AB531-ASA1, s. 57 25Section 57. 560.34 (1) (a) 1. of the statutes is amended to read:
AB531-ASA1,23,7
1560.34 (1) (a) 1. An equity security Except as otherwise provided in this
2subdivision, equity securities or options, warrants, or other equity participation
3instruments
of the qualified business, unless the certified capital company, after the
4investment and assuming full conversion and exercise of any equity participation
5instrument, owns more than 50 percent of the voting equity of the qualified business.
6The department may grant an exception to this percentage limitation under s. 560.33
7(2)
.
AB531-ASA1, s. 58 8Section 58. 560.34 (1) (a) 2. a. of the statutes is amended to read:
AB531-ASA1,23,119 560.34 (1) (a) 2. a. The debt is unsecured not secured by a first priority lien on
10any of the assets of the qualified business at the time of the certified capital
11company's qualified investment in the qualified business
.
AB531-ASA1, s. 59 12Section 59. 560.34 (1) (a) 2. b. of the statutes is amended to read:
AB531-ASA1,23,1913 560.34 (1) (a) 2. b. The Except as otherwise provided in this subd. 2. b., the debt
14is convertible into equity securities or options, warrants, or other equity
15participation instruments such as options or warrants or has attached equity
16participation rights, unless the debt and the equity participation instruments, if
17fully converted and exercised, would result in the certified capital company owning
18more than 50 percent of the voting equity of the qualified business. The department
19may grant an exception to this percentage limitation under s. 560.33 (2)
.
AB531-ASA1, s. 60 20Section 60. 560.34 (1) (b) of the statutes is amended to read:
AB531-ASA1,23,2321 560.34 (1) (b) As a condition of the investment, the qualified business agrees
22not to use the proceeds from the investment for the purpose of relocating its
23operations other than to this state.
AB531-ASA1, s. 61 24Section 61. 560.34 (1) (c) of the statutes is amended to read:
AB531-ASA1,24,3
1560.34 (1) (c) As a condition of the investment, the qualified business agrees,
2as long as the certified capital corporation company continues to hold the
3investment, not to relocate its headquarters out of this state.
AB531-ASA1, s. 62 4Section 62. 560.34 (1) (d) of the statutes is renumbered 560.34 (1) (d) (intro.)
5and amended to read:
AB531-ASA1,24,86 560.34 (1) (d) (intro.) As a condition of the investment, the qualified business
7agrees, as long as the certified capital corporation company continues to hold the
8investment, to maintain do any of the following:
AB531-ASA1,24,9 91. Maintain at least 75% of its employees in this state.
AB531-ASA1, s. 63 10Section 63. 560.34 (1) (d) 2. of the statutes is created to read:
AB531-ASA1,24,1211 560.34 (1) (d) 2. Pay at least 75 percent of its total payroll to employees who
12are employed in this state.
AB531-ASA1, s. 64 13Section 64. 560.34 (1) (e) of the statutes is amended to read:
AB531-ASA1,24,2314 560.34 (1) (e) As a condition of the investment, the qualified business agrees,
15as long as the certified capital corporation company continues to hold the
16investment, to maintain at least 75% of its employees at work sites that were
17maintained by the qualified business at the time that the investment was made or
18at work sites that are no more than 25 miles from the place where the headquarters
19or principal business operations of the qualified business are located at the time of
20the investment
, unless the qualified business obtains an exemption from the
21department under this paragraph. The department may grant an exemption unless
22it determines that the qualified business is locating the employees at new sites to
23take advantage of lower wage rates in the areas where the new sites are located.
AB531-ASA1, s. 65 24Section 65. 560.34 (1) (f) of the statutes is created to read:
AB531-ASA1,25,2
1560.34 (1) (f) The investment is consistent with the certified capital company's
2investment criteria.
AB531-ASA1, s. 66 3Section 66. 560.34 (1e) of the statutes is created to read:
AB531-ASA1,25,84 560.34 (1e) Use of certified investments for particular purposes. (a) Except
5as provided in pars. (b) and (c), a certified capital company may expend moneys in
6an investment pool to purchase, for the benefit of its certified investors, U.S. treasury
7securities, other investment-grade securities, a guaranty, indemnity, bond,
8insurance policy, or other payment undertaking, or any combination thereof.
AB531-ASA1,25,119 (b) No more than one of the certified investors of the certified capital company,
10or affiliate of such a certified investor, may provide a guaranty, indemnity, bond,
11insurance policy, or other payment undertaking under par. (a).
AB531-ASA1,25,1412 (c) With respect to a certified capital company that receives certified capital
13investments under s. 560.32 (2) (b) 2., no more than 25 percent of any particular
14investment pool may be expended under par. (a).
AB531-ASA1, s. 67 15Section 67. 560.34 (1g) of the statutes is created to read:
AB531-ASA1,25,1816 560.34 (1g) Discretionary exemptions. The department may grant an
17exemption from any requirement under sub. (1) if the certified capital company is in
18substantial compliance with the requirement.
AB531-ASA1, s. 68 19Section 68. 560.34 (1m) (a) 2. of the statutes is renumbered 560.34 (1m) (a)
202. a. and amended to read:
AB531-ASA1,25,2421 560.34 (1m) (a) 2. a. Within With respect to a certified capital company that
22receives certified capital investments under s. 560.32 (2) (b) 1., within
5 years after
23the investment date for a particular investment pool, at least 50% 50 percent of the
24investment pool shall be placed in qualified investments.
AB531-ASA1, s. 69 25Section 69. 560.34 (1m) (a) 2. b. of the statutes is created to read:
AB531-ASA1,26,5
1560.34 (1m) (a) 2. b. With respect to a certified capital company that receives
2certified capital investments under s. 560.32 (2) (b) 2., within 5 years after the
3investment date for a particular investment pool, at least 50 percent of the
4investment pool shall be placed in qualified investments and, of such 50 percent, at
5least 50 percent shall be placed in qualified investments in early stage businesses.
AB531-ASA1, s. 70 6Section 70. 560.34 (1m) (b) of the statutes is amended to read:
AB531-ASA1,26,207 560.34 (1m) (b) The proceeds of all capital of a qualified investment returned
8to a certified capital company by a qualified business may be placed in new qualified
9investments, which shall count toward the percentage requirements under par. (a)
10and s. 560.36 (3) (1) (c). The department shall promulgate rules governing the extent
11to which a reinvestment of proceeds from the sale of a qualified investment in a
12qualified business may be counted toward the percentage requirements under par.
13(a) and ss. 560.36 (3) (1) (c) and 560.37 (3m) (a) 2. These rules may provide that
14reinvested proceeds from the sale of short-term investments shall be only partially
15counted toward the percentage requirements under par. (a) and ss. 560.36 (3) (1) (c)
16and 560.37 (3m) (a) 2. The rules may also provide that proceeds from the sale of an
17investment in a qualified business that are reinvested in that qualified business, or
18an affiliate of that qualified business, shall be only partially counted toward the
19percentage requirements under par. (a) and ss. 560.36 (3) (1) (c) and 560.37 (3m) (a)
202.
AB531-ASA1, s. 71 21Section 71. 560.34 (2) of the statutes is renumbered 560.34 (2) (intro.) and
22amended to read:
AB531-ASA1,27,323 560.34 (2) (intro.) Nonqualified investments. All certified capital investments
24in a certified capital company that are not invested in qualified investments may be
25held or invested by the certified capital company as it considers appropriate, except

1that a certified capital company may not invest certified capital investments in an
2insurance company or in an affiliate of an insurance company.
only in any of the
3following:
AB531-ASA1, s. 72 4Section 72. 560.34 (2) (a) to (k) of the statutes are created to read:
AB531-ASA1,27,65 560.34 (2) (a) Deposits with a federally insured financial institution, as defined
6in s. 705.01 (3).
AB531-ASA1,27,87 (b) Certificates of deposit in a federally insured financial institution, as defined
8in s. 705.01 (3).
AB531-ASA1,27,119 (c) Investment securities that are obligations of the United States or its
10agencies or instrumentalities, or that are obligations that are guaranteed fully as to
11principal and interest by the United States.
AB531-ASA1,27,1312 (d) Commercial paper rated at least "A1," "P1," or the equivalent, by a
13nationally recognized credit rating organization.
AB531-ASA1,27,1514 (e) Debt instruments rated at least "AA" or its equivalent by a nationally
15recognized credit rating organization.
AB531-ASA1,27,1916 (f) Debt instruments issued by, or guaranteed with respect to payment by, an
17entity whose unsecured indebtedness is rated at least "AA" or its equivalent by a
18nationally recognized credit rating organization and which are not subordinated to
19other unsecured indebtedness of the issuer or guarantor, as applicable.
AB531-ASA1,27,2220 (g) Swaps designed to realize or protect the value of a qualified investment, if
21the counterparty is rated at least "A" or its equivalent by a nationally recognized
22credit rating organization.
AB531-ASA1,27,2323 (h) Obligations of the state or any political subdivision of the state.
AB531-ASA1,27,2524 (i) Interests in money market or other mutual funds, the portfolios of which are
25limited to cash and other permissible investments described in this subsection.
AB531-ASA1,28,1
1(j) A small business investment company that is approved by the department.
AB531-ASA1,28,22 (k) Any other investments approved in advance in writing by the department.
AB531-ASA1, s. 73 3Section 73. 560.34 (4) of the statutes is amended to read:
AB531-ASA1,28,104 560.34 (4) Restrictions on management. No certified capital company may be
5managed or controlled by, or have a general partner that is, an insurance company,
6a person who is subject to taxation under subchs. I, II, and IV of ch. 76, a credit union
7organized under ch. 186, a savings bank organized under ch. 214, a savings and loan
8association organized under ch. 215, or a bank organized under ch. 221,
or an affiliate
9of an insurance company any such entity and that is a certified investor in the
10certified capital company
.
AB531-ASA1, s. 74 11Section 74. 560.34 (5) of the statutes is created to read:
AB531-ASA1,28,1612 560.34 (5) Qualified investment becoming nonqualified. (a) If a certified
13capital company makes an investment authorized under s. 560.32 (2) (b) 2. in a
14qualified business and during the time that the certified capital company still holds
15the investment, the qualified business violates an agreement made under sub. (1) (b)
16to (e), all of the following apply:
AB531-ASA1,28,2017 1. The violation does not affect the certified capital company's satisfaction of
18the percentage requirements under sub. (1m) (a) 1. or 2., and 100 percent of the
19amount of the qualified investment shall be counted toward the certified capital
20company's satisfaction of those percentage requirements.
AB531-ASA1,28,2421 2. If the violation occurs within the first year after the qualified investment was
22made, no amount of the qualified investment shall be counted toward the certified
23capital company's satisfaction of the percentage requirements under ss. 560.36 (3)
24and 560.37 (3m) (a).
AB531-ASA1,29,4
13. If the violation occurs more than one year, but 3 years or less, after the
2qualified investment was made, only 25 percent of the amount of the qualified
3investment shall be counted toward the certified capital company's satisfaction of the
4percentage requirements under ss. 560.36 (3) and 560.37 (3m) (a).
AB531-ASA1,29,85 4. If the violation occurs more than 3 years, but 5 years or less, after the
6qualified investment was made, only 50 percent of the amount of the qualified
7investment shall be counted toward the certified capital company's satisfaction of the
8percentage requirements under ss. 560.36 (3) and 560.37 (3m) (a).
AB531-ASA1,29,129 5. If the violation occurs more than 5 years after the qualified investment was
10made, 90 percent of the amount of the qualified investment shall be counted toward
11the certified capital company's satisfaction of the percentage requirements under ss.
12560.36 (3) and 560.37 (3m) (a).
AB531-ASA1,29,1913 (b) Notwithstanding par. (a), if a qualified business violates an agreement
14under sub. (1) (b), (c), (d), or (e), the department may grant an exception to the
15requirements under par. (a) 2. to 5. and not reduce the amount of the qualified
16investment that is counted toward the certified capital company's satisfaction of the
17percentage requirements under ss. 560.36 (3) and 560.37 (3m) (a), unless the
18department determines that the qualified business is locating employees at new sites
19to take advantage of lower wage rates in the areas where those sites are located.
AB531-ASA1, s. 75 20Section 75. 560.35 (1c) of the statutes is created to read:
AB531-ASA1,29,2321 560.35 (1c) Qualified investments. Within 3 business days after making a
22qualified investment, a certified capital company shall report all of the following to
23the department:
AB531-ASA1,29,2524 (a) The name of the qualified business in which the qualified investment was
25made.
AB531-ASA1,30,1
1(b) The amount of the qualified investment.
AB531-ASA1,30,22 (c) The type of investment, as specified in s. 560.34 (1) (a) 1. or 2. a. or b.
AB531-ASA1, s. 76 3Section 76. 560.35 (1r) of the statutes is created to read:
AB531-ASA1,30,94 560.35 (1r) Qualified investment schedule report. Within 30 days after the
5conclusion of each time period specified in s. 560.34 (1m) (a), a certified capital
6company shall report to the department, in the format and substance prescribed by
7the department, information required by the department for determining whether
8the certified capital company is in compliance with the percentage requirements
9under s. 560.34 (1m) (a).
AB531-ASA1, s. 77 10Section 77. 560.35 (2) (intro.) of the statutes is amended to read:
AB531-ASA1,30,1511 560.35 (2) Annual Semiannual reports. (intro.) On Each year, on or before
12January 31 annually, for the preceding 6-month period ending on December 31, and
13on or before July 31, for the preceding 6-month period ending on June 30
, a certified
14capital company shall report, in the format and substance prescribed by the
15department,
all of the following to the department:
AB531-ASA1, s. 78 16Section 78. 560.35 (2) (a) of the statutes is amended to read:
AB531-ASA1,30,1817 560.35 (2) (a) The amount of the certified capital company's certified capital at
18the end of the preceding year 6-month period.
AB531-ASA1, s. 79 19Section 79. 560.35 (2) (c) of the statutes is amended to read:
AB531-ASA1,30,2220 560.35 (2) (c) All qualified investments that the certified capital company has
21made during the previous calendar year preceding 6-month period and the
22investment pool from which each qualified investment was made.
AB531-ASA1, s. 80 23Section 80. 560.35 (2) (d) of the statutes is created to read:
AB531-ASA1,31,224 560.35 (2) (d) All amounts that the certified capital company has expended
25under s. 560.34 (1e) (a), the investment pool from which each such expenditure was

1made, and the percentage of the total amount of the investment pool which each such
2expenditure represents.
AB531-ASA1, s. 81 3Section 81. 560.35 (3) of the statutes is amended to read:
AB531-ASA1,31,194 560.35 (3) Financial statements. Within 90 days of the end of the certified
5capital company's fiscal year, the certified capital company shall provide to the
6department a copy of its annual audited financial statements, including the opinion
7of an independent certified public accountant, and a copy of a report on agreed-upon
8procedures prepared by an independent certified public accountant
. The audit shall
9address agreed-upon-procedures report shall identify the procedures performed by
10the certified capital company, as prescribed by the department, that relate to
the
11methods of operation and conduct of the business of the certified capital company to
12enable the department to determine whether the certified capital company is
13complying with this subchapter and the rules promulgated under this subchapter,
14including whether certified capital has been invested in the manner required under
15s. 560.34. The financial statements and agreed-upon-procedures report provided
16under this subsection shall be segregated by investment pool and shall be separately
17audited on that basis
to allow the department to determine whether the certified
18capital company is in compliance with s. 560.34 (1m) this subchapter and the rules
19promulgated under this subchapter
.
AB531-ASA1, s. 82 20Section 82. 560.36 (intro.) of the statutes is renumbered 560.36 (1) (intro.) and
21amended to read:
AB531-ASA1,31,2322 560.36 (1) (intro.) A Except as provided in sub. (2), a certified capital company
23may make a distribution only if one of the following conditions is met:
AB531-ASA1, s. 83 24Section 83. 560.36 (1) to (4) of the statutes are renumbered 560.36 (1) (a) to
25(d) and 560.36 (1) (c), as renumbered, is amended to read:
AB531-ASA1,32,7
1560.36 (1) (c) Placement of 100% 100 percent of investments in qualified
2investments.
The certified capital company has placed in qualified investments an
3amount equal to 100% 100 percent of the certified capital investments in the
4investment pool and at least 60 percent of the total amount of such investments
5purchased equity securities; options, warrants, or other equity participation
6instruments; or debt that is convertible into equity securities or options, warrants,
7or other equity participation instruments
.
AB531-ASA1, s. 84 8Section 84. 560.36 (2m) of the statutes is created to read:
AB531-ASA1,32,219 560.36 (2m) State participation. A certified capital company that receives
10certified capital investments under s. 560.32 (2) (b) 2. shall pay to the department,
11for deposit into the general fund, 30 percent of the net profits and gains realized by
12the certified capital company on qualified investments resulting from those certified
13capital investments, except that the payment required under this subsection is 20
14percent of those net profits and gains if the certified capital company, either
15concurrently with or after receiving certified capital investments under s. 560.32 (2)
16(b) 2., raises an additional pool of venture capital that does not contain certified
17capital investments and that is of a sufficient size and is sufficiently focused on
18investing in Wisconsin businesses, as determined by the department. A certified
19capital company shall make all payments required under this subsection
20concurrently with distributions of profits and gains to owners of the certified capital
21company.
AB531-ASA1, s. 85 22Section 85. 560.37 (1m) of the statutes is created to read:
AB531-ASA1,33,623 560.37 (1m) Reduced management fee. If a certified capital company violates
24s. 560.34 (1e) (c) or (1m) (a), the department may order the certified capital company
25to reduce its annual management fee to the percentage of the certified capital

1company's total certified capital, or the total dollar amount, specified in that order.
2A certified capital company may, within 10 days after receiving an order under this
3subsection, request a contested case hearing under s. 227.42 from the department.
4If the final administrative or judicial proceeding results in a determination that the
5order was issued in error or was unreasonable, the department shall rescind or revise
6the order accordingly.
AB531-ASA1, s. 86 7Section 86. 560.37 (3m) (a) (intro.) and 2. of the statutes are consolidated,
8renumbered 560.37 (3m) (a) and amended to read:
AB531-ASA1,33,139 560.37 (3m) (a) A certified capital company may voluntary decertify itself as
10a certified capital company if any of the following conditions are met: 2. The only
11if the
certified capital company has placed in qualified investments an amount equal
12to 100% 100 percent of the certified capital investment in the certified capital
13company.
AB531-ASA1, s. 87 14Section 87. 560.37 (3m) (a) 1. of the statutes is repealed.
AB531-ASA1, s. 88 15Section 88. 560.37 (4) of the statutes is amended to read:
AB531-ASA1,33,1816 560.37 (4) Effect of decertification. Decertification of a certified capital
17company or an investment pool has the effects specified in s. ss. 71.07 (7m) (e), 71.28
18(7m) (e), 71.47 (7) (d) and (7m) (e), and
76.635 (4).
AB531-ASA1, s. 89 19Section 89. 560.37 (5) of the statutes is amended to read:
AB531-ASA1,33,2320 560.37 (5) Notices to certified investors. The department shall notify a
21certified investor when the certified capital company tax credit arising from a
22certified investment is no longer subject to recapture and forfeiture under s. ss. 71.07
23(7m) (e), 71.28 (7m) (e), 71.47 (7) (d) and (7m) (e), and
76.635 (4).
AB531-ASA1, s. 90 24Section 90. Nonstatutory provisions.
AB531-ASA1,34,7
1(1 ) Performance evaluation audit. The joint legislative audit committee is
2requested to, and may, direct the legislative audit bureau to perform a performance
3evaluation audit of the program under subchapter II of chapter 560 of the statutes,
4which shall include evaluating the overall effectiveness of the program. If the
5committee directs the legislative audit bureau to perform an audit under this
6subsection, the bureau shall file its report as described in section 13.94 (1) (b) of the
7statutes by January 1, 2005.
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