AB129: Bill Text

AB129,45,8 (e) Whether the applicant is located in this state or will locate and maintain an office in this state as a condition of the applicant's certification under this section.

AB129,45,10 (f) Any other factors the authority considers relevant that are consistent with the authorities responsibilities under this subchapter.

AB129,45,12 (3) Application fee. An applicant for certification under sub. (1) shall pay to the authority a fee in the amount determined by the authority.

AB129,45,17 239.13 Investment of capital in certified investors; requirements. (1) Investment policy. The fund manager shall establish, and amend as appropriate, a fund investment policy. The authority shall review and approve the investment policy prior to the policy's implementation and shall review the policy and any amendments at least annually thereafter.

AB129,45,21 (2) Fund investments. The authority may invest capital under this subchapter only in certified investors. The authority may not commit more than 15 percent of the total capital that the authority is authorized to raise under s. 239.11 (2) (a) to a single certified investor.

AB129,45,25 (3) Contracts. Before the authority invests any capital in a certified investor, the authority shall contract with the certified investor, and in addition to any other terms required or negotiated by the authority, that contract shall include the following requirements:

AB129,46,3 (a) The certified investor shall commit to maintaining a significant physical presence in this state, including locating an office in this state that is staffed with at least one full-time employee of the certified investor.

AB129,46,7 (b) The certified investor shall invest at least 50 percent of the amount of capital the certified investor receives from the fund in a business that meets all of the following conditions at the time the certified investor first invests in the business under this section:

AB129,46,8 1. Is headquartered in this state.

AB129,46,10 2. Employs at least 50 percent of its employees, including any subsidiary or other affiliated entity, in this state.

AB129,46,13 3. Agrees to use fund capital only for research and development, the introduction of a new product in the market, the business's entry into a new market, or other activities that are expected to grow the business and create jobs in this state.

AB129,46,16 4. Is not primarily engaged in real estate development or sales, insurance, banking, lending, lobbying, political consulting, professional services, or retail sales, other than direct sales of products the business itself manufactures.

AB129,46,18 (c) The certified investor may not receive capital from the fund that exceeds 25 percent of the total capital the investor has raised from all sources.

AB129,46,21 (d) When a certified investor makes an investment of fund capital in a business, the certified investor shall at least match the fund's capital contribution to that investment with capital the certified investor has raised from other sources.

AB129,46,23 (e) The certified investor may not apply the amount of capital it receives from the fund toward certification under s. 560.205 (1) or (2).

AB129,46,25 (4) Sunset. The authority may not make a commitment to invest capital in a certified investor under this subchapter after December 31, 2015.

AB129,47,5 239.14 Tax credits to fund creditors. (1) In lieu of payment of its debt service obligation to a fund creditor, the authority may contract with a fund creditor to award a tax credit under s. 71.07 (8s), 71.28 (8s), or 71.47 (8s) to the fund creditor up to an amount equal to the amount the authority is unable to pay the creditor under the authority's debt service obligation to the creditor in a taxable year.

AB129,47,11 (2) A contract under sub. (1) shall set forth the terms and conditions under which the fund creditor may claim a tax credit under this section. A fund creditor may not claim a tax credit that exceeds the amount the authority fails to pay under the authority's debt service obligation to the fund creditor. The authority shall certify to the department of revenue the amount of the tax credit a creditor of the fund may claim under this section.

AB129,47,14 (3) The authority may not award a tax credit under this section that may be claimed before January 1, 2016. The authority may not award tax credits under this section that total more than $300,000,000.

AB129,47,15 subchapter iiI

AB129,47,16 certified jobs now funds

AB129,47,17 239.20 Definitions. In this subchapter:

AB129,47,18 (1) "Affiliate" means any of the following:

AB129,47,21 (a) A person who owns, controls, or holds power to vote 15 percent or more of the outstanding voting securities or other voting interests of a certified jobs now fund or an insurance company or other person subject to premium tax liability.

AB129,47,25 (b) A business, 15 percent of whose outstanding voting securities or other voting ownership interests are owned, controlled, or held with power to vote by a certified jobs now fund or an insurance company or other person subject to premium tax liability.

AB129,48,3 (c) A person who controls, is controlled by, or is under common control with a certified jobs now fund or an insurance company or other person subject to premium tax liability.

AB129,48,6 (d) A business in which a certified jobs now fund or an insurance company or other person subject to premium tax liability is a partner, managing member, or other principal.

AB129,48,9 (e) An officer, director, employee, or agent of a certified jobs now fund or an insurance company or other person subject to premium tax liability, or an immediate family member of the officer, director, employee, or agent.

AB129,48,12 (2) "Allocation date" means the date stated in the authority's notice under s. 239.22 (2) (b) that approves a specific amount of designated capital and awards a corresponding premium tax credit to a participating investor.

AB129,48,14 (3) "Certified jobs now fund" or "fund" means an entity that is certified under s. 239.21.

AB129,48,21 (4) "Designated capital" means an investment of cash by a participating investor in a certified jobs now fund that is approved by the authority under s. 239.22 and that fully funds either the participating investor's equity interest in a certified jobs now fund, a qualified debt instrument that a certified jobs now fund issues, or both. In this subsection, "qualified debt instrument" means a bond, note, or other obligation that a certified jobs now fund issues at par value or at a premium or discount from par value that meets all of the following conditions:

AB129,48,23 (a) Has an original maturity date of at least 4 years from the date on which it is issued.

AB129,48,25 (b) Has a repayment schedule that is no faster than a level principal amortization over 4 years.

AB129,49,1 (c) Does not allow the prepayment of interest.

AB129,49,3 (d) Has payment and interest features that are not related to the fund's profitability or the performance of the fund's investment portfolio.

AB129,49,6 (5) "Early stage business" means a qualified business that received, including any affiliate, gross revenue of $2,000,000 or less in the fiscal year immediately preceding that date.

AB129,49,9 (6) "Participating investor" means an insurance company or other person subject to premium tax liability who the authority approves to invest designated capital in a certified jobs now fund under s. 239.22.

AB129,49,10 (7) "Premium tax credit" means a tax credit under s. 76.634.

AB129,49,12 (8) "Premium tax liability" means the fees imposed under s. 76.60, 76.63, 76.65, 76.66, or 76.67.

AB129,49,15 (9) "Qualified business" means a business that, as of the time a certified jobs now fund or its affiliate first invests in the business under this subchapter, meets all of the following conditions:

AB129,49,17 (a) Is headquartered in, and has its principal business operations located in, this state.

AB129,49,19 (b) Is in need of venture capital and is unable to obtain conventional financing, as determined by the authority.

AB129,49,22 (c) Employs 100 or fewer employees, and at least 80 percent of those employees are employed in this state or at least 80 percent of its payroll is paid to employees employed in this state.

AB129,49,25 (d) Is not primarily engaged in real estate development or sales, insurance, banking, lending, lobbying, political consulting, professional services, or retail sales, other than direct sales of products the business itself manufactures.

AB129,50,2 (10) "Qualified investment" means a certified jobs now fund's investment of designated capital in a qualified business.

AB129,50,5 239.21 Certification of jobs now funds. (1) Application. Any person may apply to the authority on a form prescribed by the authority for certification under this section. The application shall include all of the following:

AB129,50,6 (a) The name, address, and tax identification number of the applicant.

AB129,50,8 (b) A description of the business activities conducted by the applicant and the locations at which those activities are conducted.

AB129,50,11 (c) An audited balance sheet and the audit report, rendered within 35 days prior to the date the applicant files its application with the authority, of an independent auditor approved by the authority.

AB129,50,15 (d) The strategic investment plan of the applicant, and an analysis completed by an economist or econometric analysis company approved by the authority that shows the projected impact that investment plan is expected to have on the economy of this state.

AB129,50,18 (2) Certification. (a) The authority shall certify an applicant under sub. (1) if the applicant pays the fee specified under sub. (3) and the authority determines after conducting an investigation that all of the following conditions are met:

AB129,50,20 1. The primary activity of the applicant is the investment of cash in qualified businesses.

AB129,50,22 2. The applicant owns at least $500,000 in unencumbered cash or cash equivalents.

AB129,50,25 3. At least 2 principals or persons employed to manage the applicant's investments have at least 5 years of experience in the venture capital or private equity industry in this state.

AB129,51,2 4. The strategic investment plan of the applicant will have a beneficial impact on the economy of this state.

AB129,51,6 (b) Within 30 days after the date an applicant files an application under sub. (1), the authority shall either issue a certification to the applicant or deny the application and provide written notice to the applicant that states the grounds for denial and includes the authority's suggestions, if any, to remove those grounds.

AB129,51,8 (3) Application fee. An applicant for certification under sub. (1) shall pay to the authority a fee in the amount determined by the authority.

AB129,51,13 239.22 Participating investors; premium tax credits. (1) Application. (a) Any insurance company or other person subject to premium tax liability may apply to the authority to make an investment of designated capital in a certified jobs now fund and receive a premium tax credit for that investment. The person's application shall include all of the following:

AB129,51,14 1. The person's name, address, and tax identification number.

AB129,51,16 2. The name and address of the certified jobs now fund in which the person proposes to invest.

AB129,51,17 3. The amount of the proposed investment.

AB129,51,20 4. An undertaking by the person to make an investment of designated capital in the amount approved by the authority within 5 business days after the allocation date established by the authority under sub. (2) (b).

AB129,51,25 (b) The authority shall establish a single 15-day period in which applications under par. (a) may be submitted to the authority. The authority shall provide a notice regarding that application period and the investment program under this subchapter that is reasonably calculated to reach all insurance companies or other persons subject to premium tax liability within this state.

AB129,52,2 (c) The authority may establish additional rules consistent with this subchapter regarding the requirements for an application under par. (a).

AB129,52,6 (2) Award. (a) The authority shall approve an investment of designated capital in a certified jobs now fund and, subject to sub. (4) (b), award a premium tax credit to a person who satisfies the application requirements under sub. (1) in an amount equal to 80 percent of the person's proposed investment of designated capital.

AB129,52,12 (b) If the authority approves a person's proposed investment of designated capital under par. (a), the authority shall notify the person and the certified jobs now fund of that approval in writing, stating the amount of the investment approved by the authority, the amount of the premium tax credit the person may claim, the requirements, including those under sub. (3), for making that claim, and the allocation date.

AB129,52,16 (c) The authority may not set an allocation date that is earlier than 30 days after the date of the authority's notice of approval of an investment under par. (b). The first allocation date set by the authority for any participating investor may not be later than 120 days after the effective date of this paragraph .... [LRB inserts date].

AB129,52,20 (3) Claim eligibility and requirements. (a) A participating investor may claim a premium tax credit in the amount the authority awards only after the participating investor makes an investment of designated capital in the certified jobs now fund in the amount approved by the authority under sub. (2).

AB129,52,25 (b) A participating investor may claim up to 25 percent of the premium tax credit approved under sub. (2) in a taxable year, except that a participating investor may not claim any premium tax credit under this subchapter for a taxable year beginning before January 1, 2014, and a premium tax credit may not be applied to quarterly tax payments due during the 2014 taxable year.

AB129,53,2 (4) Limits on premium tax credits. (a) The authority may not award more than $200,000,000 in premium tax credits under this subchapter.

AB129,53,8 (b) If, as a result of the limitations under par. (a), the amount of available premium tax credits is insufficient for approval of the full amount of all applications for capital investments that are received by the authority within the 15-day period established by the authority under sub. (1) (b), the authority shall prorate the awardable amount among the applicants based on the amount the applicant has committed to invest in the certified jobs now fund.

AB129,53,11 (c) The authority may not award more than $50,000,000 in premium tax credits to a single participating investor, including its successor and any affiliate, on a particular allocation date.

AB129,53,14 239.23 Operation of a certified jobs now fund. (1) Required disclosures in securities offerings. Any offering material involving the sale of securities of a certified jobs now fund shall include all of the following statements:

AB129,53,21 (a) "By authorizing the formation of a certified jobs now fund, the Wisconsin Venture Capital Authority does not endorse the quality of management or explicitly or implicitly guarantee or otherwise assure the economic performance of the fund and is not liable for damages or losses to a participating investor in the fund. Use of the word "certified" in an offering is not a recommendation, endorsement, or guarantee of the investment by the Wisconsin Venture Capital Authority or the state."

AB129,54,4 (b) "Investments in a prospective certified jobs now fund prior to the time the fund is certified are not eligible for a premium tax credit under section 76.634 of the Wisconsin Statutes. Investments in a certified jobs now fund are not eligible for a premium tax credit under section 76.634 of the Wisconsin Statutes unless the proposed investment is approved by the Wisconsin Venture Capital Authority under section 239.22 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 premium tax credits and repayment of used premium tax credits."

AB129,54,7 (c) "In addition to any other applicable law, the certified jobs now fund is subject to applicable provisions of subchapter III of chapter 239 of the Wisconsin Statutes and any requirements of the Wisconsin Venture Capital Authority."

AB129,54,10 (2) Qualified investments. A certified jobs now fund may invest designated capital only in a qualified business. A qualified investment shall meet all of the following requirements:

AB129,54,15 (a) The investment is a cash investment in a qualified business for the purchase of debt, debt participation, equity, or hybrid security of any kind, including a debt instrument or security that has the characteristics of debt that provides for conversion into equity or an equity participation instrument such as an option or warrant.

AB129,54,19 (b) If the investment is for the purchase of any debt or debt participation, no more than 10 percent of that debt or debt participation may be used for the refinancing of other debt or the buy-out of other shareholders or owners of the qualified business.

AB129,54,22 (c) As a condition of the investment, the qualified business agrees not to relocate its headquarters outside of this state as long as the certified jobs now fund continues to hold the investment.

AB129,55,2 (d) As a condition of the investment, the qualified business agrees to maintain at least 75 percent of its employees, or pay at least 75 percent of its payroll to employees, including the employees or payroll of any subsidiary or other affiliated entity, in this state as long as the certified jobs now fund continues to hold the investment.

AB129,55,7 (3) Authority determinations regarding qualified businesses. A certified jobs now fund may request a determination from the authority that a business in which the fund proposes to invest is a qualified business or an early stage business. The authority shall issue its determination in writing to the fund within a reasonable time after the fund's request.

AB129,55,12 (4) Schedule of investments. A certified jobs now fund shall make qualified investments according to the following schedule, except that a certified jobs now fund may reinvest proceeds it receives from one qualified investment in another qualified investment and apply the amount of that reinvestment toward the following requirements for that other qualified investment:

AB129,55,15 (a) Within 2 years after an allocation date, at least 35 percent of the designated capital approved by the authority on that date is placed in qualified investments, of which at least 50 percent is invested in early stage businesses.

AB129,55,18 (b) Within 4 years after an allocation date, at least 50 percent of the designated capital approved by the authority on that date is placed in qualified investments, of which at least 50 percent is invested in early stage businesses.

AB129,55,23 (c) Notwithstanding s. 239.24 (1) (c) and (e), if, within 5 years after an allocation date, the certified jobs now fund has not placed at least 80 percent of the designated capital approved by the authority on that date in qualified investments, of which at least 50 percent is invested in early stage businesses, the certified jobs now fund may not pay any management or similar fee until it has made those investments.

AB129,56,3 (d) Notwithstanding s. 239.24 (1) (c) and (e), if, within 7 years after an allocation date, the certified jobs now fund has not placed 100 percent of the designated capital approved on that date in qualified investments, of which at least 50 percent is invested in early stage businesses, the certified jobs now fund may not pay any management or similar fee until it has made those investments.

AB129,56,12 (5) Qualified business relocation out of state. If within 24 months after the date a qualified investment is made, the qualified business relocates its principal business operations to another state and the certified jobs now fund still holds a qualified investment in the business, the amount of the fund's total designated capital and qualified investments may be reduced by the amount of the qualified investment in the relocated business for the purpose only of satisfying the investment schedule under sub. (4). This subsection does not apply if the relocated business returns its principal business operations to this state within 90 days after its initial relocation.

AB129,56,15 (6) Other limitations on investments. (a) A certified jobs now fund may not invest more than 15 percent of its total designated capital in any one qualified business.