
15 bond, insurance policy, or other payment undertaking in favor
16 of the certified capital company's certified investors as
17 permitted by subparagraph (3)(m)1.
18 (6) PREMIUM TAX CREDIT; AMOUNT; LIMITATIONS.--
19 (a) Any certified investor who makes an investment of
20 certified capital shall earn a vested credit against premium
21 tax liability equal to 100 percent of the certified capital
22 invested by the certified investor. Certified investors shall
23 be entitled to use no more than 10 percentage points of the
24 vested premium tax credit earned under a particular program,
25 including any carryforward credits from such program under
26 this act, per year beginning with premium tax filings for
27 calendar year 2000 for credits earned under Program One. Any
28 premium tax credits not used by certified investors in any
29 single year may be carried forward and applied against the
30 premium tax liabilities of such investors for subsequent
31 calendar years. The carryforward credit may be applied
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 against subsequent premium tax filings through calendar year
2 2017.
3 (7) ANNUAL TAX CREDIT; MAXIMUM AMOUNT; ALLOCATION
4 PROCESS.--
5 (a) The total amount of tax credits which may be
6 allocated by the office shall not exceed $150 million with
7 respect to Program One and $150 million with respect to
8 Program Two. The total amount of tax credits which may be used
9 by certified investors under this act shall not exceed $15
10 million annually with respect to credits earned under Program
11 One and $15 million annually with respect to credits earned
12 under Program Two.
13 (c) Each certified capital company must apply to the
14 office for an allocation of premium tax credits for potential
15 certified investors by March 15, 1999, on a form developed by
16 the office with the cooperation of the Department of Revenue.
17 The form shall be accompanied by an affidavit from each
18 potential certified investor confirming that the potential
19 certified investor has agreed to make an investment of
20 certified capital in a certified capital company up to a
21 specified amount, subject only to the receipt of a premium tax
22 credit allocation pursuant to this subsection. No certified
23 capital company shall submit premium tax allocation claims on
24 behalf of certified investors that in the aggregate would
25 exceed the total dollar amount appropriated by the Legislature
26 for the specific program. No allocation shall be made to the
27 potential investors of a certified capital company under
28 Program Two unless such certified capital company has filed
29 premium tax allocation claims that would result in an
30 allocation to the potential investors in such certified
31 capital company of not less than $15 million in the aggregate.
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 (d) On or before April 1, 1999, The office shall
2 inform each certified capital company of its share of total
3 premium tax credits available for allocation to each of its
4 potential investors.
5 (e) If a certified capital company does not receive
6 certified capital equaling the amount of premium tax credits
7 allocated to a potential certified investor for which the
8 investor filed a premium tax allocation claim within 10
9 business days after the investor received a notice of
10 allocation, the certified capital company shall notify the
11 office by overnight common carrier delivery service of the
12 company's failure to receive the capital. That portion of the
13 premium tax credits allocated to the certified capital company
14 shall be forfeited. If the office must make a pro rata
15 allocation under paragraph (f), the office shall reallocate
16 such available credits among the other certified capital
17 companies on the same pro rata basis as the initial
18 allocation.
19 (f) If the total amount of capital committed by all
20 certified investors to certified capital companies in premium
21 tax allocation claims under Program Two exceeds the aggregate
22 cap on the amount of credits that may be awarded under Program
23 Two, the premium tax credits that may be allowed to any one
24 certified investor under Program Two shall be allocated using
25 the following ratio:
26
27 A/B = X/>$150,000,000
28
29 where the letter "A" represents the total amount of certified
30 capital certified investors have agreed to invest in any one
31 certified capital company under Program Two, the letter "B"
18
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 represents the aggregate amount of certified capital that all
2 certified investors have agreed to invest in all certified
3 capital companies under Program Two, the letter "X" is the
4 numerator and represents the total amount of premium tax
5 credits and certified capital that may be allocated to a
6 certified capital company on a date determined in rules
7 adopted by the department pursuant to subsection (17) in
8 calendar year 1999, and $150 million is the denominator and
9 represents the total amount of premium tax credits and
10 certified capital that may be allocated to all certified
11 investors in calendar year 2003 1999. Any such premium tax
12 credits are not first available for utilization until annual
13 filings are made in 2001 for calendar year 2000 in the case of
14 Program One, and the tax credits may be used at a rate not to
15 exceed 10 percent annually per program.
16 (g) The maximum amount of certified capital for which
17 premium tax allocation claims may be filed on behalf of any
18 certified investor and its affiliates by one or more certified
19 capital companies may not exceed $15 million for Program One
20 and $22.5 million for Program Two.
21 (h) To the extent that less than $150 million in
22 certified capital is raised in connection with the procedure
23 set forth in paragraphs (c)-(g), the department may adopt
24 rules to allow a subsequent allocation of the remaining
25 premium tax credits authorized under this section.
26 (i) The office shall issue a certification letter for
27 each certified investor, showing the amount invested in the
28 certified capital company under each program. The applicable
29 certified capital company shall attest to the validity of the
30 certification letter.
31 (8) ANNUAL TAX CREDIT; CLAIM PROCESS.--
19
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 (a) On an annual basis, on or before January December
2 31, each certified capital company shall file with the
3 department and the office, in consultation with the
4 department, on a form prescribed by the office, for each
5 calendar year:
6 1. The total dollar amount the certified capital
7 company received from certified investors, the identity of the
8 certified investors, and the amount received from each
9 certified investor during the immediately preceding calendar
10 year.
11 2. The total dollar amount the certified capital
12 company invested and the amount invested in qualified
13 businesses, together with the identity and location of those
14 businesses and the amount invested in each qualified business
15 during the immediately preceding calendar year.
16 3. For informational purposes only, the total number
17 of permanent, full-time jobs either created or retained by the
18 qualified business during the immediately preceding calendar
19 year, the average wage of the jobs created or retained, the
20 industry sectors in which the qualified businesses operate,
21 and any additional capital invested in qualified businesses
22 from sources other than certified capital companies.
23 (9) REQUIREMENT FOR 100 PERCENT INVESTMENT; STATE
24 PARTICIPATION.--
25 (a) A certified capital company may make qualified
26 distributions at any time. In order to make a distribution to
27 its equity holders, other than a qualified distribution from
28 funds related to a particular program, a certified capital
29 company must have invested an amount cumulatively equal to 100
30 percent of its certified capital raised under such program in
31 qualified investments. Payments to debt holders of a certified
20
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 capital company, however, may be made without restriction with
2 respect to repayments of principal and interest on
3 indebtedness owed to them by a certified capital company,
4 including indebtedness of the certified capital company on
5 which certified investors earned premium tax credits. A debt
6 holder that is also a certified investor or equity holder of a
7 certified capital company may receive payments with respect to
8 such debt without restrictions.
9 (b) Cumulative distributions from a certified capital
10 company from funds related to a particular program to its
11 certified investors and equity holders under such program,
12 other than qualified distributions, in excess of the certified
13 capital company's original certified capital raised under such
14 program and any additional capital contributions to the
15 certified capital company with respect to such program may be
16 audited by a nationally recognized certified public accounting
17 firm acceptable to the department, at the expense of the
18 certified capital company, if the department directs such
19 audit be conducted. The audit shall determine whether
20 aggregate cumulative distributions from the funds related to a
21 particular program made by the certified capital company to
22 all certified investors and equity holders under such program,
23 other than qualified distributions, have equaled the sum of
24 the certified capital company's original certified capital
25 raised under such program and any additional capital
26 contributions to the certified capital company with respect to
27 such program. If at the time of any such distribution made by
28 the certified capital company, such distribution taken
29 together with all other such distributions from the funds
30 related to such program made by the certified capital company,
31 other than qualified distributions, exceeds in the aggregate
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 the sum of the certified capital company's original certified
2 capital raised under such program and any additional capital
3 contributions to the certified capital company with respect to
4 such program, as determined by the audit, the certified
5 capital company shall pay to the Department of Revenue 10
6 percent of the portion of such distribution in excess of such
7 amount. Payments to the Department of Revenue by a certified
8 capital company pursuant to this paragraph shall not exceed
9 the aggregate amount of tax credits used by all certified
10 investors in such certified capital company for such program.
11 (10) DECERTIFICATION.--
12 (b) Nothing contained in this subsection shall be
13 construed to limit the department's Comptroller's authority to
14 conduct audits of certified capital companies as deemed
15 appropriate and necessary.
16 (f) Decertification of a certified capital company for
17 failure to meet all requirements for continued certification
18 under paragraph (5)(a) with respect to the certified capital
19 raised under a particular program may cause the recapture of
20 premium tax credits previously claimed by such company under
21 such program and the forfeiture of future premium tax credits
22 to be claimed by certified investors under such program with
23 respect to such certified capital company, as follows:
24 1. Decertification of a certified capital company
25 within 3 years after its certification date with respect to a
26 particular program shall cause the recapture of all premium
27 tax credits earned under such program and previously claimed
28 by such company and the forfeiture of all future premium tax
29 credits earned under such program which are to be claimed by
30 certified investors with respect to such company.
31 2. When a certified capital company meets all
22
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 requirements for continued certification under subparagraph
2 (5)(a)1. with respect to certified capital raised under a
3 particular program and subsequently fails to meet the
4 requirements for continued certification under the provisions
5 of subparagraph (5)(a)2. with respect to certified capital
6 raised under such program, those premium tax credits earned
7 under such program which have been or will be taken by
8 certified investors within 3 years after the certification
9 date of the certified capital company with respect to such
10 program shall not be subject to recapture or forfeiture;
11 however, all premium tax credits earned under such program
12 that have been or will be taken by certified investors after
13 the third anniversary of the certification date of the
14 certified capital company for such program shall be subject to
15 recapture or forfeiture.
16 3. When a certified capital company meets all
17 requirements for continued certification under subparagraphs
18 (5)(a)1. and 2. with respect to a particular program and
19 subsequently fails to meet the requirements for continued
20 certification under the subparagraph (5)(a)3. with respect to
21 such program, those premium tax credits earned under such
22 program which have been or will be taken by certified
23 investors within 4 years after the certification date of the
24 certified capital company with respect to such program shall
25 not be subject to recapture or forfeiture; however, all
26 premium tax credits earned under such program that have been
27 or will be taken by certified investors after the fourth
28 anniversary of the certification date of the certified capital
29 company with respect to such program shall be subject to
30 recapture and forfeiture.
31 4. If a certified capital company has met all
23
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 requirements for continued certification under paragraph
2 (5)(a) with respect to certified capital raised under a
3 particular program, but such company is subsequently
4 decertified, those premium tax credits earned under such
5 program which have been or will be taken by certified
6 investors within 5 years after the certification date of such
7 company with respect to such program shall not be subject to
8 recapture or forfeiture. Those premium tax credits earned
9 under such program to be taken subsequent to the 5th year of
10 certification with respect to such program shall be subject to
11 forfeiture only if the certified capital company is
12 decertified within 5 years after its certification date with
13 respect to such program.
14 5. If a certified capital company has invested an
15 amount cumulatively equal to 100 percent of its certified
16 capital raised under a particular program in qualified
17 investments, all premium tax credits claimed or to be claimed
18 by its certified investors under such program shall not be
19 subject to recapture or forfeiture.
20 (11) TRANSFERABILITY.--The premium tax credit
21 established pursuant to this act may be transferred or sold.
22 The Department of Revenue shall adopt rules to facilitate the
23 transfer or sale of such premium tax credits. A transfer or
24 sale shall not affect the time schedule for taking the premium
25 tax credit as provided in this act. Any premium tax credits
26 recaptured shall be the liability of the taxpayer who actually
27 claimed the premium tax credits. The claim of a transferee of
28 a certified investor's unused premium tax credit shall be
29 permitted in the same manner and subject to the same
30 provisions and limitations of this act as the original
31 certified investor. The term "transferee" means any person
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 who:
2 (a) Through the voluntary sale, assignment, or other
3 transfer of the business or control of the business of the
4 certified investor, including the sale or other transfer of
5 stock or assets by merger, consolidation, or dissolution,
6 succeeds to all or substantially all of the business and
7 property of the certified investor;
8 (b) Becomes by operation of law or otherwise the
9 parent company of the certified investor;
10 (c) Directly or indirectly owns, whether through
11 rights, options, convertible interests, or otherwise,
12 controls, or holds power to vote 10 percent or more of the
13 outstanding voting securities or other ownership interest of
14 the certified investor;
15 (d) Is a subsidiary of the certified investor or 10
16 percent or more of whose outstanding voting securities or
17 other ownership interest are directly or indirectly owned,
18 whether through rights, options, convertible interests, or
19 otherwise, by the certified investor; or
20 (e) Directly or indirectly controls, is controlled by,
21 or is under the common control with the certified investor.
22 (17) Notwithstanding the limitations set forth in
23 paragraph (7)(a), in the first fiscal year in which the total
24 insurance premium tax collections as determined by the Revenue
25 Estimating Conference exceed collections for fiscal year
26 2000-2001 by more than the total amount of tax credits issued
27 pursuant to this section which were used by certified
28 investors in that year, the department may allocate to
29 certified investors in accordance with paragraph (7)(a) tax
30 credits for Program Two. The department shall establish, by
31 rule, a date and procedures by which certified capital
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 companies must file applications for allocations of such
2 additional premium tax credits, which date shall be no later
3 than 180 days from the date of determination by the Revenue
4 Estimating Conference. With respect to new certified capital
5 invested and premium tax credits earned pursuant to this
6 subsection, the schedule specified in subparagraphs
7 (5)(a)1.-4. is satisfied by investments by December 31 of the
8 2nd, 3rd, 4th, and 5th calendar year, respectively, after the
9 date established by the department for applications of
10 additional premium tax credits. The department shall adopt
11 rules by which an entity not already certified as a certified
12 capital company may apply for certification as a certified
13 capital company for participation in this additional
14 allocation. The insurance premium tax credit authorized by
15 Program Two may not be used by certified investors until the
16 annual return due March 1, 2004, and may be used on all
17 subsequent returns and estimated payments; however,
18 notwithstanding the provisions of s. 624.5092(2)(b), the
19 installments of taxes due and payable on April 15, 2004, and
20 June 15, 2004, shall be based on the net tax due in 2003 not
21 taking into account credits granted pursuant to this section
22 for Program Two.
23
24 (Renumber subsequent section)
25
26
27 ================ T I T L E A M E N D M E N T ===============
28 And the title is amended as follows:
29 On page 44, line 23, after the semicolon
30
31 insert:
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HOUSE AMENDMENT
Bill No. HB 3-E
Amendment No. 1 (for drafter's use only)
1 amending s. 288.99, F.S., relating to the
2 Certified Capital Company Act; redefining the
3 terms "early stage technology business" and
4 "qualified distribution"; defining the terms
5 "Program One" and "Program Two"; revising
6 procedures and dates for certification and
7 decertification under Program One and Program
8 Two; revising the process for earning premium
9 tax credits; providing a limitation on tax
10 credits under Program Two; providing for
11 distributions under both programs; requiring
12 rules; providing for additional premium
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