H.P. 1489 - L.D. 2088
An Act to Amend the Laws Concerning Access to Capital for Maine Businesses
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 10 MRSA §1100-T, sub-§2-A, as amended by PL 1995, c. 658, §4, is further amended to read:
2-A. Eligibility of private venture capital funds for tax credit certificate. The authority shall adopt rules in accordance with the Maine Administrative Procedure Act to implement application of the program to investment in a private venture capital fund. Without limitation, the requirements for eligibility for a tax credit certificate for investment in a private venture capital fund include the following.
A. A tax credit certificate may be issued in an amount not more than 30% of the amount of cash actually invested in a private venture capital fund in any calendar year. A tax credit certificate may be issued to an individual who invests in a private venture capital fund in an amount that:
(1) Is not more than 30% of the amount of cash actually invested in a private venture capital fund in any calendar year by the individual; and
(2) Does not exceed 30% of the amount of cash invested by the fund in eligible businesses.
The aggregate amount of credits issued to investors in a fund may not exceed 30% of the amount of cash invested by the fund in eligible businesses.
B. Each state business in which the private venture capital fund invests must be a manufacturer; must provide a service that is sold or rendered, or is projected to be sold or rendered, predominantly outside of the State; or must bring capital into the State, as determined by the authority. As
used in this subsection, unless the context otherwise indicates, an "eligible business" means a business located in the State that:
(1) Is a manufacturer;
(2) Is engaged in the development or application of advanced technologies;
(3) Provides a service that is sold or rendered, or is projected to be sold or rendered, predominantly outside of the State; or
(4) Brings capital into the State, as determined by the authority.
C. Aggregate investment eligible for tax credits may not be more than $600,000 $1,000,000 for any one private venture capital fund as of the date of issuance of a tax credit certificate.
D. The investment with respect to which any individual is applying for a tax credit certificate may not be more than an aggregate of $100,000 $200,000 in any one private venture capital fund in any 3 consecutive calendar years, except that this paragraph does not limit other investment by any applicant for which that applicant is not applying for a tax credit certificate.
E. Each business receiving an investment from a private venture capital fund, which investment is used as the basis for the issuance of a tax credit certificate, must have annual gross sales of $2,000,000 or less and the operation of the business must be the full-time professional activity of the principal owner, as determined by the authority. The principal owner and principal owner's spouse are not eligible for a credit for investment in that business or the private venture capital fund. A tax credit certificate may not be issued to a parent, brother, sister or child of a principal owner if the parent, brother, sister or child has any existing ownership interest in the that business or in the private venture capital fund.
F. Each investment received by a business from a private venture capital fund, which investment is used as the basis for the issuance of a tax credit certificate, must be expended on plant maintenance and construction, equipment, research and development or working capital for the business or on such other business activity as may be approved by the authority.
G. The authority shall establish limits on repayment of the investment by an individual in and the investments made by a private venture capital fund, which investment is used as the basis for the issuance of a tax credit certificate. The investments must be at risk in the private venture capital fund and the business, respectively.
H. The investors qualifying for the credit must collectively own less than 1/2 of the private venture capital fund and less than 1/2 of any business in which an investment is made by the private venture capital fund, which investment is used as the basis for the issuance of a tax credit.
Effective July 9, 1998, unless otherwise indicated.
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