560.26(2)
(2) If the Wisconsin Procurement Institute receives a grant under this section, it shall submit to the department, within 6 months after spending the full amount of the grant, a report detailing how the grant proceeds were used.
560.26(3)
(3) The department may not make grants under
sub. (1) that exceed $100,000 in total.
560.26 History
History: 1999 a. 9.
560.27
560.27
High-technology business development corporation. 560.27(1)(a)(a) The department shall organize and assist in maintaining a high-technology business development corporation as a nonstock, nonprofit corporation under
ch. 181 for the exclusive purpose of promoting and supporting the creation, development and retention of science-based and technology-based businesses in the state. In furtherance of its purpose, the corporation shall establish and implement programs focused on key elements necessary for the success of high-technology firms, including entrepreneurs, businesses, professional services, seed and venture capital, universities and state government.
560.27(1)(b)
(b) From the appropriation under
s. 20.143 (1) (d), the department shall make a one-time grant of $50,000 in fiscal year 2000-01 to the high-technology business development corporation for start-up capital and reasonable administrative expenses of the corporation.
560.27(2)(a)(a) The high-technology business development corporation shall be governed by a board of directors, consisting of the secretary, or his or her designee, the president of the University of Wisconsin System, or his or her designee, the director of the technical college system board, or his or her designee, the president of the Wisconsin Association of Independent Colleges and Universities, or his or her designee, and at least 11 other members, one or more of whom represents each of the following categories:
560.27(2)(a)7.
7. Professionals in the state who are experienced in providing services to persons specified in
subds. 1. to
6.
560.27(2)(b)
(b) The members who are representatives of the categories under
par. (a) 1. to
7. shall serve 5-year terms. Of the initial members who are representatives of the categories under
par. (a) 1. to
7., one shall be appointed by the senate majority leader, one shall be appointed by the speaker of the assembly, one shall be appointed by the senate minority leader, one shall be appointed by the assembly minority leader and at least 7 shall be appointed by the governor. The high-technology business development corporation, in its bylaws, shall specify the method for electing new members who are representatives of the categories under
par. (a) 1. to
7. and for filling vacancies.
560.27(3)(a)(a) Subject to
par. (c), the department may make a grant to the high-technology business development corporation, from the appropriation under
s. 20.143 (1) (d), if all of the following apply:
560.27(3)(a)1.
1. The corporation submits an expenditure plan to the department detailing the proposed use of the grant proceeds and the secretary approves the plan.
560.27(3)(a)2.
2. The corporation enters into a written agreement with the department that specifies the conditions for the use of the grant proceeds, including reporting and auditing requirements.
560.27(3)(a)3.
3. The corporation provides matching funds equal to 50% of the grant proceeds.
560.27(3)(a)4.
4. The corporation provides to the department information requested by the department about private funding the corporation has received or will receive for the purposes detailed in the expenditure plan under
subd. 1.
560.27(3)(a)5.
5. The corporation agrees in writing to submit to the department the report required by
par. (b) by the time required under
par. (b).
560.27(3)(b)
(b) If the corporation receives a grant under this subsection, the corporation shall submit to the department, within 6 months after spending the full amount of the grant, a report detailing how the grant proceeds were used.
560.27(3)(c)
(c) The department may not make grants under this subsection that exceed $200,000 in total in fiscal year 2000-01, or that exceed $250,000 in total in any fiscal year thereafter.
560.27(4)
(4) Annually, the high-technology business development corporation shall provide a report on its activities to the appropriate standing committees of each house of the legislature in the manner provided under
s. 13.172 (3) and to the governor.
560.27(5)
(5) The assets transferred to, and the assets and liabilities of, the high-technology business development corporation shall be separate from all other assets and liabilities of the state, of all political subdivisions of the state and of the department. Neither the state, any political subdivision of the state nor the department guarantees any obligation of or has any obligation to the high-technology business development corporation. Neither the state, any political subdivision of the state nor the department is liable for any debt or liability of the high-technology business development corporation.
560.27 History
History: 1999 a. 106.
CERTIFIED CAPITAL COMPANIES
560.30
560.30
Definitions. In this subchapter:
560.30(1)
(1) "Affiliate" means, with respect to a certified capital company or a certified investor, any of the following:
560.30(1)(a)
(a) A person who, directly or indirectly, owns, controls, or holds power to vote, 10% or more of the outstanding voting securities or other voting ownership interests of the certified capital company or certified investor.
560.30(1)(b)
(b) A person, 10% of whose outstanding voting securities or other voting ownership interests are directly or indirectly owned, controlled or held with power to vote by the certified capital company or certified investor.
560.30(1)(c)
(c) A person directly or indirectly controlling, controlled by, or under common control with, the certified capital company or certified investor.
560.30(1)(d)
(d) A partnership in which the certified capital company or certified investor is a general partner.
560.30(1)(e)
(e) A person who is an officer, director or agent of the certified capital company or certified investor, or is an immediate family member of such an officer, director or agent.
560.30(2)
(2) "Certified capital company" means a person that has been certified by the department under
s. 560.31 and that has not been decertified under
s. 560.37 (3) or
(3m).
560.30(3)
(3) "Certified capital company tax credit" means the tax credit under
s. 76.635.
560.30(4)
(4) "Certified capital investment" means an investment in a certified capital company that is certified under
s. 560.32 (2) and that fully funds either the investor's equity interest in a certified capital company, a qualified debt instrument that a certified capital company issues, or both.
560.30(5)
(5) "Certified investor" means a person who makes a certified capital investment.
560.30(6)
(6) "Investment date" means, with respect to each investment pool, the date on which the last certified capital that is part of that investment pool was invested in the certified capital company.
560.30(7)
(7) "Investment pool" means the aggregate of all investments of certified capital in a certified capital company that are made as part of the same transaction, except that investments received more than 30 days apart may not be considered part of the same investment pool.
560.30(8)
(8) "Qualified business" means a business which is a qualified business under
s. 560.33.
560.30(9)
(9) "Qualified debt instrument" means a debt instrument that a certified capital company issues at par value or at a premium; that has an original maturity date of at least 5 years from the date on which it was issued; that has a repayment schedule that is no faster than a level principal amortization and, until the certified capital company may make distributions other than qualified distributions, the interest, distribution or payment features of which are not related to the certified capital company's profitability or the performance of its investment portfolio.
560.30(10)
(10) "Qualified distribution" means a distribution or payment by a certified capital company to its equity holders for any of the following:
560.30(10)(a)
(a) The costs of forming, syndicating, managing or operating the certified capital company.
560.30(10)(b)
(b) An annual management fee that does not exceed 2.5% of the certified capital company's total certified capital.
560.30(10)(c)
(c) Reasonable and necessary fees paid for professional services related to the operation of the certified capital company.
560.30(10)(d)
(d) A projected increase in federal or state taxes, including penalties and interest on those taxes, of the equity owners of the certified capital company if those amounts are related to the certified capital company's ownership, management or operation.
560.30(11)
(11) "Qualified investment" means an investment in a qualified business by a certified capital company that meets the requirements under
s. 560.34 (1).
560.30 History
History: 1997 a. 215.
560.31
560.31
Certification of certified capital companies. 560.31(1)(1)
Application. The department shall promulgate rules establishing procedures under which a person may apply to become a certified capital company. The department shall grant or deny an application for certification under this section within 30 days of the date of application. If the department denies certification, the department shall include with the denial a detailed description of the grounds for the refusal, including suggestions for removal of those grounds.
560.31(2)
(2) Requirements for certification. The department shall certify a person as a certified capital company if the department determines that all of the following conditions have been met:
560.31(2)(a)
(a) The person is a partnership, corporation, trust or limited liability company, whether organized for profit or not for profit, that has as its primary business activity the investment of cash in qualified businesses.
560.31(2)(b)
(b) The person has a net worth, at the time of application, of at least $500,000 and has at least $500,000 in cash, cash equivalents and marketable securities.
560.31(2)(c)
(c) The directors, officers, general partners, trustees, managers or members or persons having a similar function are familiar with the requirements of this subchapter.
560.31(2)(d)
(d) At least 2 officers, directors, general partners, trustees, managers or members each have at least 2 years of experience in the venture capital industry.
560.31(2)(e)
(e) The person has included, in any offering material involving the sale of securities, the statement required under
s. 560.32 (1).
560.31(2)(f)
(f) The person has paid a nonrefundable application fee of $7,500.
560.31 History
History: 1997 a. 215.
560.32
560.32
Investments in certified capital companies. 560.32(1)(1)
Required disclosures in securities offerings. Any offering material involving the sale of securities of a certified capital company shall include all of the following statements:
560.32(1)(a)
(a) "By authorizing the formation of a certified capital company, the state does not necessarily endorse the quality of management or the potential for earnings of the company and is not liable for damages or losses to a certified investor in the company. Use of the word "certified" in an offering is not a recommendation or endorsement of the investment by the State of Wisconsin Department of Commerce."
560.32(1)(b)
(b) "Investments in a prospective certified capital company prior to the time the company is certified are not eligible for a certified capital company investment credit under section 76.635 of the Wisconsin Statutes. Investments in a certified capital company are not eligible for a certified capital company investment credit under section 76.635 of the Wisconsin Statutes unless the proposed investment is certified under section 560.32 (2) of the Wisconsin Statutes before the investment is made. In the event that certain statutory provisions are violated, the state may require forfeiture of unused certified capital company investment credits and repayment of used certified capital company investment credits."
560.32(2)
(2) Certification of certified capital investments. 560.32(2)(a)(a) A person may apply to make a certified capital investment in a certified capital company by providing notice under this paragraph to the department on a form specified by the department. The notice shall include the name of the person, the name of the certified capital company, the amount of the investment and any other information specified by the department. The notice shall also include an undertaking by the person to make the investment within 5 days after the department notifies the person that the investment has been certified.
560.32(2)(b)
(b) The department may certify an investment under this subsection only if, after the certification, the department will not have certified a total of more than $50,000,000 in investments under this subsection.
560.32(2)(c)
(c) Prior to August 1, 2000, the department may not certify an investment under this subsection if, after the certification, the investor, together with all affiliates of the investor, would have more than $10,000,000 in certified capital investments.
560.32(2)(d)
(d) If, as a result of the limitations under
par. (b) or
(c), the department may not certify the full amount requested in applications for certified capital investments submitted under
par. (a), the department shall allocate the amounts available for certification in order of priority based on the date on which the application was filed. If the amounts available for certification are insufficient to certify the full amount of all applications for certified capital investments that are submitted on the same day, the department shall prorate the available amount on the basis of the amount that the investor has committed to invest in the certified capital company under
par. (a).
560.32(3)
(3) Limitation on certified investor investment. A certified investor may not, individually, or with or through one or more affiliates, own 10% or more of the equity securities in, be a general partner or manager of, or otherwise control the investments of the certified capital company. This subsection does not preclude a certified investor from exercising its legal rights and remedies, including interim management of a certified capital company, in the event that a certified capital company is in default of its statutory or contractual obligations to the certified investor.
560.32 History
History: 1997 a. 215.
560.32 Annotation
Attracting Venture Capital for Business Start-ups. Gillman & Ross. Wis. Law. May 1999.
560.33
560.33
Qualified businesses. 560.33(1)
(1)
Qualifications. A business is a qualified business if all of the following requirements are met as of the time that a certified capital company, or any affiliate of the certified capital company, makes its first investment in the business:
560.33(1)(a)
(a) The business is headquartered in this state and its principal business operations are located in this state.
560.33(1)(am)
(am) The business is in need of venture capital and is unable to obtain conventional financing, as defined by the department by rule.
560.33(1)(b)
(b) The business has no more than 100 employees, at least 75% of whom are employed in this state.
560.33(1)(c)
(c) During its 2 most recent fiscal years, the business had, together with all of its consolidated affiliates, an average annual net income, after federal income taxes and excluding any carry-over losses, of not more than $2,000,000, as determined in accordance with generally accepted accounting principles.
560.33(1)(d)
(d) The business has, together with its consolidated affiliates, a net worth that is not in excess of $5,000,000.
560.33(1)(e)
(e) The business is not predominantly engaged in professional services provided by accountants, lawyers or physicians.
560.33(1)(f)
(f) The business is not engaged in the development of real estate for resale.
560.33(1)(g)
(g) The business is not engaged in banking or lending and does not make any loans to, or investments in, certified capital companies.
560.33(2)
(2) Department opinions and exceptions. A certified capital company may, prior to making an investment in a specific business, request a written opinion from the department that a business in which it proposes to invest is a qualified business. If the department determines that the business meets the requirements under
sub. (1), the department shall issue a written opinion stating that the business is a qualified business.
560.33 History
History: 1997 a. 215.
560.34
560.34
Operation of certified capital companies. 560.34(1)(1)
Qualified investments requirements. In order for a certified capital company to prevent disqualification under
s. 560.37 of an investment pool, the certified capital company shall ensure that the investment pool makes qualified investments in accordance with the schedule under
sub. (1m). An investment is a qualified investment if the investment meets all of the following requirements:
