§ 283 - Limitations on purposes and powers - Vermont Statutes

[Section 283 repealed effective July 1, 2010.]

§ 283. Limitations on purposes and powers

The Vermont venture capital fund raised from Vermont taxpayers shall form as either a business corporation or limited partnership as set forth in Title 11, subject to the following:

(1) The Vermont venture capital fund shall not invest in any firm in which a total of more than a 25 percent interest in that firm is held by an investor of the Vermont venture capital fund combined with any interest held in the firm by the spouse or dependent children of the investor.

(2)(A) Before it commences to make investments, the fund, if organized as a corporation, shall have and thereafter maintain a board of nine directors, seven of whom shall be elected by the shareholders and two of whom shall be appointed by the governor, with the advice and consent of the senate, and shall represent the public interest of the state.

(B) If organized as a partnership, before it commences to make investments, the fund shall have and maintain a board of three advisors appointed by the governor with the advice and consent of the senate. The board of advisors shall represent solely the public interest of the state with respect to the management of the fund and shall have no civil liability for the financial performance of the fund. The board of advisors shall be advised of investments made by the fund. The board of advisors shall have access to all information held by the fund with respect to investments made by the fund.

(3) The Vermont venture capital fund shall cause to be prepared a report which shall include an audited financial statement certified by an independent certified public accountant, within 120 days after the close of each fiscal year of its operations. This report shall be made available to the public. The report shall include a discussion of the fund's impact on the Vermont economy and employment.

(4) The Vermont venture capital fund shall not make distributions of more than 75 percent of its net profit to its investors during its first five years of operation.

(5) No person, firm or corporation shall be allocated more than 10 percent of the available tax credits. For the purposes of determining allocation hereunder, the attribution rules of section 318 of the Internal Revenue Code in effect as of the effective date of this chapter shall apply.

(6) The first $3 million of capitalization of the Vermont venture capital fund raised from Vermont taxpayers on or before January 1, 1993, shall be eligible for partial tax credits as specified in 32 V.S.A. § 5830b.

(7) All investments and related business dealings using funds which qualify for partial tax credits under 32 V.S.A. § 5830b shall also be subject to the following restrictions:

(A) The investments shall be restricted to Vermont firms, except as set forth in subdivision (7)(D) of this section. Corporations shall be considered Vermont firms for the purposes of this chapter if their Vermont apportionment under 32 V.S.A. § 5833 equals or exceeds 50 percent. Any funds so invested in Vermont business firms shall be used by such firms in order to enhance their Vermont investments. Investment shall be restricted to firms that export the majority of their products and services outside the state or add substantial value to products and materials within the state. In its investments, the fund shall give priority to new firms and existing firms which are developing new products.

(B) Each Vermont venture capital fund investment in any one firm, in any twelve-month period, shall be limited to a maximum of $250,000.00 or ten percent of the Vermont venture capital fund's capitalization, whichever is greater.

(C) At least two-thirds of the monies invested by the Vermont venture capital fund and qualifying for a tax credit under 32 V.S.A. § 5830b shall at all times be invested in the form of equity, or convertible securities. This provision shall not prohibit the generally accepted business practice of earning interest on working funds deposited in relatively secure accounts such as savings and money market funds.

(D)(i) The fund may participate with other funds in co-investments outside the state. Each such co-investment must be preceded by a separate co-investment which invests an equal or greater amount in a Vermont firm.

(ii) In any event, investments shall be made in Vermont firms in amounts equal to or greater than the capitalization raised by subdivision (6) of this section. (Added 1985, No. 171 (Adj. Sess.), § 1, eff. May 7, 1986; amended 1987, No. 80, § 4, eff. June 9, 1987; 1993, No. 78, § 2; 2009, No. 33, § 20.)