ENROLLED
Senate Bill No. 137
(By Senators Craigo, Walker and Plymale)
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[Passed March 11, 2000; in effect ninety days from passage.]
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AN ACT to amend and reenact sections six and eight, article one,
chapter five-e of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, all relating generally to the
capital company act; requiring venture capital funds to be
held in escrow until an applicant business provides proof of
the creation of jobs to otherwise qualify for the provision of
funding; providing for four million dollars in authorized
credits for the fiscal year beginning on the first day of
July, two thousand; and requiring two million dollars of that
amount be allocated to small business investment companies.
Be it enacted by the Legislature of West Virginia:
That sections six and eight, article one, chapter five-e of
the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted, all to read as follows:
ARTICLE 1. WEST VIRGINIA CAPITAL COMPANY ACT.
§5E-1-6. Qualification of West Virginia capital companies.
(a) The authority shall qualify West Virginia capital
companies commencing after the effective date of this article. A
company seeking to be qualified as a West Virginia capital company
shall make written application to the authority on forms provided
by the authority. The application shall contain the information
required by section ten of this article. Further, the application
shall specify the level of capitalization of the company.
(b) The application shall set forth the applicant's purpose.
(c) The authority may certify West Virginia capital companies
in existence after the first day of July, one thousand nine hundred
eighty-six.
(d) An applicant shall establish an escrow account located in
West Virginia, into which funds invested in the applicant shall be
deposited and held for the period of time between their receipt by
the applicant and the designation of the applicant as a qualified
company. The funds shall not be invested by the applicant until it
is designated by the authority as a qualified company: Provided,
That, in addition to the minimum standards set forth in section seven of this article, no applicant may be designated a qualified
company without providing sufficient proof to the authority that
the proposed project will sufficiently promote the purpose of
providing employment in accordance with the provisions of section
three, article fifteen, chapter thirty-one of this code. In the
event the authority does not designate the applicant a qualified
company, such funds shall be returned to the investors, if
requested by the investors.
(e) A West Virginia capital company may not qualify or be
issued a certification under this article unless the company holds
a valid business registration certificate issued pursuant to
article twelve, chapter eleven of this code. A company exempt from
registration under article twelve may qualify and be certified
under this article upon proof of its exemption.
§5E-1-8. Tax credits.
(a) The total amount of tax credits authorized for a single
qualified company may not exceed two million dollars.
Capitalization of the company may be increased pursuant to rule of
the authority.
(b) (1) The total credits authorized by the authority for all
companies may not exceed a total of ten million dollars each fiscal year: Provided, That for the fiscal year beginning on the first
day of July, one thousand nine hundred ninety-nine, the total
credits authorized for all companies may not exceed a total of six
million dollars: Provided, however, That for the fiscal year
beginning on the first day of July, two thousand, the total credits
authorized for all companies may not exceed a total of four million
dollars: Provided further, That the capital base of any such
qualified company shall be invested in accordance with the
provisions of this article. The authority shall allocate these
credits to qualified companies in the order that the companies are
qualified.
(2) Not more than one million seven hundred fifty thousand
dollars of the credits allowed under subdivision (1) of this
subsection may be allocated by the authority during each fiscal
year to one or more small business investment companies described
in this subdivision: Provided, That for the fiscal year beginning
on the first day of July, two thousand, two million dollars of the
credits allowed under subdivision (1) of this subsection shall be
allocated by the authority during that fiscal year to one or more
small business investment companies described in this subdivision.
The remainder of the tax credits allowed during the fiscal year shall be allocated to qualified companies other than those small
business investment companies. The portion of the tax credits
allowed for small business investment companies described in this
subdivision shall be allowed only if allocated by the authority
during the first ninety days of the fiscal year, and may only be
allocated to companies that: (A) Were organized on or after the
first day of January, one thousand nine hundred ninety-nine; (B)
have registered for licensure by the small business administration
as a small business investment company under the small business
investment act; and (C) have certified in writing to the authority
on the application for credits under this act that the company will
diligently seek to obtain and thereafter diligently seek to invest
leverage available to such small business investment companies
under the small business investment act. These credits shall be
allocated by the authority in the order that the companies are
qualified. Any credits which have not been allocated to qualified
companies meeting the requirements of this subdivision relating to
small business investment companies during the first ninety days of
the fiscal year shall be made available and allocated to other
qualified companies in the manner prescribed in this section for
qualified companies generally.
(c) Any investor, including an individual, partnership or
corporation who makes a capital investment in a qualified West
Virginia capital company, is entitled to a tax credit equal to
fifty percent of the investment, except as otherwise provided in
this section or in this article. The credit allowed by this
article shall be taken after all other credits allowed by chapter
eleven of this code. It shall be taken against the same taxes and
in the same order as set forth in subsections (c) through (i),
inclusive, section five, article thirteen-c, chapter eleven of this
code. The credit for investments by a partnership or by a
corporation electing to be treated as a Subchapter S corporation
may be divided pursuant to election of partners or shareholders.
(d) The tax credit allowed under this section is to be
credited against the taxpayer's tax liability for the taxable year
in which the investment in a qualified West Virginia capital
company is made. If the amount of the tax credit exceeds the
taxpayer's tax liability for the taxable year, the amount of the
credit which exceeds the tax liability for the taxable year may be
carried to succeeding taxable years until used in full, or until
forfeited: Provided, That: (i) Tax credits may not be carried
forward beyond fifteen years; and (ii) tax credits may not be carried back to prior taxable years. Any tax credit remaining
after the fifteenth taxable year is forfeited.
(e) The tax credit provided for in this section is available
only to those taxpayers whose investment in a qualified West
Virginia capital company occurs after the first day of July, one
thousand nine hundred eighty-six.
(f) The tax credit allowed under this section may not be used
against any liability the taxpayer may have for interest, penalties
or additions to tax.
(g) Notwithstanding any provision in this code to the
contrary, the tax commissioner shall publish in the state register
the name and address of every taxpayer, and the amount, by
category, of any credit asserted under this article. The
categories by dollar amount of credit received are as follows:
(1) More than $1.00, but not more than $50,000;
(2) More than $50,000, but not more than $100,000;
(3) More than $100,000, but not more than $250,000;
(4) More than $250,000, but not more than $500,000;
(5) More than $500,000, but not more than $1,000,000;
(6) More than $1,000,000.