Sec. 117-1-2 - Definitions
§ 117-1-2. Definitions
2.1. "Act" means the West Virginia Capital Company Act, W. Va. Code § 5E-1-1 et seq.
2.2. "Applicant" means
(1) a profit or non-profit entity, organized and existing under the laws of West Virginia, which is created for the purpose of making capital available for qualified investmentsor
(2) a West Virginia business development corporation created pursuant to W. Va. Code § 31-14-1 et seq., that seeks to be designated by the Authority as a Qualified Company. For purposes of this definition, entity includes, but is not limited to, a corporation (including an S Corporation), a partnership, a limited liability company and a trust.
2.3. "Authority" means the West Virginia Economic Development Authority, provided for in W. Va. Code § 31-15-1 et seq.
2.4. "Authorized Tax Credits" means the tax credits provided for in W. Va. Code § 5E-1-8.
2.5. "Capital Base" means the equity capital or net worth upon which tax credits are authorized for a Qualified Company, and the source from which investments are to be made in accordance with this Rule.
2.6. "Capital Lease" means a lease meeting one or more of the following criteria:
2.6.a. The lease transfers ownership of the property to the lessee at the end of the lease term by the lessee's exercise of a purchase option which is de minimis in amount;
2.6.b. The lease term is equal to seventy-five percent or more of the estimated economic life of the leased property. However, if the beginning of the lease terms falls within the last twenty-five percent of the total estimated economic life of the leased property, including earlier years of use, this criterion shall not be used;
2.6.c. Under generally accepted accounting principals, the lessee cannot treat payments to the capital company as payments under an operating lease; or
2.6.d. For federal income tax purposes, the parties are required to treat payments as amortization of principal and interest.
2.7. "Certified West Virginia Capital Company" or "Certified Company" means (1) a West Virginia business development corporation created pursuant to W. Va. Code § 31-14-1 et seq.; or (2) a profit or non-profit entity organized and existing under the laws of the State of West Virginia, created for the purpose of making venture or risk capital available for qualified investments, that has been certified by the Authority.
2.8. "Code" means the Code of West Virginia of 1931, as amended.
2.9. "Complete Application" means an application that contains all of the information required by this Rule, as determined by the Director, in his or her sole discretion.
2.10. "Debt or Debt Financing" means a loan to be repaid pursuant to a loan instrument with a stated maturity date of at least five (5) years, which (i) shall be maintained by the Qualified Company for at least five (5) years pursuant to W. Va. Code § 5E-1-12(b) and Subdivision 6.10.a of this Rule, (ii) is not subject to payment upon demand of the Qualified Company prior to its maturity date except upon acceleration due to default in terms and conditions ordinary and usual to loan instruments, and (iii) is originally issued by a West Virginia Business to the Qualified Company.
2.11. "Decertification" means the action of the Authority of revoking the Qualified Status from a Capital Company. Decertification may be involuntary due to a Capital Company's failure to comply with provisions of the Act or this Rule pursuant to Subsections 7.7, 7.8 and 7.9 of this Rule, or voluntary pursuant to Subsection 7.10 of this Rule.
2.12. "Designate as a Qualified Company" means the action of the Authority in designating a Certified Company as qualified for available tax credits and allocating the credits to the Certified Company relative to its capital base.
2.13. "Designate as Qualified" means the action of the Authority in authorizing (i) a separate capital base for a Qualified Company or (ii) an increase in a Qualified Company's capital base, and in allocating available tax credits relative to the separate capital base or increase in capital base.
2.14. "Development Corporation" means a West Virginia Business Development Corporation created pursuant to W. Va. § 31-14-1 et seq.
2.15. "Director" means the Executive Director of the West Virginia Economic Development Authority, or his or her designated representative.
2.16. "Equity" or "Equity Financing" means common stock or preferred stock in a corporation purchased from the corporation including warrants and options purchased from the corporation which upon exercise entitle the Qualified Company to common or preferred stock. Equity also means an ownership interest in a general partnership, ownership of limited partnership units and an ownership interest in a limited liability company. An investment otherwise meeting this definition shall not be considered as equity if the investment includes an option whereby the Qualified Company can compel the repurchase of the investment by the issuing corporation or any other person prior to the expiration of five (5) years from the date of purchase by the Qualified Company.
2.17. "Fiscal Year" means July 1 through June 30, which is the fiscal year of the State.
2.18. "Insurance Company" means any person engaged in the business of making contracts of insurance.
2.19. "Managing Body" means the board of directors in the case of a corporation, voting partners in the case of a general partnership, general partners in the case of a limited partnership, members or managers in the case of a limited liability company and the management committee or similar decision making body in the case of a joint venture.
2.20. "Partnership" includes a syndicate, group, pool, joint venture, or other unincorporated organization, through or by means of which any business, financing operation, or venture is carried on; and the term partner includes a member of the syndicate, group, pool, joint venture or organization.
2.21. "Pass-through entity" means any person, other than an individual, which is not classified for federal income tax purposes as an association taxed as a corporation.
2.22. "Qualified Investment" means a debt or equity financing of a West Virginia Business, but only if the business is engaged in one or more of the following activities: Manufacturing; agricultural production or processing; forestry production or processing; mineral production or processing, except for conventional oil and gas exploration; provision of services in a service industry; transportation; research and development of products or processes associated with any of the activities previously enumerated in this Subsection; tourism, an example of which is provided at Subdivision 6.5.b of this Rule; computer software development companies engaged in the creation of computer software; and wholesale or retail distribution activities within the state. The investment by a Qualified Company in purchases of property to be leased by it, as lessor, through a capital lease, as defined in Subsection 2.6 of this Rule, to a West Virginia Business lessee engaged in one of the activities enumerated in this Subsection is a qualified investment.
2.23. "Qualified West Virginia Capital Company" or "Qualified Company" means a Certified West Virginia Capital Company that has been designated by the Authority as a Qualified Capital Company under the provisions of W. Va. Code § 5E-1-6 and which has raised a minimum capital base of One Million Dollars to a maximum of Four Million Dollars per fiscal year, upon which tax credits are allocated.
2.24. "S Corporation" or "Subchapter S Corporation" means a small business corporation as defined in Section 1361(b) of the Internal Revenue Code of 1954, 26 U.S.C. §§ 1 et seq., as amended, for which an election under Section 1362(a) of the Internal Revenue Code is in effect.
2.25. "SBIC" or "small business investment company" means only an entity which:
(a) was organized on or after January 1, 1999;
(b) is licensed by the U.S. Small Business Administration as a small business investment company under the Small Business Investment Act of 1958, 15 U.S.C. §§ 661 et seq., as amended; and
(c) has certified in writing on an application for designation as a Qualified Company submitted to the Authority pursuant to Subsection 3.3 of this Rule that the entity will diligently seek to obtain and thereafter diligently seek to invest leverage available to small business investment companies.
2.26. "SBIC-Designated Tax Credit Amount" means the maximum amount of tax credits, if any, set forth in the Act which shall be allocated by the Authority during the first thirty (30) days of each fiscal year to one or more SBICs. For the fiscal year beginning July 1, 2001, the SBIC-Designated Tax Credit Amount is two million dollars ($2,000,000.00).
2.27. "Service Industry" means a type of business that has ordinary characteristics of retail establishments except that services instead of goods are sold and the principal activity of which is furnishing service to the consuming public. Service industries include, by way of example and not by way of limitation, barbershops, laundries and automobile repair shops.
2.28. "State" means the State of West Virginia.
2.29. "West Virginia Business" means any business which is located in or is principally based in West Virginia, with more than fifty percent (50%) of its assets and operations located in West Virginia, and with more than fifty percent (50%) of its employees being West Virginia residents. For purposes of this definition, more than fifty percent (50%) of the "operations" of a business means more than fifty percent (50%) of the gross revenues of a business.
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