135.500. Title of law--definitions.

Title of law--definitions.

135.500. 1. Sections 135.500 to 135.529 shall be known and may becited as the "Missouri Certified Capital Company Law".

2. As used in sections 135.500 to 135.529, the following terms mean:

(1) "Affiliate of a certified company":

(a) Any person, directly or indirectly owning, controlling or holdingpower to vote ten percent or more of the outstanding voting securities orother ownership interests of the Missouri certified capital company;

(b) Any person ten percent or more of whose outstanding votingsecurities or other ownership interest are directly or indirectly owned,controlled or held with power to vote by the Missouri certified capitalcompany;

(c) Any person directly or indirectly controlling, controlled by, orunder common control with the Missouri certified capital company;

(d) A partnership in which the Missouri certified capital company isa general partner;

(e) Any person who is an officer, director or agent of the Missouricertified capital company or an immediate family member of such officer,director or agent;

(2) "Applicable percentage", one hundred percent;

(3) "Capital in a qualified Missouri business", any debt, equity orhybrid security, of any nature and description whatsoever, including a debtinstrument or security which has the characteristics of debt but whichprovides for conversion into equity or equity participation instrumentssuch as options or warrants which are acquired by a Missouri certifiedcapital company or a qualified investing entity as a result of a transferof cash to a business;

(4) "Certified capital", an investment of cash by an investor in aMissouri certified capital company;

(5) "Certified capital company", any partnership, corporation, trustor limited liability company, whether organized on a profit ornot-for-profit basis, that is located, headquartered and registered toconduct business in Missouri that has as its primary business activity, theinvestment of cash in qualified Missouri businesses, and which is certifiedby the department as meeting the criteria of sections 135.500 to 135.529;

(6) "Department", the Missouri department of economic development;

(7) "Director", the director of the department of economicdevelopment or a person acting under the supervision of the director;

(8) "Investor", any insurance company that contributes cash;

(9) "Liquidating distribution", payments to investors or to thecertified capital company from earnings;

(10) "Person", any natural person or entity, including a corporation,general or limited partnership, trust, limited liability company, or anycharitable organization which is exempt from federal income tax and whoseMissouri unrelated business taxable income, if any, would be subject to thestate income tax imposed under chapter 143, RSMo;

(11) "Qualified distribution", any distribution or payment to equityholders of a certified capital company in connection with the following:

(a) Reasonable costs and expenses of forming, syndicating, managingand operating the certified capital company;

(b) Management fees for managing and operating the certified capitalcompany; and

(c) Any increase in federal or state taxes, penalties and interest,including those related to state and federal income taxes, of equity ownersof a certified capital company which related to the ownership, managementor operation of a certified capital company;

(12) "Qualified investing entity", any partnership, corporation,trust, or limited liability company, whether organized on a for-profit ornot-for-profit basis, that:

(a) Is registered to do business in this state;

(b) Is a wholly owned subsidiary of a certified capital company orotherwise affiliated with and under common control with a certified capitalcompany; and

(c) Has been designated as a qualified investing entity by suchcertified capital company.

Such designation shall be effective upon delivery by the certified capitalcompany of written notice of the designation to the department. Aqualified investing entity may raise debt or equity capital for investment,but such capital shall not be considered certified capital. Any qualifiedinvestment made by a qualified investing entity after the effective date ofthis act shall be deemed to have been made by a certified capital companythat designated the qualified investing entity as such; provided that noqualified investment may be deemed to have been made by more than onecertified capital company;

(13) "Qualified investment", the investment of cash by a Missouricertified capital company or a qualified investing entity in such a manneras to acquire capital in a qualified Missouri business;

(14) "Qualified Missouri business", an independently owned andoperated business, which is headquartered and located in Missouri and whichis in need of venture capital and cannot obtain conventional financing.Such business shall have no more than two hundred employees, eighty percentof which are employed in Missouri. Such business shall be involved incommerce for the purpose of manufacturing, processing or assemblingproducts, conducting research and development, or providing services ininterstate commerce, but excluding retail, real estate, real estatedevelopment, insurance and professional services provided by accountants,lawyers or physicians. At the time a certified capital company orqualified investing entity makes an initial investment in a business, suchbusiness shall be a small business concern that meets the requirements ofthe United States Small Business Administration's qualification sizestandards for its venture capital program, as defined in Section 13 CFR121.301(c) of the Small Business Investment Act of 1958, as amended. Anybusiness which is classified as a qualified Missouri business at the timeof the first investment in such business by a Missouri certified capitalcompany or qualified investing entity shall, for a period of seven yearsfrom the date of such first investment, remain classified as a qualifiedMissouri business and may receive follow-on investments from any Missouricertified capital company or qualified investing entity and such follow-oninvestments shall be qualified investments even though such business maynot meet the other qualifications of this subsection at the time of suchfollow-on investments;

(15) "State premium tax liability", any liability incurred by aninsurance company pursuant to the provisions of section 148.320, 148.340,148.370 or 148.376, RSMo, and any other related provisions, which mayimpose a tax upon the premium income of insurance companies after January1, 1997.

(L. 1996 H.B. 1237, A.L. 1997 2d Ex. Sess. S.B. 1, A.L. 2003 H.B. 289, A.L. 2007 1st Ex. Sess H.B. 1)

Effective 11-28-07