Amendment ASA1-AB531

AB531-ASA1,20,23 560.33 (1) (j) The business is engaged in at least one of the following activities:

AB531-ASA1,20,24 1. Manufacturing, processing, or assembling products.

AB531-ASA1,21,2 2. Providing services, unless the services are of such a nature that the department disapproves of the business under sub. (2).

AB531-ASA1,21,3 3. Conducting research and development.

AB531-ASA1,21,5 4. Conducting any other business that is not excluded under this subsection and that is approved by the department under sub. (2).

AB531-ASA1, s. 53 Section 53. 560.33 (1) (k) of the statutes is created to read:

AB531-ASA1,21,13 560.33 (1) (k) The business does not have a financial relationship with a certified capital company or any affiliate of a certified capital company before the date on which the certified capital company makes its first investment in the business, unless the business is approved under sub. (2) notwithstanding such a financial relationship. This paragraph does not prohibit a certified capital company from providing financial advice to a business before making an investment in the business.

AB531-ASA1, s. 54 Section 54. 560.33 (2) of the statutes is renumbered 560.33 (2) (a) and amended to read:

AB531-ASA1,22,6 560.33 (2) (a) A certified capital company may shall, 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 provide the department with a description of the proposed investment in the form prescribed by the department. Within 15 business days of receiving the description, the department shall determine whether the business is a qualified business and the proposed investment is consistent with the certified capital company's investment criteria and, if the business is not a qualified business or the proposed investment is not consistent, notify the certified capital company in writing of the determination and the reasons for the determination. If the department fails to so notify the certified capital company within 15 business days of receiving the request, the business shall be deemed a qualified business and the investment shall be deemed consistent, notwithstanding any failure to satisfy sub. (1) or s. 560.34 (1) (f).

AB531-ASA1, s. 55 Section 55. 560.33 (2) (b) and (c) of the statutes are created to read:

AB531-ASA1,22,11 560.33 (2) (b) During the 15 business day period established under par. (a), the department may make a determination that a business is a qualified business, notwithstanding any failure to satisfy sub. (1), if the certified capital company's proposed investment in the business will further the goals of this subchapter.

AB531-ASA1,22,17 (c) If the department determines that a proposed investment is not consistent with a certified capital company's investment criteria, the certified capital company may, within 10 days after the department's decision, request a contested case hearing under s. 227.42 from the department. If the final administrative or judicial proceeding results in a determination that the investment is consistent, the department shall issue a redetermination accordingly.

AB531-ASA1, s. 56 Section 56. 560.34 (1) (intro.) of the statutes is amended to read:

AB531-ASA1,22,24 560.34 (1) Qualified investments requirements. (intro.) 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 Except as provided in sub. (1g), an investment is a qualified investment if the investment meets all of the following requirements:

AB531-ASA1, s. 57 Section 57. 560.34 (1) (a) 1. of the statutes is amended to read:

AB531-ASA1,23,7 560.34 (1) (a) 1. An equity security Except as otherwise provided in this subdivision, equity securities or options, warrants, or other equity participation instruments of the qualified business, unless the certified capital company, after the investment and assuming full conversion and exercise of any equity participation instrument, owns more than 50 percent of the voting equity of the qualified business. The department may grant an exception to this percentage limitation under s. 560.33 (2).

AB531-ASA1, s. 58 Section 58. 560.34 (1) (a) 2. a. of the statutes is amended to read:

AB531-ASA1,23,11 560.34 (1) (a) 2. a. The debt is unsecured not secured by a first priority lien on any of the assets of the qualified business at the time of the certified capital company's qualified investment in the qualified business.

AB531-ASA1, s. 59 Section 59. 560.34 (1) (a) 2. b. of the statutes is amended to read:

AB531-ASA1,23,19 560.34 (1) (a) 2. b. The Except as otherwise provided in this subd. 2. b., the debt is convertible into equity securities or options, warrants, or other equity participation instruments such as options or warrants or has attached equity participation rights, unless the debt and the equity participation instruments, if fully converted and exercised, would result in the certified capital company owning more than 50 percent of the voting equity of the qualified business. The department may grant an exception to this percentage limitation under s. 560.33 (2).

AB531-ASA1, s. 60 Section 60. 560.34 (1) (b) of the statutes is amended to read:

AB531-ASA1,23,23 560.34 (1) (b) As a condition of the investment, the qualified business agrees not to use the proceeds from the investment for the purpose of relocating its operations other than to this state.

AB531-ASA1, s. 61 Section 61. 560.34 (1) (c) of the statutes is amended to read:

AB531-ASA1,24,3 560.34 (1) (c) As a condition of the investment, the qualified business agrees, as long as the certified capital corporation company continues to hold the investment, not to relocate its headquarters out of this state.

AB531-ASA1, s. 62 Section 62. 560.34 (1) (d) of the statutes is renumbered 560.34 (1) (d) (intro.) and amended to read:

AB531-ASA1,24,8 560.34 (1) (d) (intro.) As a condition of the investment, the qualified business agrees, as long as the certified capital corporation company continues to hold the investment, to maintain do any of the following:

AB531-ASA1,24,9 1. Maintain at least 75% of its employees in this state.

AB531-ASA1, s. 63 Section 63. 560.34 (1) (d) 2. of the statutes is created to read:

AB531-ASA1,24,12 560.34 (1) (d) 2. Pay at least 75 percent of its total payroll to employees who are employed in this state.

AB531-ASA1, s. 64 Section 64. 560.34 (1) (e) of the statutes is amended to read:

AB531-ASA1,24,23 560.34 (1) (e) As a condition of the investment, the qualified business agrees, as long as the certified capital corporation company continues to hold the investment, to maintain at least 75% of its employees at work sites that were maintained by the qualified business at the time that the investment was made or at work sites that are no more than 25 miles from the place where the headquarters or principal business operations of the qualified business are located at the time of the investment, unless the qualified business obtains an exemption from the department under this paragraph. The department may grant an exemption unless it determines that the qualified business is locating the employees at new sites to take advantage of lower wage rates in the areas where the new sites are located.

AB531-ASA1, s. 65 Section 65. 560.34 (1) (f) of the statutes is created to read:

AB531-ASA1,25,2 560.34 (1) (f) The investment is consistent with the certified capital company's investment criteria.

AB531-ASA1, s. 66 Section 66. 560.34 (1e) of the statutes is created to read:

AB531-ASA1,25,8 560.34 (1e) Use of certified investments for particular purposes. (a) Except as provided in pars. (b) and (c), a certified capital company may expend moneys in an investment pool to purchase, for the benefit of its certified investors, U.S. treasury securities, other investment-grade securities, a guaranty, indemnity, bond, insurance policy, or other payment undertaking, or any combination thereof.

AB531-ASA1,25,11 (b) No more than one of the certified investors of the certified capital company, or affiliate of such a certified investor, may provide a guaranty, indemnity, bond, insurance policy, or other payment undertaking under par. (a).

AB531-ASA1,25,14 (c) With respect to a certified capital company that receives certified capital investments under s. 560.32 (2) (b) 2., no more than 25 percent of any particular investment pool may be expended under par. (a).

AB531-ASA1, s. 67 Section 67. 560.34 (1g) of the statutes is created to read:

AB531-ASA1,25,18 560.34 (1g) Discretionary exemptions. The department may grant an exemption from any requirement under sub. (1) if the certified capital company is in substantial compliance with the requirement.

AB531-ASA1, s. 68 Section 68. 560.34 (1m) (a) 2. of the statutes is renumbered 560.34 (1m) (a) 2. a. and amended to read:

AB531-ASA1,25,24 560.34 (1m) (a) 2. a. Within With respect to a certified capital company that receives certified capital investments under s. 560.32 (2) (b) 1., within 5 years after the investment date for a particular investment pool, at least 50% 50 percent of the investment pool shall be placed in qualified investments.

AB531-ASA1, s. 69 Section 69. 560.34 (1m) (a) 2. b. of the statutes is created to read:

AB531-ASA1,26,5 560.34 (1m) (a) 2. b. With respect to a certified capital company that receives certified capital investments under s. 560.32 (2) (b) 2., within 5 years after the investment date for a particular investment pool, at least 50 percent of the investment pool shall be placed in qualified investments and, of such 50 percent, at least 50 percent shall be placed in qualified investments in early stage businesses.

AB531-ASA1, s. 70 Section 70. 560.34 (1m) (b) of the statutes is amended to read:

AB531-ASA1,26,20 560.34 (1m) (b) The proceeds of all capital of a qualified investment returned to a certified capital company by a qualified business may be placed in new qualified investments, which shall count toward the percentage requirements under par. (a) and s. 560.36 (3) (1) (c). The department shall promulgate rules governing the extent to which a reinvestment of proceeds from the sale of a qualified investment in a qualified business may be counted toward the percentage requirements under par. (a) and ss. 560.36 (3) (1) (c) and 560.37 (3m) (a) 2. These rules may provide that reinvested proceeds from the sale of short-term investments shall be only partially counted toward the percentage requirements under par. (a) and ss. 560.36 (3) (1) (c) and 560.37 (3m) (a) 2. The rules may also provide that proceeds from the sale of an investment in a qualified business that are reinvested in that qualified business, or an affiliate of that qualified business, shall be only partially counted toward the percentage requirements under par. (a) and ss. 560.36 (3) (1) (c) and 560.37 (3m) (a) 2.

AB531-ASA1, s. 71 Section 71. 560.34 (2) of the statutes is renumbered 560.34 (2) (intro.) and amended to read:

AB531-ASA1,27,3 560.34 (2) (intro.) Nonqualified investments. All certified capital investments in a certified capital company that are not invested in qualified investments may be held or invested by the certified capital company as it considers appropriate, except that a certified capital company may not invest certified capital investments in an insurance company or in an affiliate of an insurance company. only in any of the following:

AB531-ASA1, s. 72 Section 72. 560.34 (2) (a) to (k) of the statutes are created to read:

AB531-ASA1,27,6 560.34 (2) (a) Deposits with a federally insured financial institution, as defined in s. 705.01 (3).

AB531-ASA1,27,8 (b) Certificates of deposit in a federally insured financial institution, as defined in s. 705.01 (3).

AB531-ASA1,27,11 (c) Investment securities that are obligations of the United States or its agencies or instrumentalities, or that are obligations that are guaranteed fully as to principal and interest by the United States.

AB531-ASA1,27,13 (d) Commercial paper rated at least "A1," "P1," or the equivalent, by a nationally recognized credit rating organization.

AB531-ASA1,27,15 (e) Debt instruments rated at least "AA" or its equivalent by a nationally recognized credit rating organization.

AB531-ASA1,27,19 (f) Debt instruments issued by, or guaranteed with respect to payment by, an entity whose unsecured indebtedness is rated at least "AA" or its equivalent by a nationally recognized credit rating organization and which are not subordinated to other unsecured indebtedness of the issuer or guarantor, as applicable.

AB531-ASA1,27,22 (g) Swaps designed to realize or protect the value of a qualified investment, if the counterparty is rated at least "A" or its equivalent by a nationally recognized credit rating organization.

AB531-ASA1,27,23 (h) Obligations of the state or any political subdivision of the state.

AB531-ASA1,27,25 (i) Interests in money market or other mutual funds, the portfolios of which are limited to cash and other permissible investments described in this subsection.

AB531-ASA1,28,1 (j) A small business investment company that is approved by the department.

AB531-ASA1,28,2 (k) Any other investments approved in advance in writing by the department.

AB531-ASA1, s. 73 Section 73. 560.34 (4) of the statutes is amended to read:

AB531-ASA1,28,10 560.34 (4) Restrictions on management. No certified capital company may be managed or controlled by, or have a general partner that is, an insurance company, a person who is subject to taxation under subchs. I, II, and IV of ch. 76, a credit union organized under ch. 186, a savings bank organized under ch. 214, a savings and loan association organized under ch. 215, or a bank organized under ch. 221, or an affiliate of an insurance company any such entity and that is a certified investor in the certified capital company.

AB531-ASA1, s. 74 Section 74. 560.34 (5) of the statutes is created to read:

AB531-ASA1,28,16 560.34 (5) Qualified investment becoming nonqualified. (a) If a certified capital company makes an investment authorized under s. 560.32 (2) (b) 2. in a qualified business and during the time that the certified capital company still holds the investment, the qualified business violates an agreement made under sub. (1) (b) to (e), all of the following apply:

AB531-ASA1,28,20 1. The violation does not affect the certified capital company's satisfaction of the percentage requirements under sub. (1m) (a) 1. or 2., and 100 percent of the amount of the qualified investment shall be counted toward the certified capital company's satisfaction of those percentage requirements.

AB531-ASA1,28,24 2. If the violation occurs within the first year after the qualified investment was made, no amount of the qualified investment shall be counted toward the certified capital company's satisfaction of the percentage requirements under ss. 560.36 (3) and 560.37 (3m) (a).

AB531-ASA1,29,4 3. If the violation occurs more than one year, but 3 years or less, after the qualified investment was made, only 25 percent of the amount of the qualified investment shall be counted toward the certified capital company's satisfaction of the percentage requirements under ss. 560.36 (3) and 560.37 (3m) (a).

AB531-ASA1,29,8 4. If the violation occurs more than 3 years, but 5 years or less, after the qualified investment was made, only 50 percent of the amount of the qualified investment shall be counted toward the certified capital company's satisfaction of the percentage requirements under ss. 560.36 (3) and 560.37 (3m) (a).

AB531-ASA1,29,12 5. If the violation occurs more than 5 years after the qualified investment was made, 90 percent of the amount of the qualified investment shall be counted toward the certified capital company's satisfaction of the percentage requirements under ss. 560.36 (3) and 560.37 (3m) (a).

AB531-ASA1,29,19 (b) Notwithstanding par. (a), if a qualified business violates an agreement under sub. (1) (b), (c), (d), or (e), the department may grant an exception to the requirements under par. (a) 2. to 5. and not reduce the amount of the qualified investment that is counted toward the certified capital company's satisfaction of the percentage requirements under ss. 560.36 (3) and 560.37 (3m) (a), unless the department determines that the qualified business is locating employees at new sites to take advantage of lower wage rates in the areas where those sites are located.

AB531-ASA1, s. 75 Section 75. 560.35 (1c) of the statutes is created to read:

AB531-ASA1,29,23 560.35 (1c) Qualified investments. Within 3 business days after making a qualified investment, a certified capital company shall report all of the following to the department:

AB531-ASA1,29,25 (a) The name of the qualified business in which the qualified investment was made.

AB531-ASA1,30,1 (b) The amount of the qualified investment.

AB531-ASA1,30,2 (c) The type of investment, as specified in s. 560.34 (1) (a) 1. or 2. a. or b.

AB531-ASA1, s. 76 Section 76. 560.35 (1r) of the statutes is created to read:

AB531-ASA1,30,9 560.35 (1r) Qualified investment schedule report. Within 30 days after the conclusion of each time period specified in s. 560.34 (1m) (a), a certified capital company shall report to the department, in the format and substance prescribed by the department, information required by the department for determining whether the certified capital company is in compliance with the percentage requirements under s. 560.34 (1m) (a).

AB531-ASA1, s. 77 Section 77. 560.35 (2) (intro.) of the statutes is amended to read:

AB531-ASA1,30,15 560.35 (2) Annual Semiannual reports. (intro.) On Each year, on or before January 31 annually, for the preceding 6-month period ending on December 31, and on or before July 31, for the preceding 6-month period ending on June 30, a certified capital company shall report, in the format and substance prescribed by the department, all of the following to the department:

AB531-ASA1, s. 78 Section 78. 560.35 (2) (a) of the statutes is amended to read:

AB531-ASA1,30,18 560.35 (2) (a) The amount of the certified capital company's certified capital at the end of the preceding year 6-month period.

AB531-ASA1, s. 79 Section 79. 560.35 (2) (c) of the statutes is amended to read:

AB531-ASA1,30,22 560.35 (2) (c) All qualified investments that the certified capital company has made during the previous calendar year preceding 6-month period and the investment pool from which each qualified investment was made.

AB531-ASA1, s. 80 Section 80. 560.35 (2) (d) of the statutes is created to read:

AB531-ASA1,31,2 560.35 (2) (d) All amounts that the certified capital company has expended under s. 560.34 (1e) (a), the investment pool from which each such expenditure was made, and the percentage of the total amount of the investment pool which each such expenditure represents.

AB531-ASA1, s. 81 Section 81. 560.35 (3) of the statutes is amended to read:

AB531-ASA1,31,19 560.35 (3) Financial statements. Within 90 days of the end of the certified capital company's fiscal year, the certified capital company shall provide to the department a copy of its annual audited financial statements, including the opinion of an independent certified public accountant, and a copy of a report on agreed-upon procedures prepared by an independent certified public accountant. The audit shall address agreed-upon-procedures report shall identify the procedures performed by the certified capital company, as prescribed by the department, that relate to the methods of operation and conduct of the business of the certified capital company to enable the department to determine whether the certified capital company is complying with this subchapter and the rules promulgated under this subchapter, including whether certified capital has been invested in the manner required under s. 560.34. The financial statements and agreed-upon-procedures report provided under this subsection shall be segregated by investment pool and shall be separately audited on that basis to allow the department to determine whether the certified capital company is in compliance with s. 560.34 (1m) this subchapter and the rules promulgated under this subchapter.

AB531-ASA1, s. 82 Section 82. 560.36 (intro.) of the statutes is renumbered 560.36 (1) (intro.) and amended to read:

AB531-ASA1,31,23 560.36 (1) (intro.) A Except as provided in sub. (2), a certified capital company may make a distribution only if one of the following conditions is met:

AB531-ASA1, s. 83 Section 83. 560.36 (1) to (4) of the statutes are renumbered 560.36 (1) (a) to (d) and 560.36 (1) (c), as renumbered, is amended to read: