Code of Maine Rules › 94 - INDEPENDENT AGENCIES › 457 - FINANCE AUTHORITY OF MAINE (FAME) › Chapter 307 - MAINE SEED CAPITAL TAX CREDIT PROGRAM-Amendment 9 › Section 457-307-3-B - Eligibility - Investments into Private Venture Capital Funds on or after January 1, 2012

Current through 2024-29, July 17, 2024
Investments by investors made on or after January 1, 2012 in
				  private venture capital funds will also be eligible under the Program, provided
				  each of the following criteria is met, and to the extent applicable and
				  required by the Authority, continues to be met under continuing certifications
				  or agreements:
A. The amount invested
				by the private venture capital fund in an eligible business (as defined in
				Section 3(A) ) must be equal to or greater than the amount of the investment in
				the private venture capital fund that is receiving the tax credit. Tax credits
				will not be issued until the private venture capital fund's investment in such
				business(es) is (are) made.
B. Each
				investment received by a business from the private venture capital fund must be
				expended by such business for the purposes allowed in Section 3(B)(1), and must
				be certified as required by Section 3(B)(4).
C. Both the investor's investment in the
				private venture capital fund and the private venture capital fund's investment
				in an eligible business must be at risk, and neither investment may be secured
				by a lien on business or private venture capital fund assets or a personal
				guaranty of any principal owner of an eligible business.
D. The investor's investment in a private
				venture capital fund must be made under an agreement whereby the investment is
				subject to loss in its entirety, and may not have unilateral "put" rights
				during the five-year period beginning on the date the cash is received by the
				private venture capital fund. The investment by the private venture capital
				fund in any eligible business shall be governed by Section 3(B)(2), with the
				private venture capital fund being treated as the investor. Nothing in this
				paragraph is intended to limit the ability of the applicant to sell or transfer
				his or her interest in the private venture capital fund to another person or
				entity (other than the private venture capital fund itself, a business in which
				the fund has invested and sought a credit for, or a principal owner thereof),
				or to limit the ability of the private venture capital fund to transfer its
				interest in the enterprise to another person or entity (other than a business
				in which the private venture capital fund has invested, which investment was
				the basis for a credit, or a principal owner thereof), at any time, provided
				prior written notice is given to the Authority, together with a signed
				acknowledgement by both the transferor and the transferee that the investment
				remains subject to the limitations of this Rule, and provided further that the
				Authority finds that the intent of the transfer is not the avoidance of the
				limitations of the Program.
E. No
				investor in a private venture capital fund seeking a tax credit may own 50% or
				more of any eligible business receiving an investment from the private venture
				capital fund, which investment is the subject of an application for a Program
				tax credits. No private venture capital fund seeking a tax credit may own in
				excess of 50% of any eligible business receiving an investment from the private
				venture capital fund, which investment is the subject of an application for
				Program tax credits. For the purposes of this limitation, an investor's
				ownership interest in an eligible business shall include all interests held in
				the investor's personal name, and a pro rata share of all interests held
				jointly with other individuals or entities or held by another legal entity in
				which the investor has an interest, including the private venture capital fund,
				and a private venture capital fund's ownership interest shall include those
				interests held in its name as well as those held by or attributed to (under the
				language of this subsection) any of its investors. Nothing in this subsection
				shall preclude an investor or private venture capital fund from making a later
				investment that results in its ownership interest equaling or exceeding 50% of
				an eligible business, so long as (i) neither the investor nor the private
				venture capital fund applies for a Program tax credit for such later
				investment, and (ii) there was no intent by the investor or the private venture
				capital fund to take such additional interests at the time of the original
				investment for which it received a Program tax credit.
F. No member, shareholder, equity owner,
				beneficiary or partner in the private venture capital fund is a principal owner
				in any business in which the private venture capital fund invests and seeks a
				tax credit.
G. The eligible
				business in which the private venture capital fund invests and seeks a credit
				must not move substantially all its operations and assets outside the State
				during the four year period commencing on the date of an investment which is
				the subject of a tax credit, except in the case of an arm's length, fair value
				acquisition approved by the Authority, which approval may be contingent on a
				partial revocation, as determined by the Authority.
H. The private venture capital fund did not
				receive a partial Program credit under Section 3- A(F) for the investment in
				question.