Ala. Admin. Code r. 281-2-1-.02 - Certified Capital Company

Current through Register Vol. 40, No. 6, March 31, 2022

To qualify as a CAPCO all of the following must apply:

(1) The applicant must have, at the time of application for certification, an equity capitalization of at least $500,000 in the form of cash or cash equivalents. The applicant must maintain this equity capitalization until it receives an allocation of certified capital pursuant to Section 17 of the Act. As used in this subsection, the term "EQUITY CAPITALIZATION" means the applicant's total cash and cash equivalents less the applicant's total liabilities, each as determined in accordance with generally accepted accounting principles.
(2) At least two principals or persons employed or engaged to manage the funds of the applicant must have at least four (4) years of experience making venture capital investments in small businesses on behalf of or as an institutional or accredited investor. As used in this subsection, the following terms shall have the following meanings:
(a) "PRINCIPALS" means persons who have a material direct or indirect ownership interest in the applicant such that those persons each have a material influence over the policies and decisions of the applicant, including its investment decisions.
(b) "PERSON EMPLOYED OR ENGAGED TO MANAGE THE FUNDS OF THE APPLICANT" means a person who, in exchange for reasonable compensation, has a material influence over the policies and decisions of the applicant, including its investment decisions.
(c) "VENTURE CAPITAL INVESTMENTS" means the investment of funds in enterprises that would qualify as qualified technology businesses under the Act, which investment involves some investment risk but offers the potential for above average future returns.
(3) The applicant must satisfy any additional reasonable information requirement imposed by the ADO under these regulations.
(4) The applicant must have incorporated or organized within the State of Alabama no later than fifteen (15) days before applying for certification.
(5) The applicant must have established an office within the State of Alabama before or within sixty (60) days of certification. As used in this subsection, the term "OFFICE WITHIN THE STATE OF ALABAMA" means a place of business physically located in the State of Alabama from which all material policies are, and will be, made and all material orders are, and will be, issued.
(6) A CAPCO may agree pursuant to Section 13 of the Act to indemnify, or purchase a guaranty, indemnity, bond, insurance policy or other payment undertaking for the benefit of, a certified investor for losses resulting from the recapture or forfeiture of premium tax credits under Section 12 of the Act.
(7) The key employees of the CAPCO must:
(a) Work in the "office within the State of Alabama" established by the applicant or CAPCO, as the case may be, for at least 1,400 hours per year; and
(b) Reside in the State of Alabama, as determined for purposes of Alabama income taxation.

F. Neal Wade


Ala. Admin. Code r. 281-2-1-.02
New Rule: Filed July 25, 2003; effective August 29, 2003. Amended: Filed February 6, 2008; effective March 12, 2008.

Statutory Authority: Code of Ala. 1975, as amended; Act 2002-429.

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