Ala. Admin. Code r. 281-2-1-.09 - Continuance Of Certification

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

(1) To continue to be certified with respect to program one and program two, a CAPCO shall make qualified investments according to the following schedule:
(a) For programs one and two, before the third (3rd) anniversary of an investment pool allocation date, a CAPCO must have made qualified investments of certified capital of such investment pool in qualified technology businesses in an amount cumulatively equal to at least thirty-five percent (35%) of the certified capital in that investment pool.
(b) For program two, of the amount invested before the third (3rd) anniversary of the program two investment pool allocation date pursuant to paragraph 1(a), above, a CAPCO must have invested at least $75,000 of such investment pool amount in no less than one (1) qualified diversity business.
(c) For programs one and two, before the fifth (5th) anniversary of an investment pool allocation date, a CAPCO must have made qualified investments of certified capital of such investment pool in qualified technology businesses in an amount cumulatively equal to at least fifty percent (50%) of the certified capital in that investment pool.
(d) For program two, of the amount invested before the fifth (5th) anniversary of the program two investment pool allocation date pursuant to paragraph 1(c), above, a CAPCO must have invested at least $75,000 of such investment pool amount in no less than three (3) qualified diversity businesses, for a cumulative investment amount of at least $225,000.
(2) The aggregate cumulative amount of all qualified investments made from an investment pool by a CAPCO after the applicable program allocation date shall be considered in the computation of the percentage requirements applicable to each program under the Act. Any proceeds received from a qualified investment in a program may be invested in another qualified investment and count toward any requirement in the Act with respect to investments of certified capital in that same program.
(3) A business that is classified as a qualified technology business at the time of the first (1st) investment in the business by a CAPCO remains classified as a qualified technology business and may receive follow-on investments from any CAPCO. Except as provided by this subsection, a follow-on investment made under this subsection is a qualified investment even though the business may not meet the definition of a qualified technology business at the time of the follow-on investment; provided, however, that a CAPCO may make a follow-on investment in a program one portfolio company of program two investment pool funds only if, at the time of the initial investment of the program two investment pool funds, the program one portfolio company meets the definition of a qualified technology business.
(4) A qualified investment may not be made at a cost to an investment pool of a CAPCO greater than fifteen percent (15%) of the total certified capital of that investment pool of the CAPCO.
(5) If, before the one hundred eightieth (180th) day after the date that a CAPCO makes an investment in a qualified technology business, the qualified technology business moves its principal business operations from the State of Alabama, the investment may not be considered a qualified investment for purposes of the percentage requirements under the Act.
(6) A CAPCO shall invest any certified capital not invested in qualified investments only as follows ("Permissible Investments"):
(a) Cash deposited with a federally insured financial institution.
(b) Certificates of deposit in a federally insured financial institution.
(c) Investment securities that are obligations of the United States or its agencies or instrumentalities or obligations that are guaranteed fully as to principal and interest by the United States.
(d) Debt instruments rated at least "A" or its equivalent by a nationally recognized credit rating organization, or issued by, or guaranteed with respect to payment by, an entity whose unsecured indebtedness is rated at least "A" or its equivalent by a nationally recognized credit rating organization, and which indebtedness is not subordinated to other unsecured indebtedness of the issuer or the guarantor.
(e) Obligations of the State of Alabama or any municipality or political subdivision of the State of Alabama.
(f) Any other investments approved in advance and in writing by the ADO.
(7) For the purposes of this section, the dates required for qualified investments with respect to either program one or program two shall be referred to as milestone dates. The term "MUST HAVE MADE QUALIFIED INVESTMENTS", means the date funds are received by the qualified technology business from the CAPCO, as evidenced by the date of a check or other means of funds transfer. The CAPCO must submit the following information to the ADO within thirty (30) days of the milestone dates for each of its investment pools:
(a) The amount of certified capital from the applicable investment pool placed in qualified investments as of the milestone date.
(b) The amount of total certified capital from the applicable investment pool provided by certified investors to the CAPCO as of the milestone date.
(8) In the event that the CAPCO fails to meet the milestone dates with respect to a particular program, or in the event the CAPCO fails to submit the information required above within the time period specified, the CAPCO shall be notified and allowed to resolve the deficiency within one hundred twenty (120) days. In the event the deficiency is not resolved within the time limit, the investment pool may be decertified by the ADO.
(9) In the event that the CAPCO willfully provides materially false or incorrect information with respect to any program milestones that would have resulted in the decertification of a CAPCO's investment pool, full recapture of all tax credits earned with respect to both program one and program two may be required by the ADO.
(10) Not later than January 31 of each year, each CAPCO shall report to the ADO all of the following information with respect to its investment pool(s):
(a) The amount of the CAPCO's certified capital in each investment pool at the end of the preceding year.
(b) Whether or not the CAPCO has invested more than fifteen percent (15%) of the total certified capital of any one investment pool with respect to either program one or program two in any one (1) business.
(c) Each qualified investment that the CAPCO made during the preceding year and, with respect to each qualified investment in a qualified technology business in which the CAPCO is an investor as of the date of the report, (i) the number of employees of the qualified technology business at the time the qualified investment was made, (ii) the name of each qualified technology business that is also a qualified diversity business as defined herein, and (iii) the current number of employees of the qualified technology business.
(d) Any other information required by the ADO.
(11) Not later than April 1 of each year, the CAPCO shall provide to the ADO an annual audited financial statement that includes the opinion of an independent certified public accountant; provided, however, that any CAPCO that is initially certified as such during 2007 or 2008 shall not be required to submit the information set forth in this paragraph until April 1, 2009. The audit or other review by the certified public accountant, shall address the methods of operation and conduct of the business of the CAPCO to determine whether:
(a) The CAPCO is complying with the Act and these regulations.
(b) The funds received by the CAPCO have been invested as required within the time provided by Regulation 281-2-1-.09(1).
(c) The CAPCO has invested the funds in qualified technology businesses.
(d) The CAPCO has invested the funds in qualified diversity businesses.
(e) As used in this subsection, the term "AUDITED FINANCIAL STATEMENT" means a complete set of financial statements prepared in accordance with generally accepted accounting standards, including an income statement, balance sheet and statement of cash flows, which financial statements have been audited by an independent certified public accountant in accordance with generally accepted auditing standards.
(12) Not later than January 31 of each year, each CAPCO shall pay (i) a nonrefundable renewal fee of $5,000 to the ADO for each investment pool of the CAPCO certified by the ADO, and (ii) a nonrefundable program maintenance fee of $5,000 to the ADO for each investment pool of the CAPCO certified by the ADO. If a CAPCO fails to pay any renewal fee or program maintenance fee on or before that date, the CAPCO must pay, in addition to the renewal or program maintenance fee then due, a late fee of $5,000 per unpaid fee to continue its certification.
(13) Notwithstanding subsection (12), a CAPCO is not required to pay any renewal fee or program maintenance fees within six (6) months of the date on which the CAPCO's certification or recertification is issued pursuant to Section 3 of the Act and Regulation 281-2-1-.06.

F. Neal Wade

Notes

Ala. Admin. Code r. 281-2-1-.09
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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