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-A - Eligibility - Investments into Funds Prior to January 1, 2012 and Investments through Flow-Through Entities

Current through 2024-29, July 17, 2024
Investments by investors in funds prior to January 1, 2012
				  and in flow-through entities will be eligible under the Program, provided each
				  of the following criteria is met:
A.
				The amount invested by the fund or flow-through entity in an eligible business
				(as defined in Section 3(A) ) must be equal to or greater than the amount of
				the investment in the fund or flow-through entity that is the basis for
				receiving the tax credit. Except as provided in subparagraph (F) of this
				Section 3- A, tax credits for investments in funds will not be issued until the
				fund's investment in such business(es) is (are) made.
B. Each investment received by a business
				from the fund or flow-through entity 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 fund or flow-through entity, and the fund's or
				flow-through entity's investment in an eligible business must be at risk, and
				neither investment may be secured by a lien on business, flow-through entity or
				fund assets or a personal guaranty of any principal owner of an eligible
				business.
D. The investor's
				investment in a fund or flow-through entity 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 fund or flow-through entity. The investment by the fund
				or flow-through entity in any eligible business shall be governed by Section
				3(B)(2), with the fund or flow-through entity 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 fund or flow-through entity to
				another person or entity (other than the fund or flow-through entity itself, a
				business in which the fund or flow-through entity has invested and sought a
				credit for, or a principal owner thereof), or to limit the ability of the fund
				or flow-through entity to transfer its interest in the enterprise to another
				person or entity (other than a business in which the fund or flow-through
				entity 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. For investments made prior to January 1.
				2012, investors applying for a credit under the Program may not own 50% or more
				(collectively) in any eligible business receiving an investment from the fund,
				which investment is the subject of an application for a Program tax credit. For
				investments made on or after January 1, 2012, the investment may not result in
				the investor who applies for a tax credit owning 50% or more of the business in
				which the investment is made. 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 a fund,
				flow-through entity or private venture capital fund. Nothing in this subsection
				shall preclude an investor from making a later investment that results in its
				ownership interest equaling or exceeding 50% of an eligible business, so long
				as (i) the investor does not apply for a Program tax credit for such later
				investment, and (ii) there was no intent by the investor to take such
				additional interests at the time of the original investment for which it
				received a Program tax credit.
F.
				Notwithstanding the provisions of Section 3- A(A), for money invested in or
				unconditionally committed (as determined in the discretion of the Chief
				Executive Officer) to eligible funds after August 11, 2000, but prior to
				January 1, 2012, where the application is made prior to the investment of funds
				by the investor into the fund and/or the fund's investment of such sums in an
				eligible business, the applicable fund investors may receive a tax credit
				certificate for up to 20% of the investment for which the investor would be
				eligible had the funds been invested in the fund, and in turn invested by the
				fund in an eligible business, provided the following conditions are met:
1. The fund is located in Maine;
2. The fund is owned and controlled primarily
				by residents of the State of Maine;
3. The fund has demonstrated to the
				satisfaction of the Authority that it has as a major investment objective, the
				investment in eligible businesses;
4. The investor in fact makes the full
				Investment in the fund; and
5. The
				fund in fact invests an amount equal to or greater than the amount of the
				investment in one or more eligible businesses.
A certificate for 20% of the investment will be issued after
				  fulfillment of conditions 1, 2 and 3 above, assuming the fund and the
				  prospective investment are otherwise eligible under this rule. A certificate
				  for the remainder of the credit (or so much thereof as the investor is found
				  eligible) will not be issued until fulfillment of conditions 4 and 5 above, so
				  long as the fund and the investment are otherwise eligible under this rule, and
				  provided credits remain available at such time. To the extent the fund or the
				  investor complies with conditions 4 and 5 above, but in an amount less than the
				  full investment as originally described, the second certificate will be issued
				  based on the actual amount of the credit for which the investor is eligible,
				  less the amount of credit listed on the first certificate.
Any credit awarded under this subparagraph F, prior to an
				  investment being made in an eligible fund or in turn invested by such fund in
				  an eligible business, will be automatically revoked by the Authority three (3)
				  years after issued, to the extent that on or before such date the fund or the
				  investor has not provided to the Authority evidence satisfactory to the
				  Authority that conditions 4 and 5 above have been met. Nothing herein shall
				  preclude an investor from receiving a credit, to the extent available, once all
				  eligibility requirements have been met.