S T A T E O F N E W Y O R K
________________________________________________________________________
7985--B
2011-2012 Regular Sessions
I N A S S E M B L Y
May 25, 2011
___________
Introduced by M. of A. SILVER, MORELLE, SCHIMMINGER, LUPARDO, SCARBOR-
OUGH, MAGNARELLI, CASTRO, CAHILL, GUNTHER, GABRYSZAK, M. MILLER,
SCHROEDER, WEPRIN, SIMOTAS, WEISENBERG, MILLMAN, GALEF, HOYT, ZEBROW-
SKI, JAFFEE, P. RIVERA -- Multi-Sponsored by -- M. of A. ABBATE, BREN-
NAN, CAMARA, GIBSON, MAGEE, MARKEY -- read once and referred to the
Committee on Ways and Means -- committee discharged, bill amended,
ordered reprinted as amended and recommitted to said committee --
reported and referred to the Committee on Rules -- Rules Committee
discharged, bill amended, ordered reprinted as amended and recommitted
to the Committee on Rules
AN ACT to amend the tax law, in relation to program six certified capi-
tal companies and to repeal section 84 of part A of chapter 62 of the
laws of 2011 relating to constituting chapter 18-A of the consolidated
laws relating to financial services, relating to making certain
provisions permanent
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The opening paragraph of paragraph 7 of subdivision (a) of
section 11 of the tax law, as amended by section 19 of part A of chapter
63 of the laws of 2005, is amended to read as follows:
"Qualified business" - A QUALIFIED SEED FUND OR an independently owned
and operated business that meets all of the following conditions as of
the time of the first investment in the business:
S 2. Paragraph 10 of subdivision (a) of section 11 of the tax law, as
amended by section 19 of part A of chapter 63 of the laws of 2005, is
amended to read as follows:
(10) "Qualified investment" - the investment of cash by a certified
capital company in a qualified business for the purchase of any debt,
equity or hybrid security, of any nature and description whatever,
including a debt instrument or security which has the characteristics of
debt but which provides for conversion into equity or equity partic-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10508-12-1
A. 7985--B 2
ipation instruments such as options or warrants, provided however, in
the case of certified capital programs three, four [and], five[,] AND
SIX that any such debt instrument have a maturity of at least twenty-
four months from the date such debt is incurred; and further provided
that a certified capital company, after the investment and assuming full
conversion and exercise of any equity participation instruments, shall
not own more than fifty percent of the voting equity of the qualified
business, except in the case of a follow-on investment where a specific
exemption is granted by the department under subparagraph (D) of para-
graph one of subdivision (c) of this section OR AN INVESTMENT IN A QUAL-
IFIED SEED FUND BY A PROGRAM SIX CERTIFIED CAPITAL COMPANY. Further-
more, except in the case of a follow-on investment, if a certified
capital company owns more than fifteen percent of the equity in a compa-
ny or has a seat on the board of directors of such company, then a
certified capital company cannot invest in such company unless the
following conditions are met: (i) at least one other investor who is not
an affiliate of the certified capital company participates in the same
round of investment on the same terms and conditions as the certified
capital company; and (ii) the certified capital company and its affil-
iates invest no more than fifty percent of the total investment made in
that round of investment.
S 3. Subdivision (a) of section 11 of the tax law is amended by adding
two new paragraphs 17 and 18 to read as follows:
17. "QUALIFIED SEED FUND" - IS ANY FUND THAT HAS BEEN CERTIFIED BY THE
SUPERINTENDENT AS SUCH BY RULE OR REGULATION. THE SUPERINTENDENT MAY
CERTIFY PARTNERSHIPS, CORPORATIONS, TRUSTS, OR LIMITED LIABILITY COMPA-
NIES ORGANIZED ON A FOR-PROFIT BASIS, OR NOT-FOR-PROFIT FUNDS, WHICH
SUBMIT AN APPLICATION TO BE DESIGNATED AS A QUALIFIED SEED FUND OPERATOR
IF SUCH APPLICANT IS LOCATED, HEADQUARTERED AND LICENSED OR REGISTERED
TO CONDUCT BUSINESS IN NEW YORK. QUALIFIED SEED FUNDS SHALL BE UNDER
EXPERIENCED PROFESSIONAL MANAGEMENT FAMILIAR WITH SEED CAPITAL INVEST-
MENT, APPROPRIATE BUSINESS PRACTICES AND TECHNOLOGY-ORIENTED PRODUCTS
AND SERVICES, AND FORMED FOR THE PURPOSE OF PROVIDING PRIVATE EQUITY TO
TECHNOLOGY-BASED COMPANIES IN THEIR FORMATIVE STAGES AND INVEST IN QUAL-
IFIED ENTERPRISES LOCATED WITHIN NEW YORK STATE. QUALIFIED SEED FUNDS
MUST DEMONSTRATE (A) CAPACITY TO PERFORM DUE DILIGENCE IN MAKING INVEST-
MENT DECISIONS AND TO PROVIDE MANAGEMENT EXPERTISE AND OTHER VALUE-ADDED
SERVICES; (B) FINANCIAL RESOURCES FOR IDENTIFYING AND INVESTING
SEED-STAGE COMPANIES; AND (C) ABILITY TO EVALUATE EMERGING TECHNOLOGY
COMMERCIALIZATION.
18. "MATCH" - A CASH INVESTMENT IN OR LOAN TO A QUALIFIED BUSINESS
MADE NO MORE THAN THREE MONTHS BEFORE OR SIX MONTHS AFTER AN INVESTMENT
OF CERTIFIED CAPITAL BY A CERTIFIED CAPITAL COMPANY PROGRAM SIX IN SUCH
QUALIFIED BUSINESS, OTHER THAN AN INVESTMENT MADE WITH CERTIFIED CAPI-
TAL. THE TERM SHALL ALSO INCLUDE CASH INVESTED IN OR LENT TO A QUALIFIED
BUSINESS BY A CERTIFIED CAPITAL COMPANY THAT HAS INVESTED ONE HUNDRED
PERCENT OF ITS CERTIFIED CAPITAL IN QUALIFIED BUSINESSES.
S 4. Paragraph 9 of subdivision (b) of section 11 of the tax law, as
amended by section 19 of part A of chapter 63 of the laws of 2005, is
amended to read as follows:
(9) The superintendent shall start accepting applications to become a
certified capital company in certified capital company program two by
November first, nineteen hundred ninety-nine, and shall start accepting
applications to become a certified capital company in certified capital
company program three by August first, two thousand, and shall begin
accepting applications to become a certified capital company in certi-
A. 7985--B 3
fied capital company program four by the later of August first, two
thousand four or not more than sixty days after the effective date of
section one of part D of chapter fifty-nine of the laws of two thousand
four and shall begin accepting applications to become a certified capi-
tal company in certified capital company program five by the later of
July first, two thousand five or not more than sixty days after the
effective date of the chapter of the laws of two thousand five which
amended this paragraph, AND SHALL BEGIN ACCEPTING APPLICATIONS TO BECOME
A CERTIFIED CAPITAL COMPANY IN PROGRAM SIX BY JULY FIRST, TWO THOUSAND
ELEVEN OR NOT MORE THAN SIXTY DAYS AFTER THE EFFECTIVE DATE OF THE CHAP-
TER OF THE LAWS OF TWO THOUSAND ELEVEN WHICH AMENDED THIS PARAGRAPH.
S 5. Subparagraph (A) of paragraph 1 of subdivision (c) of section 11
of the tax law, as amended by section 19 of part A of chapter 63 of the
laws of 2005, is amended to read as follows:
(A) Within two years after the starting date of a specific certified
capital company program of a certified capital company, at least twen-
ty-five percent of its certified capital allocable to such certified
capital company program must be placed in qualified investments AND IN
THE CASE OF PROGRAM SIX, AT LEAST TEN PERCENT OF ITS CERTIFIED CAPITAL
MUST HAVE BEEN PLACED IN QUALIFIED SEED FUNDS. ALL QUALIFIED INVESTMENTS
MADE IN QUALIFIED SEED FUNDS UNDER PROGRAM SIX SHALL COUNT TOWARDS THE
TWENTY-FIVE PERCENT INVESTMENT REQUIREMENT OF THIS SUBPARAGRAPH.
S 6. Subparagraph (C) of paragraph 1 of subdivision (c) of section 11
of the tax law, as amended by section 19 of part A of chapter 63 of the
laws of 2005, is amended to read as follows:
(C) Within four years after the starting date of a specific certified
capital company program of a certified capital company, at least fifty
percent of its certified capital allocable to such certified capital
company program must be placed in qualified investments, at least fifty
percent of which must have been placed in early stage businesses, except
that in the case of program four and any subsequent program, at least
twenty-five percent of which must have been placed in early stage busi-
nesses and an additional twenty-five percent of which must have been
placed in start-up businesses, and except that in the case of qualified
investments made in qualified businesses located in empire zones estab-
lished pursuant to article eighteen-B of the general municipal law under
the provisions of certified capital company program three, program four
and program five from allocations of certified capital made specifically
for such targeted investments in such zones, the requirement for quali-
fied investments in early stage and start-up businesses shall not apply.
AN INVESTMENT IN A QUALIFIED SEED FUND SHALL COUNT TOWARDS THE REQUIRE-
MENT UNDER PROGRAM SIX FOR QUALIFIED INVESTMENTS IN EARLY STAGE BUSI-
NESSES.
S 7. Subparagraph (D) of paragraph 1 of subdivision (c) of section 11
of the tax law, as amended by section 19 of part A of chapter 63 of the
laws of 2005, is amended to read as follows:
(D) A certified capital company, at least fifteen working days prior
to making a proposed investment in a specific business, shall certify in
writing to the superintendent that (i) the business in which it proposes
to invest meets the definition of a qualified business as set forth in
subdivision (a) of this section or, in the case of a follow-on invest-
ment, that such business continues to meet the requirements set forth in
subparagraphs (A) and (C) of paragraph seven of subdivision (a) of this
section and, in either case, an explanation of its determination that
the business meets such requirements, [and] (ii) with respect to certi-
fied capital company program three, program four and program five,
A. 7985--B 4
whether or not such business is located in an empire zone established
pursuant to article eighteen-B of the general municipal law or in an
underserved area outside an empire zone AND (III) WITH RESPECT TO CERTI-
FIED CAPITAL COMPANY PROGRAM SIX, WHETHER OR NOT SUCH INVESTMENT IS IN A
QUALIFIED SEED FUND. The certification to the superintendent shall
include a sworn statement from the business in which the certified capi-
tal company proposes to invest, which statement shall evidence the
intention of the business to maintain its headquarters in New York and
conduct its primary business operations in the state of New York after
its receipt of the investment by the certified capital company. If the
superintendent determines that the business does not meet the definition
of a qualified business, or, in the case of a follow-on investment, that
such business does not meet the requirements set forth in subparagraphs
(A) and (C) of paragraph seven of subdivision (a) of this section, then
it shall, within the fifteen working day period prior to the making of
the proposed investment, notify the certified capital company of its
determination and provide an explanation thereof, provided, however,
that the department may, upon written request of a certified capital
company and at the discretion of the department, grant, in writing, an
exemption to the percentage limitations of paragraph ten of subdivision
(a) of this section.
S 8. Subparagraph (F) of paragraph 1 of subdivision (c) of section 11
of the tax law, as amended by section 19 of part A of chapter 63 of the
laws of 2005, is amended to read as follows:
(F) If within ten years after the starting date of certified capital
company program four [or], program five OR PROGRAM SIX, and within
twelve years after the starting date of certified capital company
programs one, two, and three, one hundred percent of the certified capi-
tal allocable to a certified capital company participating in [such]
program ONE, TWO, THREE, FOUR OR FIVE has not been placed in qualified
investments AND, WITH RESPECT TO PROGRAM SIX, ONE HUNDRED PERCENT OF THE
CERTIFIED CAPITAL HAS NOT BEEN PLACED IN QUALIFIED INVESTMENTS WITH TEN
PERCENT OF SUCH AMOUNT BEING PLACED IN QUALIFIED SEED FUNDS, the specif-
ic certified capital company shall no longer be permitted to receive
management fees; provided that such restriction shall not apply (i) with
respect to certified capital company programs one, two, and three, to
any certified capital company that has not, prior to October thirty-
first, two thousand four, received, as opposed to accrued, any manage-
ment fees, or (ii) with respect to any certified capital company
program, to a certified capital company in which at least fifty percent
of the voting stock, capital, membership interests, or other beneficial
ownership interests, as the case may be, are owned by an entity that is
managed, directly or indirectly, by a non-profit corporation.
S 9. Paragraph 1 of subdivision (c) of section 11 of the tax law is
amended by adding a new subparagraph (G) to read as follows:
(G) IF WITHIN ONE YEAR OF THE STARTING DATE OF CERTIFIED CAPITAL
COMPANY PROGRAM SIX, THE CERTIFIED CAPITAL COMPANY HAS NOT ACHIEVED A
MATCH OF AT LEAST ONE HUNDRED PERCENT OF THE AMOUNT OF QUALIFIED INVEST-
MENTS MADE BY SUCH CERTIFIED CAPITAL COMPANY WITH PROGRAM SIX CERTIFIED
CAPITAL AS OF SUCH DATE, THE SPECIFIC CERTIFIED CAPITAL COMPANY SHALL
NOT BE PERMITTED TO RECEIVE MANAGEMENT FEES UNTIL IT HAS ACHIEVED SUCH
MATCH. IF WITHIN THREE YEARS OF THE STARTING DATE OF CERTIFIED CAPITAL
COMPANY PROGRAM SIX, THE CERTIFIED CAPITAL COMPANY HAS NOT ACHIEVED A
MATCH OF AT LEAST ONE HUNDRED PERCENT OF THE AMOUNT OF QUALIFIED INVEST-
MENTS MADE BY SUCH CERTIFIED CAPITAL COMPANY WITH PROGRAM SIX CERTIFIED
CAPITAL COMPANY AS OF SUCH DATE, THE SPECIFIC CERTIFIED CAPITAL COMPANY
A. 7985--B 5
SHALL NOT BE PERMITTED TO RECEIVE MANAGEMENT FEES UNTIL IT HAS ACHIEVED
SUCH MATCH. IF WITHIN FIVE YEARS OF THE STARTING DATE OF CERTIFIED CAPI-
TAL COMPANY PROGRAM SIX, THE CERTIFIED CAPITAL COMPANY HAS NOT ACHIEVED
A MATCH OF AT LEAST ONE HUNDRED PERCENT OF THE AMOUNT OF QUALIFIED
INVESTMENTS MADE BY SUCH CERTIFIED CAPITAL COMPANY WITH PROGRAM SIX
CERTIFIED CAPITAL COMPANY AS OF SUCH DATE, THE SPECIFIC CERTIFIED CAPI-
TAL COMPANY SHALL NOT BE PERMITTED TO RECEIVE MANAGEMENT FEES UNTIL IT
HAS ACHIEVED SUCH MATCH.
S 10. Subparagraph (A) of paragraph 6 of subdivision (c) of section
11 of the tax law, as amended by section 19 of part A of chapter 63 of
the laws of 2005, is amended to read as follows:
(A) As soon as practicable after the receipt of certified capital or
an irrevocable funding commitment subject only to the receipt of an
allocation pursuant to subdivision (h) of this section, (i) the name of
each certified investor from which the certified capital was received,
including such certified investor's insurance tax identification number;
(ii) the amount of each certified investor's investment of certified
capital; and (iii) the date on which the certified capital was received.
Provided, however, that requests for allocation of tax credits with
respect to certified capital company program two by certified capital
companies on behalf of their certified investors which are received by
the superintendent on or before March first, two thousand shall be
treated as having been received on March first, two thousand for tax
credits to be utilized in two thousand one, and if satisfactory, shall
be given equal priority for allocation, and provided, however, that
requests for allocation of tax credits with respect to certified capital
company program three by certified capital companies on behalf of their
certified investors which are received by the superintendent on or
before December first, two thousand shall be treated as having been
received on December first, two thousand for tax credits to be utilized
in two thousand two, and if satisfactory, shall be given equal priority
for allocation, and provided, however, that requests for allocation of
tax credits with respect to certified capital company program four by
certified capital companies on behalf of their certified investors which
are received by the superintendent on or before December first, two
thousand four shall be treated as having been received on December
first, two thousand four for tax credits to be utilized in two thousand
six, and if satisfactory, shall be given equal priority for allocation,
and provided, however, that requests for allocation of tax credits with
respect to certified capital company program five by certified capital
companies on behalf of their certified investors which are received by
the superintendent on or before the later of (i) November first, two
thousand five and (ii) the one hundred twentieth day after the date on
which the superintendent began accepting applications for certification
in connection with certified capital company program five pursuant to
paragraph nine of subdivision (b) of this section shall be treated as
having been received on such later date for tax credits to be utilized
in two thousand seven, and if satisfactory, shall be given equal priori-
ty for allocation, AND PROVIDED, HOWEVER, THAT REQUESTS FOR ALLOCATION
OF TAX CREDITS WITH RESPECT TO CERTIFIED CAPITAL COMPANY PROGRAM SIX BY
CERTIFIED CAPITAL COMPANIES ON BEHALF OF THEIR CERTIFIED INVESTORS WHICH
ARE RECEIVED BY THE SUPERINTENDENT ON OR BEFORE THE LATER OF (I) NOVEM-
BER FIRST, TWO THOUSAND ELEVEN AND (II) THE ONE HUNDRED TWENTIETH DAY
AFTER THE DATE ON WHICH THE SUPERINTENDENT BEGAN ACCEPTING APPLICATIONS
FOR CERTIFICATION IN CONNECTION WITH CERTIFIED CAPITAL PROGRAM SIX
PURSUANT TO PARAGRAPH NINE OF SUBDIVISION (B) OF THIS SECTION SHALL BE
A. 7985--B 6
TREATED AS HAVING BEEN RECEIVED ON SUCH LATER DATE FOR TAX CREDITS TO BE
UTILIZED IN TWO THOUSAND FIFTEEN, AND IF SATISFACTORY, SHALL BE GIVEN
EQUAL PRIORITY FOR ALLOCATION.
S 11. Subparagraph (B) of paragraph 6 of subdivision (c) of section 11
of the tax law, as amended by section 19 of part A of chapter 63 of the
laws of 2005, is amended to read as follows:
(B) On an annual basis, on or before January thirty-first of each
year, (i) the amount of the certified capital company's certified capi-
tal at the end of the immediately preceding year; (ii) whether or not
the certified capital company has invested more than fifteen percent of
its total certified capital in any one business; (iii) all qualified
investments that the certified capital company made during the previous
calendar year, including the number of employees of each qualified busi-
ness in which it has made investments at the time of such investment and
as of December first of the preceding calendar year. For any qualified
business where the certified capital company no longer has an invest-
ment, the certified capital company shall provide employment figures for
such company as of the last day before the investment was terminated.
Such report shall provide a separate accounting by each certified capi-
tal company program; [and] (iv) all qualified investments made in empire
zones and underserved areas outside such empire zones as required under
certified capital company program three, certified capital company
program four and certified capital company program five; AND (V) WITH
RESPECT TO CERTIFIED CAPITAL COMPANY PROGRAM SIX, ALL QUALIFIED INVEST-
MENTS MADE IN UNDERSERVED AREAS, ALL QUALIFIED INVESTMENTS MADE IN QUAL-
IFIED SEED FUNDS, INCLUDING THE NUMBER OF EMPLOYEES OF EACH BUSINESS IN
WHICH A QUALIFIED SEED FUND HAS MADE INVESTMENTS AT THE TIME OF SUCH
INVESTMENT AND AS OF DECEMBER FIRST OF THE PRECEDING CALENDAR YEAR AND
THE MATCH ACHIEVED BY THE CERTIFIED CAPITAL COMPANY. FOR ANY BUSINESS
WHERE THE QUALIFIED SEED FUND NO LONGER HAS AN INVESTMENT, THE CERTIFIED
CAPITAL COMPANY SHALL PROVIDE EMPLOYMENT FIGURES FOR SUCH COMPANY AS OF
THE LAST DAY BEFORE THE INVESTMENT WAS TERMINATED.
S 12. Paragraph 1 of subdivision (d) of section 11 of the tax law, as
amended by section 19 of part A of chapter 63 of the laws of 2005, is
amended to read as follows:
(1) A certified capital company may make qualified distributions at
any time. In order for a certified capital company to make a distrib-
ution other than a qualified distribution from a certified capital
company program, to its equity holders, either (A) the aggregate cumula-
tive amount of all qualified investments for such program must equal or
exceed one hundred percent of its certified capital allocable to such
certified capital company program AND WITH RESPECT TO PROGRAM SIX, THE
CERTIFIED CAPITAL COMPANY MUST HAVE ACHIEVED A MATCH OF AT LEAST NINETY
PERCENT OF THE CERTIFIED CAPITAL ALLOCABLE TO SUCH CERTIFIED CAPITAL
COMPANY, or (B) it must have received written authorization to make such
distribution from the superintendent. In no event, however, shall any
such distribution to its equity holders, other than a qualified distrib-
ution, be made by a certified capital company from a certified capital
company program unless an amount equal cumulatively to at least ninety
percent of its certified capital of such program is invested in compa-
nies that conduct their principal business operations in New York state.
S 13. Paragraph 5 of subdivision (e) of section 11 of the tax law, as
amended by section 19 of part A of chapter 63 of the laws of 2005, is
amended to read as follows:
(5) Once a certified capital company has invested an amount cumula-
tively equal to one hundred percent of its certified capital with
A. 7985--B 7
respect to a particular certified capital company program in qualified
investments and has met all other requirements under this subdivision,
INCLUDING THE REQUIREMENT THAT A PROGRAM SIX CERTIFIED CAPITAL COMPANY
INVEST TEN PERCENT OF ITS CERTIFIED CAPITAL IN QUALIFIED SEED FUNDS AND
ACHIEVE A MATCH OF AT LEAST NINETY PERCENT OF THE CERTIFIED CAPITAL
ALLOCABLE TO SUCH CERTIFIED CAPITAL COMPANY, the certified capital
company shall no longer be subject to regulation by the superintendent
and shall no longer be subject to the requirements of subdivision (c) of
this section with respect to such program. Upon receiving documented
certification by a certified capital company that it has invested, WITH
RESPECT TO PROGRAMS ONE, TWO, THREE, FOUR AND FIVE, an amount equal to
one hundred percent of its certified capital AND, WITH RESPECT TO
PROGRAM SIX, AN AMOUNT EQUAL TO ONE HUNDRED PERCENT OF ITS CERTIFIED
CAPITAL WITH TEN PERCENT OF SUCH CERTIFIED CAPITAL INVESTED IN QUALIFIED
SEED FUNDS AND, WITH RESPECT TO PROGRAM SIX, ACHIEVED A MATCH OF AT
LEAST NINETY PERCENT OF THE CERTIFIED CAPITAL ALLOCABLE TO SUCH CERTI-
FIED CAPITAL COMPANY, the department shall have sixty days to notify
such certified capital company that it has or has not met such require-
ment with a reason for such determination if it has not, in the judgment
of the department, met such requirement. If the department does not
provide such notification within sixty days, the certified capital
company shall then be deemed to have met such requirement.
S 14. Subdivision (h) of section 11 of the tax law is amended by
adding a new paragraph 6 to read as follows:
(6) CERTIFIED CAPITAL COMPANY PROGRAM SIX. THE AGGREGATE AMOUNT OF
CERTIFIED CAPITAL FOR WHICH TAXPAYERS MAY BE ALLOCATED AND ALLOWED TAX
CREDITS PURSUANT TO THIS PARAGRAPH AND SUBDIVISION (K) OF SECTION
FIFTEEN HUNDRED ELEVEN OF THIS CHAPTER MAY NOT EXCEED ONE HUNDRED FIFTY
MILLION DOLLARS FOR CALENDAR YEAR TWO THOUSAND FIFTEEN, WHICH CERTIFIED
CAPITAL MAY BE INVESTED IN CERTIFIED CAPITAL COMPANIES BEGINNING IN
CALENDAR YEAR TWO THOUSAND ELEVEN.
DURING ANY CALENDAR YEAR IN WHICH THE LIMITATION DESCRIBED IN THIS
PARAGRAPH WILL LIMIT THE AMOUNT OF CERTIFIED CAPITAL, CERTIFIED CAPITAL
WILL BE ALLOCATED IN ORDER OF PRIORITY BASED UPON THE DATE OF FILING OF
INFORMATION DESCRIBED IN SUBPARAGRAPH (A) OF PARAGRAPH SIX OF SUBDIVI-
SION (C) OF THIS SECTION. THE SUPERINTENDENT SHALL ADVISE ANY CERTIFIED
CAPITAL COMPANY IN WRITING, WITHIN FIFTEEN DAYS AFTER RECEIVING SUCH
FILING, WHETHER THE LIMITATIONS OF THIS PARAGRAPH THEN IN EFFECT WILL BE
APPLICABLE WITH RESPECT TO THE INVESTMENTS AND CREDITS DESCRIBED IN SUCH
FILING WITH THE SUPERINTENDENT.
CERTIFIED CAPITAL MAY BE RAISED BY EACH CERTIFIED CAPITAL COMPANY WITH
RESPECT TO CERTIFIED CAPITAL COMPANY PROGRAM SIX AT ANY TIME SUBSEQUENT
TO ITS CERTIFICATION DATE, AND CREDITS SHALL BE ALLOCATED TO AND IRREVO-
CABLY VESTED BY THE STATE IN CERTIFIED INVESTORS AT THE TIME OF EACH
SUCH INVESTMENT AS PROVIDED IN THIS PARAGRAPH, ALTHOUGH SUCH CREDITS
SHALL NOT BE FIRST ALLOWED OR INCURRED FOR STATE TAX PURPOSES, UNTIL, AT
THE EARLIEST, TAX YEARS BEGINNING IN TWO THOUSAND FIFTEEN. IN ORDER TO
SATISFY THE REQUIREMENTS OF PARAGRAPH FIVE OF SUBDIVISION (E) OF THIS
SECTION, A CERTIFIED CAPITAL COMPANY MUST HAVE MADE, ON A CUMULATIVE
BASIS, (A) AN AMOUNT OF QUALIFIED INVESTMENTS IN QUALIFIED BUSINESSES
LOCATED IN UNDERSERVED AREAS EQUAL TO AT LEAST TWO-THIRDS OF THE CERTI-
FIED CAPITAL RAISED BY SUCH CERTIFIED CAPITAL COMPANY WITH RESPECT TO
CERTIFIED CAPITAL COMPANY PROGRAM SIX, (B) QUALIFIED INVESTMENTS IN
QUALIFIED SEED FUNDS IN AN AMOUNT EQUAL TO AT LEAST TEN PERCENT OF THE
CERTIFIED CAPITAL RAISED BY SUCH CERTIFIED CAPITAL COMPANY WITH RESPECT
TO CERTIFIED CAPITAL COMPANY PROGRAM SIX AND (C) QUALIFIED INVESTMENTS
A. 7985--B 8
IN QUALIFIED BUSINESSES THAT ARE INVOLVED IN COMMERCE FOR THE PRIMARY
PURPOSE OF DEVELOPING AND MANUFACTURING PRODUCTS AND SYSTEMS COVERED BY
THE ACTIVITIES SET FORTH IN PARAGRAPH (B) OF SUBDIVISION ONE OF SECTION
THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW AND HAVE A RATIO
OF RESEARCH AND DEVELOPMENT EXPENDITURES TO NET SALES WHICH EQUALS OR
EXCEEDS SIX PERCENT DURING THE FISCAL YEAR IMMEDIATELY PRECEDING THE
QUALIFIED INVESTMENT IN AN AMOUNT EQUAL TO AT LEAST THIRTY-THREE PERCENT
OF THE CERTIFIED CAPITAL RAISED BY SUCH CERTIFIED CAPITAL COMPANY WITH
RESPECT TO PROGRAM SIX; PROVIDED, HOWEVER, THAT ALL QUALIFIED INVEST-
MENTS IN QUALIFIED SEED FUNDS SHALL COUNT TOWARD THE AMOUNT REQUIRED BY
SUBPARAGRAPH (C) OF THIS PARAGRAPH.
S 15. Subdivision (i) of section 11 of the tax law, as amended by
section 19 of part A of chapter 63 of the laws of 2005, is amended to
read as follows:
(i) Maximum certified capital. The maximum amount of certified capital
per certified capital company program invested in one or more certified
capital companies allowed in any one year to any one certified investor
shall not exceed ten million dollars for certified capital company
programs one and three, [and] eight million dollars for certified capi-
tal company programs two, four and five, AND FIFTEEN MILLION DOLLARS
FROM CERTIFIED CAPITAL COMPANY PROGRAM SIX for such year, provided,
however, that if the aggregate amount of certified capital for such
year, as set forth in subdivision (h) of this section, has not been
reached sixty days prior to the end of the year to which such aggregate
amount applies, the provisions of this subdivision shall cease to apply
for the remainder of such year. In addition, the aggregate amount of tax
credits allowed in any taxable year to any affiliated group of taxpayers
in relation to certified capital may not exceed such maximum amount,
whether or not such taxpayers file a combined return pursuant to subdi-
vision (f) of section fifteen hundred fifteen of this chapter. For
purposes of the preceding sentence, the term "affiliated group" shall
have the same meaning as described in section 1504 of the internal
revenue code, except that the references to "at least eighty percent" in
such section 1504 shall be read as "more than fifty percent".
S 16. Subdivision (j) of section 11 of the tax law, as amended by
section 19 of part A of chapter 63 of the laws of 2005, is amended to
read as follows:
(j) Reports. The superintendent shall report to the governor, the
temporary president of the senate, and the speaker of the assembly, on
or before June first of each year beginning in the year two thousand,
the number of certified capital companies holding certified capital; the
amount of certified capital invested in each certified capital company;
the cumulative amount that each certified capital company has invested
as of January first of the year two thousand and the cumulative total
each year thereafter; the cumulative amount that the investments of each
certified capital company have leveraged in terms of capital invested by
other sources of capital in qualified businesses at the same time or
subsequent to investments made by a certified capital company in such
businesses; the total amount of tax credits granted under this section
each year that credits have been awarded under this section and subdivi-
sion (k) of section fifteen hundred eleven of this chapter; the perform-
ance of each certified capital company with regard to the requirements
for recertification set forth in subdivision (c) of this section; the
classification of companies in which each certified capital company has
invested according to industrial sector and size of company; the total
gross number of jobs created by investments made by each certified capi-
A. 7985--B 9
tal company using certified capital and the number of jobs retained; the
location of companies in which each certified capital company has
invested in a manner to indicate if the requirements for qualified
investments in qualified businesses located in empire zones established
pursuant to article eighteen-B of the general municipal law set forth
for programs three, four and five and in underserved areas outside such
empire zones have been met; the total gross number of jobs created in
empire zones established pursuant to article eighteen-B of the general
municipal law and in underserved areas outside such empire zones made by
each certified capital company using certified capital in certified
capital company programs three, four and five, reported by geographic
location of each empire zone and underserved area and the number of jobs
retained; and those certified capital companies that have been decerti-
fied, or have had their certifications revoked, including the reasons
for decertification or revocation; THE LOCATION OF COMPANIES IN WHICH
EACH CERTIFIED CAPITAL COMPANY HAS INVESTED IN A MANNER TO INDICATE IF
THE REQUIREMENTS FOR QUALIFIED INVESTMENTS IN QUALIFIED BUSINESSES
LOCATED IN UNDERSERVED AREAS AS SET FORTH IN PROGRAM SIX; THE TOTAL
GROSS NUMBER OF JOBS CREATED IN UNDERSERVED AREAS USING CERTIFIED CAPI-
TAL IN CERTIFIED CAPITAL COMPANY PROGRAM SIX AND THE NUMBER OF JOBS
RETAINED; THE AMOUNT OF QUALIFIED INVESTMENTS MADE INTO QUALIFIED SEED
FUNDS FOR PROGRAM SIX CERTIFIED CAPITAL COMPANIES; THE CLASSIFICATION OF
COMPANIES IN WHICH EACH QUALIFIED SEED FUND HAS INVESTED ACCORDING TO
INDUSTRIAL SECTOR AND SIZE OF COMPANY; THE TOTAL GROSS NUMBER OF JOBS
CREATED BY INVESTMENTS MADE BY EACH QUALIFIED SEED FUND USING THE NUMBER
OF JOBS RETAINED.
S 17. Paragraph 2 of subdivision (k) of section 1511 of the tax law,
as amended by section 2 of part S of chapter 407 of the laws of 1999, is
amended to read as follows:
(2) Ten percent of such credit shall be allowed in the taxable year to
which such investment is allocated pursuant to PARAGRAPHS ONE THROUGH
FIVE OF subdivision (h) of section eleven of this chapter and in each of
the nine following taxable years. TWENTY-FIVE PERCENT OF SUCH CREDIT
SHALL BE ALLOWED IN THE TAXABLE YEAR TO WHICH SUCH INVESTMENT IS ALLO-
CATED PURSUANT TO PARAGRAPH SIX OF SUBDIVISION (H) OF SECTION ELEVEN OF
THIS CHAPTER AND IN EACH OF THE THREE FOLLOWING TAXABLE YEARS. In addi-
tion, in any taxable year subsequent to the taxable year for which
[such] ANY investment is so allocated UNDER SUBDIVISION (H), any amount
carried forward under paragraphs three and four of this subdivision may
be carried forward indefinitely until such credits are utilized.
S 18. Section 84 of part A of chapter 62 of the laws of 2011 relating
to constituting chapter 18-A of the consolidated laws relating to finan-
cial services is REPEALED.
S 19. This act shall take effect immediately.