AB531: Bill Text

6. Obligations of the state or any political subdivision of the state.

7. Interests in money market funds, the portfolios of which are limited to cash and obligations in which the certified capital company could invest the funds directly.

8. A small business investment company that is approved by the department.

9. Any other investments approved in advance in writing by the department.

Performance evaluation audit

This bill requests the Joint Legislative Audit Committee to direct the Legislative Audit Bureau to perform a performance evaluation audit of the certified capital company program.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB531, s. 1 Section 1. 71.45 (2) (a) 10. of the statutes is amended to read:

AB531,6,6 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx) and (7) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, limited liability company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) and the amount of credit computed under s. 71.47 (1), (3), (4), and (5).

AB531, s. 2 Section 2. 71.47 (7) of the statutes is created to read:

AB531,6,8 71.47 (7) Certified capital company credit. (a) In this subsection:

AB531,6,9 1. "Certified capital company" has the meaning given in s. 560.30 (2).

AB531,6,10 2. "Certified capital investment" has the meaning given in s. 560.30 (4).

AB531,6,11 3. "Investment date" has the meaning given in s. 560.30 (6).

AB531,6,12 4. "Investment pool" has the meaning given in s. 560.30 (7).

AB531,6,13 5. "Qualified investment" has the meaning given in s. 560.30 (11).

AB531,6,19 (b) An insurer who makes a certified capital investment may claim as a credit against the tax imposed under s. 71.43, for 10 years beginning with the year of the investment, an amount equal to either 10% of that investment or the amount by which the sum of the insurer's certified capital investments and the insurer's qualified investments exceeds the insurer's qualified investments in the taxable year before the insurer first claimed the credit under this section, whichever is less.

AB531,6,21 (c) Section 71.28 (4) (e), (f), (g), and (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

AB531,7,2 (d) 1. If a certified capital company is decertified, or an investment pool is disqualified, under s. 560.37 before the certified capital company fulfills the investment requirement under s. 560.34 (1m) (a) 1. with respect to the investment pool, any insurer that has received a credit under this subsection with respect to that investment pool shall repay that credit to the department of revenue and may not claim more credit in respect to that investment pool.

AB531,7,12 2. If a certified capital company fulfills the investment requirement under s. 560.34 (1m) (a) 1. with respect to an investment pool but the certified capital company is decertified, or an investment pool is disqualified, under s. 560.37 before the certified capital company fulfills the investment requirement under s. 560.34 (1m) (a) 2. for that investment pool, any insurer that has received a credit under this subsection with respect to that investment pool shall repay all credits that were claimed for taxable years after the taxable year that includes the 3rd anniversary of the investment date of the investment pool and may claim no more credits for taxable years after the taxable year that includes the 3rd anniversary of the investment date of the investment pool.

AB531,7,16 (e) An insurer may sell a credit under this subsection to another insurer who is subject to the tax imposed under s. 71.43 if the insurer notifies the commissioner of insurance and the department of revenue of the sale and includes with such notifications copies of the transfer documents.

AB531, s. 3 Section 3. 71.49 (1) (dm) of the statutes is created to read:

AB531,7,18 71.49 (1) (dm) Certified capital company credit under s. 71.47 (7).

AB531, s. 4 Section 4. 560.30 (3) of the statutes is amended to read:

AB531,7,21 560.30 (3) "Certified capital company tax credit" means the tax credit under s. ss. 71.47 (7) and 76.635.

AB531, s. 5 Section 5. 560.30 (10) (d) of the statutes is amended to read:

AB531,8,2 560.30 (10) (d) A projected increase in federal or state taxes, including excluding 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.

AB531, s. 6 Section 6. 560.30 (10) (e) of the statutes is created to read:

AB531,8,5 560.30 (10) (e) Reasonable costs associated with applying for qualified federal funding programs, as determined by the department.

AB531, s. 7 Section 7. 560.31 (1) of the statutes is amended to read:

AB531,8,14 560.31 (1) Application. The department shall promulgate rules establishing procedures under which a person may apply to become a certified capital company for receiving certified capital investments under s. 560.32 (2) (b) 1. or a certified capital company for receiving certified capital investments under s. 560.32 (2) (b) 2. 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.

AB531, s. 8 Section 8. 560.31 (2) (b) of the statutes is amended to read:

AB531,8,18 560.31 (2) (b) The At the time of application and on the date on which the person is certified, 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.

AB531, s. 9 Section 9. 560.31 (2) (g) of the statutes is created to read:

AB531,8,21 560.31 (2) (g) The person agrees to maintain in this state an investment office and staff actively engaged in making investments.

AB531, s. 10 Section 10. 560.32 (2) (b) of the statutes is renumbered 560.32 (2) (b) 1. and amended to read:

AB531,9,2 560.32 (2) (b) 1. The Prior to the effective date of this subdivision .... [revisor inserts date], 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.

AB531, s. 11 Section 11. 560.32 (2) (b) 2. of the statutes is created to read:

AB531,9,7 560.32 (2) (b) 2. Beginning on the effective date of this subdivision .... [revisor inserts date], the department shall certify investments for which notices have been received under par. (a), up to $300,000,000, excluding any investments certified under subd. 1.

AB531, s. 12 Section 12. 560.32 (2) (c) of the statutes is renumbered 560.32 (2) (c) 1.

AB531, s. 13 Section 13. 560.32 (2) (c) 2. of the statutes is created to read:

AB531,9,14 560.32 (2) (c) 2. The department may not certify an investment under par. (b) 2. if, after the certification, the investor, together with all affiliates of the investor, would have in certified capital investments under par. (b) 2. more than the greater of $10,000,000 or 15% of the total amount of investments that the department may certify under par. (b) 2.

AB531, s. 14 Section 14. 560.33 (1) (intro.) of the statutes is amended to read:

AB531,9,20 560.33 (1) Qualifications. (intro.) A Except as provided in sub. (2), 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, investment in the business will further economic development in this state or all of the following requirements are met:

AB531, s. 15 Section 15. 560.33 (1) (b) of the statutes is renumbered 560.33 (1) (b) (intro.) and amended to read:

AB531,9,24 560.33 (1) (b) (intro.) The business has no more than 100 employees, at and any of the following applies:

AB531,9,25 1. At least 75% of whom those employees are employed in this state.

AB531, s. 16 Section 16. 560.33 (1) (b) 2. of the statutes is created to read:

AB531,10,3 560.33 (1) (b) 2. At least 75% of the total payroll of the business is paid to employees who are employed in this state.

AB531, s. 17 Section 17. 560.33 (2) of the statutes is amended to read:

AB531,10,16 560.33 (2) Department opinions and exceptions. 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 Within 15 days of receiving the request, the department shall determine whether the business is a qualified business and, if the business is not a qualified business, 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 days of receiving the request, the business shall be deemed a qualified business, notwithstanding any failure to satisfy sub. (1).

AB531, s. 18 Section 18. 560.34 (1) (c) of the statutes is amended to read:

AB531,10,20 560.34 (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, s. 19 Section 19. 560.34 (1) (d) of the statutes is renumbered 560.34 (1) (d) (intro.) and amended to read:

AB531,10,25 560.34 (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:

AB531,11,1 1. Maintain at least 75% of its employees in this state.

AB531, s. 20 Section 20. 560.34 (1) (d) 2. of the statutes is created to read:

AB531,11,4 560.34 (1) (d) 2. Pay at least 75% of its total payroll to employees who are employed in this state.

AB531, s. 21 Section 21. 560.34 (1) (e) of the statutes is amended to read:

AB531,11,13 560.34 (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, 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, s. 22 Section 22. 560.34 (1m) (b) of the statutes is amended to read:

AB531,12,2 560.34 (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). 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) 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) 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) and 560.37 (3m) (a) 2.

AB531, s. 23 Section 23. 560.34 (2) of the statutes is renumbered 560.34 (2) (intro.) and amended to read:

AB531,12,10 560.34 (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, s. 24 Section 24. 560.34 (2) (a) to (k) of the statutes are created to read:

AB531,12,13 560.34 (2) (a) Deposits with a federally insured financial institution, as defined in s. 705.01 (3).

AB531,12,15 (b) Certificates of deposit in a federally insured financial institution, as defined in s. 705.01 (3).

AB531,12,18 (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.

AB531,12,20 (d) Commercial paper rated at least "A1," "P1," or the equivalent, by a nationally recognized credit rating organization.

AB531,12,22 (e) Debt instruments rated at least "AA" or its equivalent by a nationally recognized credit rating organization.

AB531,13,2 (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.

AB531,13,5 (g) Swaps or other hedging transactions 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.

AB531,13,6 (h) Obligations of the state or any political subdivision of the state.

AB531,13,8 (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.

AB531,13,9 (j) A small business investment company that is approved by the department.

AB531,13,10 (k) Any other investments approved in advance in writing by the department.

AB531, s. 25 Section 25. 560.34 (5) of the statutes is created to read:

AB531,13,16 560.34 (5) Qualified investment becoming nonqualified. (a) If a certified capital company makes an investment in a qualified business and, after the effective date of this paragraph .... [revisor inserts date], 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:

AB531,13,20 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% of the amount of the qualified investment shall be counted toward the certified capital company's satisfaction of those percentage requirements.

AB531,13,24 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).

AB531,14,4 3. If the violation occurs more than one year, but 3 years or less, after the qualified investment was made, only 25% 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).

AB531,14,8 4. If the violation occurs more than 3 years, but 5 years or less, after the qualified investment was made, only 50% 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).

AB531,14,12 5. If the violation occurs more than 5 years after the qualified investment was made, 90% 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).

AB531,14,19 (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, s. 26 Section 26. 560.35 (1c) of the statutes is created to read:

AB531,14,23 560.35 (1c) Qualified investments. Within 15 days after making a qualified investment, a certified capital company shall report all of the following to the department:

AB531,14,25 (a) The name of the qualified business in which the qualified investment was made.