Actions

Votes

Text

STATE OF NEW YORK
________________________________________________________________________

7985--B

2011-2012 Regular Sessions

IN ASSEMBLY

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.