Tennessee Code 4-28-106 – Maintaining certification – Penalty for failure to meet performance measures – Request for written determination that proposed investment will qualify as a qualified investment in a qualified business or a seed or early stag…
Affiliate: means : (A)(i) Any person who, directly or indirectly, beneficially owns, controls or holds the power to vote fifteen percent (15%) or more of the outstanding voting securities or other voting ownership interest of a TNInvestco or insurance company. See Tennessee Code 4-28-102
Base investment amount: means fourteen million dollars ($14,000,000) in the case of a qualified TNInvestco receiving one (1) allocation of tax credits and twenty eight million dollars ($28,000,000) in the case of a qualified TNInvestco receiving two (2) allocations of tax credits, which must be available in cash or cash equivalents immediately following the investment by a TNInvestco's participating investors and its owners. See Tennessee Code 4-28-102
Designated capital: means an amount of money that is invested by a participating investor in a qualified TNInvestco. See Tennessee Code 4-28-102
Escrow: Money given to a third party to be held for payment until certain conditions are met.
Investment period: means the period January 1, 2010, through December 31, 2019. See Tennessee Code 4-28-102
Qualified business: means a business that is independently owned and operated and meets all of the following requirements:(i) It is headquartered in this state, its principal business operations are located in this state, and at least sixty percent (60%) of its employees are located in this state. See Tennessee Code 4-28-102
Qualified investment: means the investment of cash by a qualified TNInvestco in a qualified business for the purchase of equity, equity options, warrants, or debt convertible to equity. See Tennessee Code 4-28-102
Seed or early stage investment: means an investment in a company that has a product or service in testing or pilot production that may or may not be commercially available. See Tennessee Code 4-28-102
State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
TNInvestco: means a partnership, corporation, trust or limited liability company, whether organized on a for-profit or not-for-profit basis that completes the application process in §. See Tennessee Code 4-28-102
written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(1)(A) To maintain its certification, a qualified TNInvestco shall make qualified investments, as follows:
(i) Within two (2) years after the allocation date, a qualified TNInvestco shall have invested an amount equal to at least fifty percent (50%) of its base investment amount in qualified investments;(ii) Within three (3) years after the allocation date, a qualified TNInvestco shall have invested an amount equal to at least seventy percent (70%) of its base investment amount in qualified investments;(iii) Within four (4) years after the allocation date, a qualified TNInvestco shall have invested an amount equal to at least eighty percent (80%) of its base investment amount in qualified investments; and(iv) Within six (6) years or any year thereafter the allocation date, a qualified TNInvestco shall have invested an amount equal to at least ninety percent (90%) of its base investment amount in qualified investments.(B) Not more than twenty-five percent (25%) of the investment amounts required by subdivisions (a)(1)(A)(i)-(iv) shall be attributable to the three-hundred-percent (300%) seed or early-stage multiplier.(2) Failure to meet the performance measures set out in subdivision (a)(1) during any calendar year shall result in a two-hundred-fifty-thousand-dollar penalty fee against the qualified TNInvestco. The proceeds from any such penalty fee shall be deposited into the Tennessee rural opportunity fund to further the state‘s economic development efforts. Funds related to the investment tax credit shall not be used to pay the penalty fee imposed under this subdivision (a)(2).(b) Prior to making a proposed qualified investment in a specific business, a qualified TNInvestco must request from the department of economic and community development a written determination that the proposed investment will qualify as a qualified investment in a qualified business or, if applicable, a seed or early stage investment. The department shall notify a qualified TNInvestco within ten (10) business days from the receipt of a request of its determination. If the department fails to notify the qualified TNInvestco of its determination within ten (10) business days, the proposed investment will be deemed to be a qualified investment in a qualified business and, if applicable, a seed or early stage investment. If the department determines that the proposed investment does not meet the definition of a qualified investment, qualified business, or seed or early stage investment, the department may nevertheless consider the proposed investment a qualified investment, or a seed or early stage investment, and if necessary, the business a qualified business, if the department determines that the proposed investment will further state economic development.(c) All designated capital not invested in qualified investments by a qualified TNInvestco shall be held in an escrow account maintained by the state and administered through the department of economic and community development.(d) A qualified TNInvestco may not invest more than fifteen percent (15%) of its designated capital in any one qualified business without the specific approval of the department of economic and community development.(e) Any amounts that have not been invested by the TNInvestco at the end of the investment period shall be forfeited and paid to the state to support the Tennessee rural opportunity fund. Investment returns, profits and the portion of the base investment amount, may be reinvested until the seventh anniversary of the fund. If a TNInvestco elects to reinvest returns, the TNInvestco shall reinvest the state’s and the TNInvestco’s returns in equal portions.(f) No qualified TNInvestco shall sell any interest in a qualified business to an affiliate unless the TNInvestco has first obtained written authorization for the sale from the department of economic and community development.(g)(1) All qualified TNInvestcos, and the qualified businesses in which they invest, shall strive to maximize the participation of minority-owned businesses and woman-owned businesses to reflect the racial, ethnic and gender diversity of Tennessee’s population.(2) The department of economic and community development shall promote awareness of the program established by this chapter among minority-owned businesses and woman-owned businesses.(3) The department of economic and community development shall undertake training programs and other educational activities to increase diversity of participation by encouraging minority-owned businesses and woman-owned businesses to apply, compete and qualify for investments under this chapter.(4) Each TNInvestco shall coordinate its efforts to strive to maximize participation in minority-owned businesses and woman-owned businesses with the efforts of the department of economic and community development.(5) Each TNInvestco shall provide information on its website concerning this program and the availability of capital to businesses including minority-owned businesses and woman-owned businesses.
