Kentucky Statutes 154.20-234 – Angel Investor Program qualification requirements
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(1) The requirements for small businesses, investors, and investments to be qualified for participation in the Angel Investor Program are as follows:
(a) To be certified as a qualified small business, the business shall demonstrate to the authority that it is an entity which, at the time the small business requests certification:
1. Has a net worth of ten million dollars ($10,000,000) or less or net income after federal income taxes for each of the two (2) preceding fiscal years of three million dollars ($3,000,000) or less;
2 Is actively and principally engaged in a qualified activity within the Commonwealth, or will be actively and principally engaged in a qualified activity within the Commonwealth after the receipt of a qualified investment by a qualified investor;
3. Has no more than one hundred (100) full-time employees;
4. Has more than fifty percent (50%) of its assets, operations, and employees located in the Commonwealth; and
5. Has at no time received an aggregate amount of qualified investments that has allowed qualified investors to receive more than one million dollars ($1,000,000) in angel investor credits;
(b) To be certified as a qualified investor, an individual investor shall demonstrate to the authority that he or she:
1. Is an individual natural person who may utilize a single-member limited liability company to make the investment as long as the individual natural person is the owner and the limited liability company is a disregarded entity;
2. Qualifies as an accredited investor pursuant to Regulation D of the
United States Securities and Exchange Commission, 17 C.F.R. sec.
230.501, in effect as of the date the individual investor requests certification;
3. Does not hold in excess of twenty percent (20%) ownership interest in, and is not employed by, the qualified small business prior to making the qualified investment in that qualified small business;
4. Is not closely related to an individual who holds in excess of twenty percent (20%) ownership interest in, or who is employed by, the qualified small business prior to making the qualified investment in that qualified small business. For purposes of this subparagraph, “closely related” means any of the following in relation to the owner or owners or spouse of the owner or owners:
a. Parents or grandparents;
b. Children or their spouses; or c. Siblings or their spouses; and
5. Seeks a financial return from the investment made in the qualified small
business; and
(c) To be certified as a qualified investment, the investment shall:
1. Be a cash investment of at least ten thousand dollars ($10,000), in a qualified small business by a qualified investor; and
2. Be offered and executed in compliance with applicable state and federal securities laws and regulations.
(2) In consideration for the qualified investment, the qualified investor shall receive an equity interest, or a near equity interest, such as a simple agreement for future equity, or “SAFE agreement”, or a convertible debt instrument in the qualified small business.
(3) The authority may establish additional requirements and guidelines for the efficient implementation and administration of the Kentucky Angel Investment Act and to carry out its purposes.
Effective: June 29, 2021
History: Amended 2021 Ky. Acts ch. 185, sec. 111, effective June 29, 2021. — Amended 2020 Ky. Acts ch. 76, sec. 1, effective July 15, 2020. — Amended 2018
Ky. Acts ch. 199, sec. 23, effective July 14, 2018. — Created 2014 Ky. Acts ch. 102, sec. 23, effective July 15, 2014.
(a) To be certified as a qualified small business, the business shall demonstrate to the authority that it is an entity which, at the time the small business requests certification:
Terms Used In Kentucky Statutes 154.20-234
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Authority: means the Kentucky Economic Development Finance Authority, consisting of a committee as set forth in KRS §. See Kentucky Statutes 154.1-010
- Commonwealth: means the Commonwealth of Kentucky. See Kentucky Statutes 154.1-010
- Company: may extend and be applied to any corporation, company, person, partnership, joint stock company, or association. See Kentucky Statutes 446.010
- Federal: refers to the United States. See Kentucky Statutes 446.010
- Owner: when applied to any animal, means any person having a property interest in such animal. See Kentucky Statutes 446.010
- Person: means an individual, partnership, joint venture, military facility operated by a department or agency of the United States, profit or nonprofit corporation including a public or private college or university, limited liability company, or other entity or association of persons organized for agricultural, commercial, health care, or industrial purposes. See Kentucky Statutes 154.1-010
- State: means the Commonwealth of Kentucky. See Kentucky Statutes 154.1-010
1. Has a net worth of ten million dollars ($10,000,000) or less or net income after federal income taxes for each of the two (2) preceding fiscal years of three million dollars ($3,000,000) or less;
2 Is actively and principally engaged in a qualified activity within the Commonwealth, or will be actively and principally engaged in a qualified activity within the Commonwealth after the receipt of a qualified investment by a qualified investor;
3. Has no more than one hundred (100) full-time employees;
4. Has more than fifty percent (50%) of its assets, operations, and employees located in the Commonwealth; and
5. Has at no time received an aggregate amount of qualified investments that has allowed qualified investors to receive more than one million dollars ($1,000,000) in angel investor credits;
(b) To be certified as a qualified investor, an individual investor shall demonstrate to the authority that he or she:
1. Is an individual natural person who may utilize a single-member limited liability company to make the investment as long as the individual natural person is the owner and the limited liability company is a disregarded entity;
2. Qualifies as an accredited investor pursuant to Regulation D of the
United States Securities and Exchange Commission, 17 C.F.R. sec.
230.501, in effect as of the date the individual investor requests certification;
3. Does not hold in excess of twenty percent (20%) ownership interest in, and is not employed by, the qualified small business prior to making the qualified investment in that qualified small business;
4. Is not closely related to an individual who holds in excess of twenty percent (20%) ownership interest in, or who is employed by, the qualified small business prior to making the qualified investment in that qualified small business. For purposes of this subparagraph, “closely related” means any of the following in relation to the owner or owners or spouse of the owner or owners:
a. Parents or grandparents;
b. Children or their spouses; or c. Siblings or their spouses; and
5. Seeks a financial return from the investment made in the qualified small
business; and
(c) To be certified as a qualified investment, the investment shall:
1. Be a cash investment of at least ten thousand dollars ($10,000), in a qualified small business by a qualified investor; and
2. Be offered and executed in compliance with applicable state and federal securities laws and regulations.
(2) In consideration for the qualified investment, the qualified investor shall receive an equity interest, or a near equity interest, such as a simple agreement for future equity, or “SAFE agreement”, or a convertible debt instrument in the qualified small business.
(3) The authority may establish additional requirements and guidelines for the efficient implementation and administration of the Kentucky Angel Investment Act and to carry out its purposes.
Effective: June 29, 2021
History: Amended 2021 Ky. Acts ch. 185, sec. 111, effective June 29, 2021. — Amended 2020 Ky. Acts ch. 76, sec. 1, effective July 15, 2020. — Amended 2018
Ky. Acts ch. 199, sec. 23, effective July 14, 2018. — Created 2014 Ky. Acts ch. 102, sec. 23, effective July 15, 2014.