S T A T E O F N E W Y O R K
________________________________________________________________________
4434
2015-2016 Regular Sessions
I N A S S E M B L Y
January 30, 2015
___________
Introduced by M. of A. SILVER, SCHIMMINGER, LUPARDO, SCARBOROUGH,
MAGNARELLI, GALEF, ZEBROWSKI, JAFFEE, SCHIMEL -- Multi-Sponsored by --
M. of A. BRENNAN, COLTON, CYMBROWITZ, MARKEY -- read once and referred
to the Committee on Ways and Means
AN ACT to amend the tax law, in relation to program six certified capi-
tal companies; and to repeal section 84 of part A of chapter 62 of the
laws of 2011 relating to constituting chapter 18-A of the consolidated
laws relating to financial services, relating to certain reporting
requirements
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. The opening paragraph of paragraph 7 of subdivision (a) of
2 section 11 of the tax law, as amended by section 19 of part A of chapter
3 63 of the laws of 2005, is amended to read as follows:
4 "Qualified business" - A QUALIFIED SEED FUND OR an independently owned
5 and operated business that meets all of the following conditions as of
6 the time of the first investment in the business:
7 S 2. Paragraph 10 of subdivision (a) of section 11 of the tax law, as
8 amended by section 19 of part A of chapter 63 of the laws of 2005, is
9 amended to read as follows:
10 (10) "Qualified investment" - the investment of cash by a certified
11 capital company in a qualified business for the purchase of any debt,
12 equity or hybrid security, of any nature and description whatever,
13 including a debt instrument or security which has the characteristics of
14 debt but which provides for conversion into equity or equity partic-
15 ipation instruments such as options or warrants, provided however, in
16 the case of certified capital programs three, four [and], five[,] AND
17 SIX that any such debt instrument have a maturity of at least twenty-
18 four months from the date such debt is incurred; and further provided
19 that a certified capital company, after the investment and assuming full
20 conversion and exercise of any equity participation instruments, shall
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06781-01-5
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1 not own more than fifty percent of the voting equity of the qualified
2 business, except in the case of a follow-on investment where a specific
3 exemption is granted by the department under subparagraph (D) of para-
4 graph one of subdivision (c) of this section OR AN INVESTMENT IN A QUAL-
5 IFIED SEED FUND BY A PROGRAM SIX CERTIFIED CAPITAL COMPANY. Further-
6 more, except in the case of a follow-on investment, if a certified
7 capital company owns more than fifteen percent of the equity in a compa-
8 ny or has a seat on the board of directors of such company, then a
9 certified capital company cannot invest in such company unless the
10 following conditions are met: (i) at least one other investor who is not
11 an affiliate of the certified capital company participates in the same
12 round of investment on the same terms and conditions as the certified
13 capital company; and (ii) the certified capital company and its affil-
14 iates invest no more than fifty percent of the total investment made in
15 that round of investment.
16 S 3. Subdivision (a) of section 11 of the tax law is amended by adding
17 two new paragraphs 17 and 18 to read as follows:
18 17. "QUALIFIED SEED FUND" - IS ANY FUND THAT HAS BEEN CERTIFIED BY THE
19 SUPERINTENDENT AS SUCH BY RULE OR REGULATION. THE SUPERINTENDENT MAY
20 CERTIFY PARTNERSHIPS, CORPORATIONS, TRUSTS, OR LIMITED LIABILITY COMPA-
21 NIES ORGANIZED ON A FOR-PROFIT BASIS, OR NOT-FOR-PROFIT FUNDS, WHICH
22 SUBMIT AN APPLICATION TO BE DESIGNATED AS A QUALIFIED SEED FUND OPERATOR
23 IF SUCH APPLICANT IS LOCATED, HEADQUARTERED AND LICENSED OR REGISTERED
24 TO CONDUCT BUSINESS IN NEW YORK. QUALIFIED SEED FUNDS SHALL BE UNDER
25 EXPERIENCED PROFESSIONAL MANAGEMENT FAMILIAR WITH SEED CAPITAL INVEST-
26 MENT, APPROPRIATE BUSINESS PRACTICES AND TECHNOLOGY-ORIENTED PRODUCTS
27 AND SERVICES, AND FORMED FOR THE PURPOSE OF PROVIDING PRIVATE EQUITY TO
28 TECHNOLOGY-BASED COMPANIES IN THEIR FORMATIVE STAGES AND INVEST IN QUAL-
29 IFIED ENTERPRISES LOCATED WITHIN NEW YORK STATE. QUALIFIED SEED FUNDS
30 MUST DEMONSTRATE (A) CAPACITY TO PERFORM DUE DILIGENCE IN MAKING INVEST-
31 MENT DECISIONS AND TO PROVIDE MANAGEMENT EXPERTISE AND OTHER VALUE-ADDED
32 SERVICES; (B) FINANCIAL RESOURCES FOR IDENTIFYING AND INVESTING
33 SEED-STAGE COMPANIES; AND (C) ABILITY TO EVALUATE EMERGING TECHNOLOGY
34 COMMERCIALIZATION.
35 18. "MATCH" - A CASH INVESTMENT IN OR LOAN TO A QUALIFIED BUSINESS
36 MADE NO MORE THAN THREE MONTHS BEFORE OR SIX MONTHS AFTER AN INVESTMENT
37 OF CERTIFIED CAPITAL BY A CERTIFIED CAPITAL COMPANY PROGRAM SIX IN SUCH
38 QUALIFIED BUSINESS, OTHER THAN AN INVESTMENT MADE WITH CERTIFIED CAPI-
39 TAL. THE TERM SHALL ALSO INCLUDE CASH INVESTED IN OR LENT TO A QUALIFIED
40 BUSINESS BY A CERTIFIED CAPITAL COMPANY THAT HAS INVESTED ONE HUNDRED
41 PERCENT OF ITS CERTIFIED CAPITAL IN QUALIFIED BUSINESSES.
42 S 4. Paragraph 9 of subdivision (b) of section 11 of the tax law, as
43 amended by section 19 of part A of chapter 63 of the laws of 2005, is
44 amended to read as follows:
45 (9) The superintendent shall start accepting applications to become a
46 certified capital company in certified capital company program two by
47 November first, nineteen hundred ninety-nine, and shall start accepting
48 applications to become a certified capital company in certified capital
49 company program three by August first, two thousand, and shall begin
50 accepting applications to become a certified capital company in certi-
51 fied capital company program four by the later of August first, two
52 thousand four or not more than sixty days after the effective date of
53 section one of part D of chapter fifty-nine of the laws of two thousand
54 four and shall begin accepting applications to become a certified capi-
55 tal company in certified capital company program five by the later of
56 July first, two thousand five or not more than sixty days after the
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1 effective date of the chapter of the laws of two thousand five which
2 amended this paragraph, AND SHALL BEGIN ACCEPTING APPLICATIONS TO BECOME
3 A CERTIFIED CAPITAL COMPANY IN PROGRAM SIX BY JULY FIRST, TWO THOUSAND
4 FIFTEEN OR NOT MORE THAN SIXTY DAYS AFTER THE EFFECTIVE DATE OF THE
5 CHAPTER OF THE LAWS OF TWO THOUSAND FIFTEEN WHICH AMENDED THIS
6 PARAGRAPH.
7 S 5. Subparagraph (A) of paragraph 1 of subdivision (c) of section 11
8 of the tax law, as amended by section 19 of part A of chapter 63 of the
9 laws of 2005, is amended to read as follows:
10 (A) Within two years after the starting date of a specific certified
11 capital company program of a certified capital company, at least twen-
12 ty-five percent of its certified capital allocable to such certified
13 capital company program must be placed in qualified investments AND IN
14 THE CASE OF PROGRAM SIX, AT LEAST TEN PERCENT OF ITS CERTIFIED CAPITAL
15 MUST HAVE BEEN PLACED IN QUALIFIED SEED FUNDS. ALL QUALIFIED INVESTMENTS
16 MADE IN QUALIFIED SEED FUNDS UNDER PROGRAM SIX SHALL COUNT TOWARDS THE
17 TWENTY-FIVE PERCENT INVESTMENT REQUIREMENT OF THIS SUBPARAGRAPH.
18 S 6. Subparagraph (C) of paragraph 1 of subdivision (c) of section 11
19 of the tax law, as amended by section 19 of part A of chapter 63 of the
20 laws of 2005, is amended to read as follows:
21 (C) Within four years after the starting date of a specific certified
22 capital company program of a certified capital company, at least fifty
23 percent of its certified capital allocable to such certified capital
24 company program must be placed in qualified investments, at least fifty
25 percent of which must have been placed in early stage businesses, except
26 that in the case of program four and any subsequent program, at least
27 twenty-five percent of which must have been placed in early stage busi-
28 nesses and an additional twenty-five percent of which must have been
29 placed in start-up businesses, and except that in the case of qualified
30 investments made in qualified businesses located in empire zones estab-
31 lished pursuant to article eighteen-B of the general municipal law under
32 the provisions of certified capital company program three, program four
33 and program five from allocations of certified capital made specifically
34 for such targeted investments in such zones, the requirement for quali-
35 fied investments in early stage and start-up businesses shall not apply.
36 AN INVESTMENT IN A QUALIFIED SEED FUND SHALL COUNT TOWARDS THE REQUIRE-
37 MENT UNDER PROGRAM SIX FOR QUALIFIED INVESTMENTS IN EARLY STAGE BUSI-
38 NESSES.
39 S 7. Subparagraph (D) of paragraph 1 of subdivision (c) of section 11
40 of the tax law, as amended by section 19 of part A of chapter 63 of the
41 laws of 2005, is amended to read as follows:
42 (D) A certified capital company, at least fifteen working days prior
43 to making a proposed investment in a specific business, shall certify in
44 writing to the superintendent that (i) the business in which it proposes
45 to invest meets the definition of a qualified business as set forth in
46 subdivision (a) of this section or, in the case of a follow-on invest-
47 ment, that such business continues to meet the requirements set forth in
48 subparagraphs (A) and (C) of paragraph seven of subdivision (a) of this
49 section and, in either case, an explanation of its determination that
50 the business meets such requirements, [and] (ii) with respect to certi-
51 fied capital company program three, program four and program five,
52 whether or not such business is located in an empire zone established
53 pursuant to article eighteen-B of the general municipal law or in an
54 underserved area outside an empire zone AND (III) WITH RESPECT TO CERTI-
55 FIED CAPITAL COMPANY PROGRAM SIX, WHETHER OR NOT SUCH INVESTMENT IS IN A
56 QUALIFIED SEED FUND. The certification to the superintendent shall
A. 4434 4
1 include a sworn statement from the business in which the certified capi-
2 tal company proposes to invest, which statement shall evidence the
3 intention of the business to maintain its headquarters in New York and
4 conduct its primary business operations in the state of New York after
5 its receipt of the investment by the certified capital company. If the
6 superintendent determines that the business does not meet the definition
7 of a qualified business, or, in the case of a follow-on investment, that
8 such business does not meet the requirements set forth in subparagraphs
9 (A) and (C) of paragraph seven of subdivision (a) of this section, then
10 it shall, within the fifteen working day period prior to the making of
11 the proposed investment, notify the certified capital company of its
12 determination and provide an explanation thereof, provided, however,
13 that the department may, upon written request of a certified capital
14 company and at the discretion of the department, grant, in writing, an
15 exemption to the percentage limitations of paragraph ten of subdivision
16 (a) of this section.
17 S 8. Subparagraph (F) of paragraph 1 of subdivision (c) of section 11
18 of the tax law, as amended by section 19 of part A of chapter 63 of the
19 laws of 2005, is amended to read as follows:
20 (F) If within ten years after the starting date of certified capital
21 company program four [or], program five OR PROGRAM SIX, and within
22 twelve years after the starting date of certified capital company
23 programs one, two, and three, one hundred percent of the certified capi-
24 tal allocable to a certified capital company participating in [such]
25 program ONE, TWO, THREE, FOUR OR FIVE has not been placed in qualified
26 investments AND, WITH RESPECT TO PROGRAM SIX, ONE HUNDRED PERCENT OF THE
27 CERTIFIED CAPITAL HAS NOT BEEN PLACED IN QUALIFIED INVESTMENTS WITH TEN
28 PERCENT OF SUCH AMOUNT BEING PLACED IN QUALIFIED SEED FUNDS, the specif-
29 ic certified capital company shall no longer be permitted to receive
30 management fees; provided that such restriction shall not apply (i) with
31 respect to certified capital company programs one, two, and three, to
32 any certified capital company that has not, prior to October thirty-
33 first, two thousand four, received, as opposed to accrued, any manage-
34 ment fees, or (ii) with respect to any certified capital company
35 program, to a certified capital company in which at least fifty percent
36 of the voting stock, capital, membership interests, or other beneficial
37 ownership interests, as the case may be, are owned by an entity that is
38 managed, directly or indirectly, by a non-profit corporation.
39 S 9. Paragraph 1 of subdivision (c) of section 11 of the tax law is
40 amended by adding a new subparagraph (G) to read as follows:
41 (G) IF WITHIN ONE YEAR OF THE STARTING DATE OF CERTIFIED CAPITAL
42 COMPANY PROGRAM SIX, THE CERTIFIED CAPITAL COMPANY HAS NOT ACHIEVED A
43 MATCH OF AT LEAST ONE HUNDRED PERCENT OF THE AMOUNT OF QUALIFIED INVEST-
44 MENTS MADE BY SUCH CERTIFIED CAPITAL COMPANY WITH PROGRAM SIX CERTIFIED
45 CAPITAL AS OF SUCH DATE, THE SPECIFIC CERTIFIED CAPITAL COMPANY SHALL
46 NOT BE PERMITTED TO RECEIVE MANAGEMENT FEES UNTIL IT HAS ACHIEVED SUCH
47 MATCH. IF WITHIN THREE YEARS OF THE STARTING DATE OF CERTIFIED CAPITAL
48 COMPANY PROGRAM SIX, THE CERTIFIED CAPITAL COMPANY HAS NOT ACHIEVED A
49 MATCH OF AT LEAST ONE HUNDRED PERCENT OF THE AMOUNT OF QUALIFIED INVEST-
50 MENTS MADE BY SUCH CERTIFIED CAPITAL COMPANY WITH PROGRAM SIX CERTIFIED
51 CAPITAL COMPANY AS OF SUCH DATE, THE SPECIFIC CERTIFIED CAPITAL COMPANY
52 SHALL NOT BE PERMITTED TO RECEIVE MANAGEMENT FEES UNTIL IT HAS ACHIEVED
53 SUCH MATCH. IF WITHIN FIVE YEARS OF THE STARTING DATE OF CERTIFIED CAPI-
54 TAL COMPANY PROGRAM SIX, THE CERTIFIED CAPITAL COMPANY HAS NOT ACHIEVED
55 A MATCH OF AT LEAST ONE HUNDRED PERCENT OF THE AMOUNT OF QUALIFIED
56 INVESTMENTS MADE BY SUCH CERTIFIED CAPITAL COMPANY WITH PROGRAM SIX
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1 CERTIFIED CAPITAL COMPANY AS OF SUCH DATE, THE SPECIFIC CERTIFIED CAPI-
2 TAL COMPANY SHALL NOT BE PERMITTED TO RECEIVE MANAGEMENT FEES UNTIL IT
3 HAS ACHIEVED SUCH MATCH.
4 S 10. Subparagraph (A) of paragraph 6 of subdivision (c) of section
5 11 of the tax law, as amended by section 19 of part A of chapter 63 of
6 the laws of 2005, is amended to read as follows:
7 (A) As soon as practicable after the receipt of certified capital or
8 an irrevocable funding commitment subject only to the receipt of an
9 allocation pursuant to subdivision (h) of this section, (i) the name of
10 each certified investor from which the certified capital was received,
11 including such certified investor's insurance tax identification number;
12 (ii) the amount of each certified investor's investment of certified
13 capital; and (iii) the date on which the certified capital was received.
14 Provided, however, that requests for allocation of tax credits with
15 respect to certified capital company program two by certified capital
16 companies on behalf of their certified investors which are received by
17 the superintendent on or before March first, two thousand shall be
18 treated as having been received on March first, two thousand for tax
19 credits to be utilized in two thousand one, and if satisfactory, shall
20 be given equal priority for allocation, and provided, however, that
21 requests for allocation of tax credits with respect to certified capital
22 company program three by certified capital companies on behalf of their
23 certified investors which are received by the superintendent on or
24 before December first, two thousand shall be treated as having been
25 received on December first, two thousand for tax credits to be utilized
26 in two thousand two, and if satisfactory, shall be given equal priority
27 for allocation, and provided, however, that requests for allocation of
28 tax credits with respect to certified capital company program four by
29 certified capital companies on behalf of their certified investors which
30 are received by the superintendent on or before December first, two
31 thousand four shall be treated as having been received on December
32 first, two thousand four for tax credits to be utilized in two thousand
33 six, and if satisfactory, shall be given equal priority for allocation,
34 and provided, however, that requests for allocation of tax credits with
35 respect to certified capital company program five by certified capital
36 companies on behalf of their certified investors which are received by
37 the superintendent on or before the later of (i) November first, two
38 thousand five and (ii) the one hundred twentieth day after the date on
39 which the superintendent began accepting applications for certification
40 in connection with certified capital company program five pursuant to
41 paragraph nine of subdivision (b) of this section shall be treated as
42 having been received on such later date for tax credits to be utilized
43 in two thousand seven, and if satisfactory, shall be given equal priori-
44 ty for allocation, AND PROVIDED, HOWEVER, THAT REQUESTS FOR ALLOCATION
45 OF TAX CREDITS WITH RESPECT TO CERTIFIED CAPITAL COMPANY PROGRAM SIX BY
46 CERTIFIED CAPITAL COMPANIES ON BEHALF OF THEIR CERTIFIED INVESTORS WHICH
47 ARE RECEIVED BY THE SUPERINTENDENT ON OR BEFORE THE LATER OF (I) NOVEM-
48 BER FIRST, TWO THOUSAND FIFTEEN AND (II) THE ONE HUNDRED TWENTIETH DAY
49 AFTER THE DATE ON WHICH THE SUPERINTENDENT BEGAN ACCEPTING APPLICATIONS
50 FOR CERTIFICATION IN CONNECTION WITH CERTIFIED CAPITAL PROGRAM SIX
51 PURSUANT TO PARAGRAPH NINE OF SUBDIVISION (B) OF THIS SECTION SHALL BE
52 TREATED AS HAVING BEEN RECEIVED ON SUCH LATER DATE FOR TAX CREDITS TO BE
53 UTILIZED IN TWO THOUSAND NINETEEN, AND IF SATISFACTORY, SHALL BE GIVEN
54 EQUAL PRIORITY FOR ALLOCATION.
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1 S 11. Subparagraph (B) of paragraph 6 of subdivision (c) of section 11
2 of the tax law, as amended by section 19 of part A of chapter 63 of the
3 laws of 2005, is amended to read as follows:
4 (B) On an annual basis, on or before January thirty-first of each
5 year, (i) the amount of the certified capital company's certified capi-
6 tal at the end of the immediately preceding year; (ii) whether or not
7 the certified capital company has invested more than fifteen percent of
8 its total certified capital in any one business; (iii) all qualified
9 investments that the certified capital company made during the previous
10 calendar year, including the number of employees of each qualified busi-
11 ness in which it has made investments at the time of such investment and
12 as of December first of the preceding calendar year. For any qualified
13 business where the certified capital company no longer has an invest-
14 ment, the certified capital company shall provide employment figures for
15 such company as of the last day before the investment was terminated.
16 Such report shall provide a separate accounting by each certified capi-
17 tal company program; [and] (iv) all qualified investments made in empire
18 zones and underserved areas outside such empire zones as required under
19 certified capital company program three, certified capital company
20 program four and certified capital company program five; AND (V) WITH
21 RESPECT TO CERTIFIED CAPITAL COMPANY PROGRAM SIX, ALL QUALIFIED INVEST-
22 MENTS MADE IN UNDERSERVED AREAS, ALL QUALIFIED INVESTMENTS MADE IN QUAL-
23 IFIED SEED FUNDS, INCLUDING THE NUMBER OF EMPLOYEES OF EACH BUSINESS IN
24 WHICH A QUALIFIED SEED FUND HAS MADE INVESTMENTS AT THE TIME OF SUCH
25 INVESTMENT AND AS OF DECEMBER FIRST OF THE PRECEDING CALENDAR YEAR AND
26 THE MATCH ACHIEVED BY THE CERTIFIED CAPITAL COMPANY. FOR ANY BUSINESS
27 WHERE THE QUALIFIED SEED FUND NO LONGER HAS AN INVESTMENT, THE CERTIFIED
28 CAPITAL COMPANY SHALL PROVIDE EMPLOYMENT FIGURES FOR SUCH COMPANY AS OF
29 THE LAST DAY BEFORE THE INVESTMENT WAS TERMINATED.
30 S 12. Paragraph 1 of subdivision (d) of section 11 of the tax law, as
31 amended by section 19 of part A of chapter 63 of the laws of 2005, is
32 amended to read as follows:
33 (1) A certified capital company may make qualified distributions at
34 any time. In order for a certified capital company to make a distrib-
35 ution other than a qualified distribution from a certified capital
36 company program, to its equity holders, either (A) the aggregate cumula-
37 tive amount of all qualified investments for such program must equal or
38 exceed one hundred percent of its certified capital allocable to such
39 certified capital company program AND WITH RESPECT TO PROGRAM SIX, THE
40 CERTIFIED CAPITAL COMPANY MUST HAVE ACHIEVED A MATCH OF AT LEAST NINETY
41 PERCENT OF THE CERTIFIED CAPITAL ALLOCABLE TO SUCH CERTIFIED CAPITAL
42 COMPANY, or (B) it must have received written authorization to make such
43 distribution from the superintendent. In no event, however, shall any
44 such distribution to its equity holders, other than a qualified distrib-
45 ution, be made by a certified capital company from a certified capital
46 company program unless an amount equal cumulatively to at least ninety
47 percent of its certified capital of such program is invested in compa-
48 nies that conduct their principal business operations in New York state.
49 S 13. Paragraph 5 of subdivision (e) of section 11 of the tax law, as
50 amended by section 19 of part A of chapter 63 of the laws of 2005, is
51 amended to read as follows:
52 (5) Once a certified capital company has invested an amount cumula-
53 tively equal to one hundred percent of its certified capital with
54 respect to a particular certified capital company program in qualified
55 investments and has met all other requirements under this subdivision,
56 INCLUDING THE REQUIREMENT THAT A PROGRAM SIX CERTIFIED CAPITAL COMPANY
A. 4434 7
1 INVEST TEN PERCENT OF ITS CERTIFIED CAPITAL IN QUALIFIED SEED FUNDS AND
2 ACHIEVE A MATCH OF AT LEAST NINETY PERCENT OF THE CERTIFIED CAPITAL
3 ALLOCABLE TO SUCH CERTIFIED CAPITAL COMPANY, the certified capital
4 company shall no longer be subject to regulation by the superintendent
5 and shall no longer be subject to the requirements of subdivision (c) of
6 this section with respect to such program. Upon receiving documented
7 certification by a certified capital company that it has invested, WITH
8 RESPECT TO PROGRAMS ONE, TWO, THREE, FOUR AND FIVE, an amount equal to
9 one hundred percent of its certified capital AND, WITH RESPECT TO
10 PROGRAM SIX, AN AMOUNT EQUAL TO ONE HUNDRED PERCENT OF ITS CERTIFIED
11 CAPITAL WITH TEN PERCENT OF SUCH CERTIFIED CAPITAL INVESTED IN QUALIFIED
12 SEED FUNDS AND, WITH RESPECT TO PROGRAM SIX, ACHIEVED A MATCH OF AT
13 LEAST NINETY PERCENT OF THE CERTIFIED CAPITAL ALLOCABLE TO SUCH CERTI-
14 FIED CAPITAL COMPANY, the department shall have sixty days to notify
15 such certified capital company that it has or has not met such require-
16 ment with a reason for such determination if it has not, in the judgment
17 of the department, met such requirement. If the department does not
18 provide such notification within sixty days, the certified capital
19 company shall then be deemed to have met such requirement.
20 S 14. Subdivision (h) of section 11 of the tax law is amended by
21 adding a new paragraph 6 to read as follows:
22 (6) CERTIFIED CAPITAL COMPANY PROGRAM SIX. THE AGGREGATE AMOUNT OF
23 CERTIFIED CAPITAL FOR WHICH TAXPAYERS MAY BE ALLOCATED AND ALLOWED TAX
24 CREDITS PURSUANT TO THIS PARAGRAPH AND SUBDIVISION (K) OF SECTION
25 FIFTEEN HUNDRED ELEVEN OF THIS CHAPTER MAY NOT EXCEED ONE HUNDRED FIFTY
26 MILLION DOLLARS FOR CALENDAR YEAR TWO THOUSAND NINETEEN, WHICH CERTIFIED
27 CAPITAL MAY BE INVESTED IN CERTIFIED CAPITAL COMPANIES BEGINNING IN
28 CALENDAR YEAR TWO THOUSAND FIFTEEN.
29 DURING ANY CALENDAR YEAR IN WHICH THE LIMITATION DESCRIBED IN THIS
30 PARAGRAPH WILL LIMIT THE AMOUNT OF CERTIFIED CAPITAL, CERTIFIED CAPITAL
31 WILL BE ALLOCATED IN ORDER OF PRIORITY BASED UPON THE DATE OF FILING OF
32 INFORMATION DESCRIBED IN SUBPARAGRAPH (A) OF PARAGRAPH SIX OF SUBDIVI-
33 SION (C) OF THIS SECTION. THE SUPERINTENDENT SHALL ADVISE ANY CERTIFIED
34 CAPITAL COMPANY IN WRITING, WITHIN FIFTEEN DAYS AFTER RECEIVING SUCH
35 FILING, WHETHER THE LIMITATIONS OF THIS PARAGRAPH THEN IN EFFECT WILL BE
36 APPLICABLE WITH RESPECT TO THE INVESTMENTS AND CREDITS DESCRIBED IN SUCH
37 FILING WITH THE SUPERINTENDENT.
38 CERTIFIED CAPITAL MAY BE RAISED BY EACH CERTIFIED CAPITAL COMPANY WITH
39 RESPECT TO CERTIFIED CAPITAL COMPANY PROGRAM SIX AT ANY TIME SUBSEQUENT
40 TO ITS CERTIFICATION DATE, AND CREDITS SHALL BE ALLOCATED TO AND IRREVO-
41 CABLY VESTED BY THE STATE IN CERTIFIED INVESTORS AT THE TIME OF EACH
42 SUCH INVESTMENT AS PROVIDED IN THIS PARAGRAPH, ALTHOUGH SUCH CREDITS
43 SHALL NOT BE FIRST ALLOWED OR INCURRED FOR STATE TAX PURPOSES, UNTIL, AT
44 THE EARLIEST, TAX YEARS BEGINNING IN TWO THOUSAND NINETEEN. IN ORDER TO
45 SATISFY THE REQUIREMENTS OF PARAGRAPH FIVE OF SUBDIVISION (E) OF THIS
46 SECTION, A CERTIFIED CAPITAL COMPANY MUST HAVE MADE, ON A CUMULATIVE
47 BASIS, (A) AN AMOUNT OF QUALIFIED INVESTMENTS IN QUALIFIED BUSINESSES
48 LOCATED IN UNDERSERVED AREAS EQUAL TO AT LEAST TWO-THIRDS OF THE CERTI-
49 FIED CAPITAL RAISED BY SUCH CERTIFIED CAPITAL COMPANY WITH RESPECT TO
50 CERTIFIED CAPITAL COMPANY PROGRAM SIX, (B) QUALIFIED INVESTMENTS IN
51 QUALIFIED SEED FUNDS IN AN AMOUNT EQUAL TO AT LEAST TEN PERCENT OF THE
52 CERTIFIED CAPITAL RAISED BY SUCH CERTIFIED CAPITAL COMPANY WITH RESPECT
53 TO CERTIFIED CAPITAL COMPANY PROGRAM SIX AND (C) QUALIFIED INVESTMENTS
54 IN QUALIFIED BUSINESSES THAT ARE INVOLVED IN COMMERCE FOR THE PRIMARY
55 PURPOSE OF DEVELOPING AND MANUFACTURING PRODUCTS AND SYSTEMS COVERED BY
56 THE ACTIVITIES SET FORTH IN PARAGRAPH (B) OF SUBDIVISION ONE OF SECTION
A. 4434 8
1 THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW AND HAVE A RATIO
2 OF RESEARCH AND DEVELOPMENT EXPENDITURES TO NET SALES WHICH EQUALS OR
3 EXCEEDS SIX PERCENT DURING THE FISCAL YEAR IMMEDIATELY PRECEDING THE
4 QUALIFIED INVESTMENT IN AN AMOUNT EQUAL TO AT LEAST THIRTY-THREE PERCENT
5 OF THE CERTIFIED CAPITAL RAISED BY SUCH CERTIFIED CAPITAL COMPANY WITH
6 RESPECT TO PROGRAM SIX; PROVIDED, HOWEVER, THAT ALL QUALIFIED INVEST-
7 MENTS IN QUALIFIED SEED FUNDS SHALL COUNT TOWARD THE AMOUNT REQUIRED BY
8 SUBPARAGRAPH (C) OF THIS PARAGRAPH.
9 S 15. Subdivision (i) of section 11 of the tax law, as amended by
10 section 19 of part A of chapter 63 of the laws of 2005, is amended to
11 read as follows:
12 (i) Maximum certified capital. The maximum amount of certified capital
13 per certified capital company program invested in one or more certified
14 capital companies allowed in any one year to any one certified investor
15 shall not exceed ten million dollars for certified capital company
16 programs one and three, [and] eight million dollars for certified capi-
17 tal company programs two, four and five, AND FIFTEEN MILLION DOLLARS
18 FROM CERTIFIED CAPITAL COMPANY PROGRAM SIX for such year, provided,
19 however, that if the aggregate amount of certified capital for such
20 year, as set forth in subdivision (h) of this section, has not been
21 reached sixty days prior to the end of the year to which such aggregate
22 amount applies, the provisions of this subdivision shall cease to apply
23 for the remainder of such year. In addition, the aggregate amount of tax
24 credits allowed in any taxable year to any affiliated group of taxpayers
25 in relation to certified capital may not exceed such maximum amount,
26 whether or not such taxpayers file a combined return pursuant to subdi-
27 vision (f) of section fifteen hundred fifteen of this chapter. For
28 purposes of the preceding sentence, the term "affiliated group" shall
29 have the same meaning as described in section 1504 of the internal
30 revenue code, except that the references to "at least eighty percent" in
31 such section 1504 shall be read as "more than fifty percent".
32 S 16. Subdivision (j) of section 11 of the tax law, as amended by
33 section 19 of part A of chapter 63 of the laws of 2005, is amended to
34 read as follows:
35 (j) Reports. The superintendent shall report to the governor, the
36 temporary president of the senate, and the speaker of the assembly, on
37 or before June first of each year beginning in the year two thousand,
38 the number of certified capital companies holding certified capital; the
39 amount of certified capital invested in each certified capital company;
40 the cumulative amount that each certified capital company has invested
41 as of January first of the year two thousand and the cumulative total
42 each year thereafter; the cumulative amount that the investments of each
43 certified capital company have leveraged in terms of capital invested by
44 other sources of capital in qualified businesses at the same time or
45 subsequent to investments made by a certified capital company in such
46 businesses; the total amount of tax credits granted under this section
47 each year that credits have been awarded under this section and subdivi-
48 sion (k) of section fifteen hundred eleven of this chapter; the perform-
49 ance of each certified capital company with regard to the requirements
50 for recertification set forth in subdivision (c) of this section; the
51 classification of companies in which each certified capital company has
52 invested according to industrial sector and size of company; the total
53 gross number of jobs created by investments made by each certified capi-
54 tal company using certified capital and the number of jobs retained; the
55 location of companies in which each certified capital company has
56 invested in a manner to indicate if the requirements for qualified
A. 4434 9
1 investments in qualified businesses located in empire zones established
2 pursuant to article eighteen-B of the general municipal law set forth
3 for programs three, four and five and in underserved areas outside such
4 empire zones have been met; the total gross number of jobs created in
5 empire zones established pursuant to article eighteen-B of the general
6 municipal law and in underserved areas outside such empire zones made by
7 each certified capital company using certified capital in certified
8 capital company programs three, four and five, reported by geographic
9 location of each empire zone and underserved area and the number of jobs
10 retained; and those certified capital companies that have been decerti-
11 fied, or have had their certifications revoked, including the reasons
12 for decertification or revocation; THE LOCATION OF COMPANIES IN WHICH
13 EACH CERTIFIED CAPITAL COMPANY HAS INVESTED IN A MANNER TO INDICATE IF
14 THE REQUIREMENTS FOR QUALIFIED INVESTMENTS IN QUALIFIED BUSINESSES
15 LOCATED IN UNDERSERVED AREAS AS SET FORTH IN PROGRAM SIX; THE TOTAL
16 GROSS NUMBER OF JOBS CREATED IN UNDERSERVED AREAS USING CERTIFIED CAPI-
17 TAL IN CERTIFIED CAPITAL COMPANY PROGRAM SIX AND THE NUMBER OF JOBS
18 RETAINED; THE AMOUNT OF QUALIFIED INVESTMENTS MADE INTO QUALIFIED SEED
19 FUNDS FOR PROGRAM SIX CERTIFIED CAPITAL COMPANIES; THE CLASSIFICATION OF
20 COMPANIES IN WHICH EACH QUALIFIED SEED FUND HAS INVESTED ACCORDING TO
21 INDUSTRIAL SECTOR AND SIZE OF COMPANY; THE TOTAL GROSS NUMBER OF JOBS
22 CREATED BY INVESTMENTS MADE BY EACH QUALIFIED SEED FUND USING THE NUMBER
23 OF JOBS RETAINED.
24 S 17. Paragraph 2 of subdivision (k) of section 1511 of the tax law,
25 as amended by section 2 of part S of chapter 407 of the laws of 1999, is
26 amended to read as follows:
27 (2) Ten percent of such credit shall be allowed in the taxable year to
28 which such investment is allocated pursuant to PARAGRAPHS ONE THROUGH
29 FIVE OF subdivision (h) of section eleven of this chapter and in each of
30 the nine following taxable years. TWENTY-FIVE PERCENT OF SUCH CREDIT
31 SHALL BE ALLOWED IN THE TAXABLE YEAR TO WHICH SUCH INVESTMENT IS ALLO-
32 CATED PURSUANT TO PARAGRAPH SIX OF SUBDIVISION (H) OF SECTION ELEVEN OF
33 THIS CHAPTER AND IN EACH OF THE THREE FOLLOWING TAXABLE YEARS. In addi-
34 tion, in any taxable year subsequent to the taxable year for which
35 [such] ANY investment is so allocated UNDER SUCH SUBDIVISION (H), any
36 amount carried forward under paragraphs three and four of this subdivi-
37 sion may be carried forward indefinitely until such credits are
38 utilized.
39 S 18. Section 84 of part A of chapter 62 of the laws of 2011 relating
40 to constituting chapter 18-A of the consolidated laws relating to finan-
41 cial services is REPEALED.
42 S 19. Notwithstanding the provisions of article 5 of the general
43 construction law, the provisions of subdivision (j) of section 11 of the
44 tax law, as repealed by section 84 of part A of chapter 62 of the laws
45 of 2011, are hereby revived and shall continue in full force and effect
46 as such provisions existed on March 30, 2011.
47 S 20. This act shall take effect immediately.