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.
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
(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
(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
(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.
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
in the State of Alabama, as determined for purposes of Alabama income taxation.
F. Neal Wade