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-ASA1,23,2321
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-ASA1,24,3
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-ASA1,24,2314
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-ASA1,25,2
1560.34
(1) (f) The investment is consistent with the certified capital company's
2investment criteria.
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-ASA1,25,1816
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-ASA1,26,207
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-ASA1,28,104
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-ASA1,28,1612
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-ASA1,29,2321
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-ASA1,30,94
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-ASA1,30,1817
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-ASA1,30,2220
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-ASA1,31,224
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-ASA1,31,194
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-ASA1,32,219
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-ASA1,33,623
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-ASA1,33,1816
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-ASA1,33,2320
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-ASA1,34,7
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.
AB531-ASA1,34,88
(2)
Existing contracts.
AB531-ASA1,34,109
(a)
Definition. In this subsection, "certified capital company" has the meaning
10given in section 560.30 (2) of the statutes.