Ala. Admin. Code r. 281-2-1-.04 - Qualified Investment

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

(1) A CAPCO may, before making an investment in a business, request from the ADO a written opinion as to whether the business in which it proposes to invest is a qualified technology business or a qualified diversity business.
(2) The ADO shall, not later than the fifteenth (15th) business day after the date of the receipt of a request under subsection (1) of this section, determine whether the business meets the definition of a qualified technology business or a qualified diversity business, and notify the CAPCO of the determination and an explanation of its determination or notify the CAPCO that an additional fifteen (15) days will be needed to review and make the determination.
(3) If the ADO fails to notify the CAPCO with respect to the proposed investment within the period specified by subsection (2) of this section, the business in which the CAPCO proposes to invest is considered to be a qualified technology business or a qualified diversity business, as applicable.
(4) The following transactions shall not be considered an "INVESTMENT OF CASH BY A CAPCO" for purposes of determining whether an investment is a qualified investment:
(a) A debt instrument, including those owned through debt participations, that has a final stated maturity of less than two years from the date of issuance and/or a repayment schedule that is faster than level principal amortization over two years. The preceding sentence shall not prohibit (i) the qualified business from voluntarily prepaying a qualified investment at anytime or (ii) the certified capital company from exercising any of its rights as a creditor, including the acceleration of the debt owed upon a default by the qualified business under the terms of the debt instrument or upon the acquisition merger or sale of all or substantially all of the assets of the qualified business;
(b) Purchases of interests in a qualified technology business that have restrictions on the use of the proceeds by the qualified technology business selling the interest, other than those restrictions usual or customary to venture capital investing and lending, such that the proceeds will be repaid by the qualified technology business without having been at risk;
(c) Accruals of principal, interest, royalty or other income;
(d) Letters of credit;
(e) Loan guarantees; or
(f) Loan collection expenses or legal fees incurred by a CAPCO in protecting its collateral interest in an investment.
(5) The Director may disqualify an investment which has been approved pursuant to subsections (1), (2), or (3) of this Regulation 281-2-1-.04 if and only if the request for written approval contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading.

F. Neal Wade


Ala. Admin. Code r. 281-2-1-.04
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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