Senate Bill sb2668c2
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2006 CS for CS for SB 2668
By the Committees on Governmental Oversight and Productivity;
Commerce and Consumer Services; and Senators Atwater, Crist
and Lynn
585-2350-06
1 A bill to be entitled
2 An act relating to capital formation; creating
3 s. 288.9621, F.S., the Florida Capital
4 Formation Act; providing definitions; requiring
5 Enterprise Florida, Inc., to organize the
6 Florida Opportunity Fund as a wholly owned
7 private, not-for-profit limited liability
8 company; providing for a board of directors for
9 the company; providing for filling vacancies on
10 the board of directors and for terms of office;
11 specifying duties of the company; requiring the
12 company to select a Florida Opportunity Fund
13 Allocation Manager; providing requirements for
14 investments; requiring the Florida Opportunity
15 Fund to issue an annual report to the Governor
16 and the Legislature; providing for a transfer
17 of nonrecurring funds from the General Revenue
18 Fund to the Economic Development Trust Fund for
19 subsequent investment in the Florida
20 Opportunity Fund; providing for return of funds
21 to the General Revenue Fund; providing for
22 future dissolution of the company; providing an
23 effective date.
24
25 Be It Enacted by the Legislature of the State of Florida:
26
27 Section 1. Parts X and XI of chapter 288, Florida
28 Statutes, are redesignated as parts XI and XII, respectively,
29 and a new part X of that chapter, consisting of section
30 288.9621, is created to read:
31 288.9621 Capital formation.--
1
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2006 CS for CS for SB 2668
585-2350-06
1 (1) SHORT TITLE.--This section may be cited as the
2 "Florida Capital Formation Act."
3 (2) DEFINITIONS.--As used in this section, the term:
4 (a) "Company" means the Florida Opportunity Fund.
5 (b) "Florida Opportunity Fund Allocation Manager" or
6 "allocation manager" means one or more fund-of-funds
7 investment managers hired by the Florida Opportunity Fund to
8 invest assets of the company in venture capital funds.
9 (c) "Office" means the Governor's Office of Tourism,
10 Trade, and Economic Development.
11 (d) "Florida-based" means operating in this state at a
12 permanent address and maintaining at least one business unit
13 in this state.
14 (e) "Business unit" means an employing unit, as
15 defined in s. 443.036, which is registered with the Agency for
16 Workforce Innovation for purposes of unemployment compensation
17 or means a subcategory or division of an employing unit that
18 is accepted by the Agency for Workforce Innovation as a
19 reporting unit.
20 (3) FLORIDA CAPITAL INVESTMENT.--
21 (a) The Governor's Office of Tourism, Trade, and
22 Economic Development shall account for the funds separately
23 within the Economic Development Trust Fund created in s.
24 288.095 for moneys transferred under this section. The office
25 shall make all funds available for investment by the State
26 Board of Administration or its investment manager as requested
27 by the State Board of Administration. The State Board of
28 Administration or its designated investment manager shall
29 invest and reinvest the moneys in accordance with s. 215.47
30 and subject to the terms of any trust agreement between the
31 State Board of Administration and the office. Fees and
2
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2006 CS for CS for SB 2668
585-2350-06
1 expenses incurred by the State Board of Administration for
2 investing the moneys shall be deducted as provided in a trust
3 agreement. Upon request of the office, the State Board of
4 Administration shall liquidate investments and advance the
5 proceeds to the company as required to fund its investments
6 pursuant to this section as well as its reasonable and
7 necessary operational expenses. The exercise by the State
8 Board of Administration or its designated investment manager
9 of powers conferred by this section shall be deemed and held
10 to be the performance of essential public purposes.
11 (b) The State Board of Administration or its
12 designated investment manager shall invest and reinvest any
13 funds returned by the company in accordance with s. 215.47 and
14 subject to the terms of any trust agreement between the State
15 Board of Administration and the office. The company shall
16 maintain necessary working capital moneys; obtain funding from
17 the trust fund for its investments, reasonable and necessary
18 operating costs, or replenishment of working capital balances;
19 and return for liquidity investment any moneys received in
20 excess of its working capital needs.
21 (4) FLORIDA OPPORTUNITY FUND; CREATION; POWERS AND
22 DUTIES.--
23 (a) Enterprise Florida, Inc., shall organize the
24 Florida Opportunity Fund as a wholly owned, private,
25 not-for-profit limited liability Florida company. Enterprise
26 Florida, Inc., shall be the company's sole owner. The Florida
27 Opportunity Fund is not a public company or instrumentality of
28 the state. Enterprise Florida, Inc., shall annually evaluate
29 and report to the Governor, the President of the Senate, and
30 the Speaker of the House of Representatives whether the
31
3
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2006 CS for CS for SB 2668
585-2350-06
1 company is being operated and state funds are being invested
2 in the best interest of the state.
3 (b) The Florida Opportunity Fund shall be governed by
4 a board of directors consisting of five members who have
5 expertise in the area of the selection and supervision of
6 early-stage investment managers or in the fiduciary management
7 of investment funds or who have expertise in other areas
8 considered appropriate by the appointment committee. The vice
9 chair of Enterprise Florida, Inc., shall select from among its
10 board of directors a five-person appointment committee to
11 appoint the company's initial board of directors. After
12 selection of the initial board of directors, vacancies on the
13 board of directors shall be filled by appointment by
14 Enterprise Florida, Inc. The board of directors shall be
15 appointed to serve staggered 3-year terms in accordance with
16 the company's organizational documents. Members of the board
17 of directors, the officers, and employees are subject to any
18 restrictions on conflicts of interest specified in the
19 organizational documents and may not have an interest in the
20 Florida Opportunity Fund Allocation Manager or in any
21 investments made by the company. Members of the board of
22 directors shall serve without compensation, but members,
23 officers, and employees may be reimbursed for all reasonable,
24 necessary, and actual expenses, as determined by the board and
25 approved by Enterprise Florida, Inc.
26 (c) The company shall have all powers granted under
27 chapter 608 and may indemnify members of the board of
28 directors to the broadest extent permissible under state law.
29 However, the members, officers, and employees shall have a
30 fiduciary duty with respect to the management of company
31 assets and selection and oversight of its allocation manager
4
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2006 CS for CS for SB 2668
585-2350-06
1 and shall discharge those duties in the best interest of the
2 state.
3 (d) The company shall be subject to chapter 119,
4 relating to public meetings, and s. 286.011, relating to
5 public records.
6 (e) The company shall select a Florida Opportunity
7 Fund Allocation Manager who has a demonstrated expertise in
8 the successful management and fund allocation of investments
9 in venture capital funds. In selecting a manager, the company
10 shall consider, among other pertinent factors, each
11 candidate's level of experience, quality of management
12 performance, investment philosophy and process, prior
13 investment fund results, and potential for achieving the
14 purposes of this section.
15 (f) The company shall invest on a fund-of-funds basis
16 in seed and early-stage venture capital funds having
17 experienced managers or management teams with demonstrated
18 experience, expertise, and a successful history in the
19 investment of venture capital funds, focusing on opportunities
20 in this state. The company may not make direct investments in
21 individual businesses. While not precluded from investing in
22 venture capital funds that have investments outside this
23 state, the company must require a venture capital fund to show
24 a record of successful investment in this state, to be based
25 in this state, or to have an office in this state staffed with
26 a full-time, professional venture investment executive in
27 order to be eligible for investment. The company may negotiate
28 any and all terms and conditions for its investments,
29 including the clawback of management fees and other provisions
30 that maximize investment in seed and early-stage Florida-based
31 companies.
5
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2006 CS for CS for SB 2668
585-2350-06
1 (g) The company may not invest in a venture capital
2 fund unless that venture capital fund has raised capital from
3 other sources in an amount at least equal to the investment of
4 the company, such that the total invested in Florida-based
5 companies by the receiving venture capital fund totals at
6 least twice the investment of the company. Investments must be
7 made in Florida-based companies, including, without
8 limitation, enterprises in life sciences, information
9 technology, advanced manufacturing processes, aviation and
10 aerospace, and homeland security and defense, as well as other
11 strategic technologies.
12 (5) ANNUAL REPORT.--The company shall submit an annual
13 report of its activities to the Governor, the President of the
14 Senate, and the Speaker of the House of Representatives within
15 3 months after the end of its fiscal year. The annual report
16 must include a copy of the independent audit of the company
17 and a valuation of the assets of the company, a review of the
18 progress of the Florida Opportunity Fund Allocation Manager in
19 implementing its investment plan, the rate of return, and the
20 benefits to the state resulting from this program, including
21 the amount of capital deployed and the amount of investment.
22 The annual report must also include a list of venture capital
23 funds in which investments were made and the number of Florida
24 businesses created and their associated industry.
25 Section 2. For the 2006-2007 fiscal year, the sum of
26 $300,000 is appropriated from the General Revenue Fund to the
27 Economic Development Trust Fund in the Office of Tourism,
28 Trade, and Economic Development to be used for start-up
29 activities necessary to implement this act, including creation
30 of the Florida Opportunity Fund and the solicitation, and
31
6
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2006 CS for CS for SB 2668
585-2350-06
1 related due diligence, required for contracting the services
2 of the Florida Opportunity Fund Allocation Manager.
3 Section 3. For the 2006-2007 fiscal year, the sum of
4 $35 million is transferred from nonrecurring moneys in the
5 General Revenue Fund to the Economic Development Trust Fund in
6 the Office of Tourism, Trade, and Economic Development for
7 subsequent investment in the Florida Opportunity Fund as
8 described in this act. Notwithstanding s. 216.301, Florida
9 Statutes, and pursuant to s. 216.351, Florida Statutes, any
10 balance remaining at the end of any fiscal year shall remain
11 in the trust fund and shall be available for carrying out the
12 purposes of this section. The transferred amount and any
13 earnings thereon are appropriated and may be used for the
14 purposes of this act until July 1, 2020, at which time the sum
15 of $35 million or the balance of funds, whichever is less,
16 shall be returned to the General Revenue Fund. The Florida
17 Opportunity Fund shall continue to administer its investments
18 after July 1, 2020, until such investments are liquidated.
19 Proceeds from liquidation of investments and any proceeds in
20 excess of $35 million may be retained for continuous
21 reinvestment by the Florida Opportunity Fund, if an amount of
22 not less than $35 million has been returned to the General
23 Revenue Fund on or before July 1, 2020. If at any time
24 Enterprise Florida, Inc., dissolves the Florida Opportunity
25 Fund, all assets of the Florida Opportunity Fund and any funds
26 remaining for the purpose of this section shall revert to the
27 General Revenue Fund. Enterprise Florida, Inc., may not sell
28 or transfer ownership of the company.
29 Section 4. This act shall take effect July 1, 2006.
30
31
7
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2006 CS for CS for SB 2668
585-2350-06
1 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
2 CS for SB 2668
3
4 Clarifies that the Florida Opportunity Fund is wholly-owned by
Enterprise Florida, Inc.
5
Prohibits Enterprise Florida, Inc., from selling or
6 transferring the Florida Opportunity Fund.
7 Provides that the Florida Opportunity Fund must be managed in
the best interest of the state.
8
Requires reversion to the General Revenue Fund of all assets
9 of the Florida Opportunity Fund if the Fund is dissolved by
Enterprise Florida, Inc.
10
Prohibits Enterprise Florida, Inc., from selling or
11 transferring the Florida Opportunity Fund.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
8
CODING: Words stricken are deletions; words underlined are additions.