West Virginia Code of State Rules › Agency 117 - Economic Development Authority › Title 117 - PROCEDURAL RULE ECONOMIC DEVELOPMENT AUTHORITY › Series 117-01 - General Administration Of The WV Capital Company Act: Establishment Of The Application Procedures To Implement The Act › Section 117-1-3 - Procedure to Become a Qualified West Virginia Capital Company

Current through Register Vol. XLI, No. 28, July 12, 2024
3.1. General Rule.
				-- In order to be designated a Qualified West Virginia Capital Company, the Act
				requires that an Applicant be a Certified Company. An Applicant is a Certified
				Company upon the Authority certifying that the Applicant is a profit or
				nonprofit entity organized and existing under the laws of the State of West
				Virginia and created for the purpose of making venture or risk capital
				available for Qualified Investments; provided that, the certification is
				unnecessary in the case of Development Corporations, which by that status are
				considered Certified Companies. For purposes of implementing the tax credit
				program established by the Act and to facilitate the process of qualification
				by the Authority, the Authority shall combine the processes of (1) certifying
				applicants as Certified Companies, and (2) designating Certified Companies as
				Qualified West Virginia Capital Companies under the Act, into a one step
				procedure.
3.2. Requirements for
				Qualified Company. -- The following requirements apply as indicated to all
				Qualified Companies and Applicants:
3.2.a.
				Certification. -- A Qualified Company shall be a Certified West Virginia
				Capital Company;
3.2.b. Business
				Office. -- An Applicant or Qualified Company shall have a reasonably accessible
				business office located within the State of West Virginia, which office has a
				listed telephone number and is open to the public during normal business
				hours;
3.2.c. Amount of Capital
				base. -- An Applicant or Qualified Company shall have a capital base of at
				least One Million Dollars, but not greater than Four Million Dollars, which
				must be raised after July 1, 1986. If the amount of the investment in an
				Applicant or Qualified Company in any fiscal year exceeds Four Million Dollars,
				the amount in excess of Four Million Dollars is not eligible for tax credits
				under the Act for that fiscal year. A capital base of a Qualified Company which
				falls below the minimum requirement of One Million Dollars due to the
				uncollectability and write-off of a qualified investment is not in violation of
				the One Million Dollar minimum requirement set forth in this Subdivision and in
				W. Va. Code §
										5E-1-7(d);
3.2.d. Maintenance of Capital Base. -- After
				designation as a Qualified Company, a Qualified Company which is not a SBIC
				shall maintain all of its capital base, as defined in this Rule, except that
				which has been invested in Qualified Investments, in bank accounts and
				financial institutions which are located in the State of West Virginia, in any
				other interest bearing instruments with a maturity of less than one (1) year
				which are obtained from and managed by a West Virginia corporation, or in a
				fund authorized by the Authority pursuant to W. Va. Code §
										5E-2-4(b)
				in accordance with Subsection 6.1 of this Rule. For purposes of this Rule, the
				phrase "interest bearing instruments with a maturity of less than one (1) year
				which are obtained from and managed by a West Virginia corporation" includes,
				by way of example and not by way of limitation, direct investment in interest
				bearing money management or similar accounts or certificates of deposit
				maturing in one (1) year or less obtained from a West Virginia branch office of
				a brokerage firm;
3.2.e. Limitation
				on Debt Investment in Capital Base. -- No more than twenty-five (25%) percent
				of each separate capital base of an Applicant or Qualified Company which is not
				a SBIC shall be in the form of full recourse, interest bearing demand notes.
				The notes shall be backed by an irrevocable letter of credit or bond from a
				reputable source, as determined by the Authority;
3.2.f. Stated Purpose. -- An Applicant or
				Qualified Company's stated purpose shall be to encourage and assist in the
				creation, development or expansion of West Virginia businesses;
3.2.g. Funds.
1. An Applicant which is not a SBIC shall
				establish an escrow account located in West Virginia. All funds invested in an
				Applicant which is not a SBIC shall be deposited and held in the escrow account
				for the period of time between their receipt by the Applicant and the
				designation of the Applicant as a Qualified Company.
2. A Qualified Company which is not a SBIC,
				seeking to establish a separate capital base or increase its capital base,
				shall establish a separate escrow account located in West Virginia for each
				separate capital base or each increase to capital base sought. All funds
				invested in a Qualified Company which is not a SBIC relative to a separate
				capital base or increase to capital base shall be deposited and held in the
				applicable escrow account for the period of time between their receipt by the
				Qualified Company and the designation as qualified of the respective separate
				capital base or increase to capital base.
3. A Qualified Company which is a SBIC
				seeking to establish a separate capital base or increase its capital base,
				shall submit to the Authority small business administration capital
				certificates totaling the amount of the separate capital base or increased
				capital base.
4. Funds may not be
				invested by the Applicant or the Qualified Company until the Authority
				designates the Applicant a Qualified Company, or designates as qualified the
				separate capital base or increase to capital base sought, as applicable. In the
				case of companies which are not SBICs, where the Authority does not designate
				the Applicant a Qualified Company, or designate as qualified the separate
				capital base or increase to capital base sought, the escrowed funds shall be
				returned to the investors, if requested by the investors;
3.2.h. Disclosure to Investors. -- An
				Applicant or Qualified Company, when soliciting funds for its capital base,
				shall disclose that no tax credit for the investor's investment will be
				available until the Authority either designates the Applicant a Qualified
				Company or designates as qualified a separate capital base or an increase to
				capital base, and issues to the Qualified Company notice of the qualification
				and a Certificate of tax credit; and
3.2.i. Business Registration Certificate. --
				An Applicant or Qualified Company shall hold a valid West Virginia business
				registration certificate pursuant to W. Va. Code§
										11-12-1 et
				seq., or be exempt from registration.