Bill Text: MI SB1108 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Businesses; other; business development enterprises; authorize under Michigan BIDCO act. Amends title & secs. 104, 105, 106, 203, 301, 303, 401 & 403 of 1986 PA 89 (MCL 487.1104 et seq.) & adds secs. 304 & 304a.
Spectrum: Bipartisan Bill
Status: (Passed) 2012-12-27 - Assigned Pa 0358'12 With Immediate Effect [SB1108 Detail]
Download: Michigan-2011-SB1108-Introduced.html
SENATE BILL No. 1108
May 1, 2012, Introduced by Senators BOOHER, HUNTER, PAPPAGEORGE and SMITH and referred to the Committee on Banking and Financial Institutions.
A bill to amend 1986 PA 89, entitled
"Michigan BIDCO act,"
by amending the title and sections 104, 105, 203, 301, 303, 401,
and 403 (MCL 487.1104, 487.1105, 487.1203, 487.1301, 487.1303,
487.1401, and 487.1403), sections 104, 105, 301, 303, 401, and 403
as amended by 1997 PA 150, and by adding sections 304 and 304a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to promote economic development by providing for the
licensing and regulation of business and industrial development
corporations; to prescribe the powers and duties of certain public
officers and agencies; to provide for the promulgation of rules; to
provide remedies and penalties; and to repeal certain acts and
parts of acts.
Sec. 104. (1) "Affiliate" means, if used with respect to a
specified person other than a natural person, a person controlling
or controlled by that specified person, or a person controlled by a
person
who that also controls the specified person.
(2) "BIDCO" means a business and industrial development
company licensed under this act. The term includes a business
development enterprise.
(3) "Business development enterprise" means a business and
industrial development company that meets all of the following:
(a) Has as part of its business plan the public policy
objective of providing or facilitating the availability of capital
to businesses in this state that have 750 or fewer employees, and
may have 1 or more additional public policy objectives.
(b) Is licensed under this act.
(c) Is designated as a qualified business development
enterprise by the Michigan strategic fund under section 304.
(4) (3)
"Business firm" means a
person that transacts business
on a regular and continual basis, or a person that proposes to
transact business on a regular and continual basis.
(5) (4)
"Commissioner" means the
commissioner of the financial
institutions
bureau of the department of consumer and industry
services. office of financial and insurance regulation
in the
department of licensing and regulatory affairs.
(6) (5)
"Control" means, if used
with respect to a specified
person, the power to direct or cause the direction of, directly or
indirectly through 1 or more intermediaries, the management and
policies of that specified person, whether by contract, other than
a commercial contract for goods or nonmanagement services, or
otherwise.
A natural person shall not be is
not considered to
control
a person solely on account of being because he or she is a
director, officer, manager, or employee of that person. A person
who,
that, directly or indirectly, has the power to vote or
direct
the
voting of 20% or more of the total ownership vote , shall be is
rebuttably presumed to control that entity.
(7) (6)
"Controlling person"
means, if used with respect to a
specified
person, a person who that controls that specified person,
directly or indirectly through 1 or more intermediaries.
Sec. 105. (1) "Incorporating statute" means the business
corporation act, 1972 PA 284, MCL 450.1101 to 450.2098, the
nonprofit corporation act, 1982 PA 162, MCL 450.2101 to 450.3192,
or the Michigan limited liability company act, 1993 PA 23, MCL
450.4101 to 450.5200.
(2) "Insolvent" means a licensee that ceases to pay its debts
in the ordinary course of business, that cannot pay its debts as
they become due, or whose liabilities exceed its assets.
(3) "Interests of the licensee" includes the interests of
shareholders of a licensee organized as a Michigan corporation and
members of a licensee organized as a Michigan limited liability
company.
(4) "License" means a license issued under this act
authorizing a Michigan corporation or Michigan limited liability
company to transact business as a BIDCO. The term includes a BIDCO
license issued to a business development enterprise.
(5) "Licensee" means a Michigan corporation or Michigan
limited
liability company which is licensed that holds a license
under this act.
(6) "Manager" means a person designated by the members of a
Michigan limited liability company to manage the limited liability
company as provided in its articles of organization or an operating
agreement.
(7)
"Member" means a person with that has an ownership
interest in a BIDCO organized as a Michigan limited liability
company.
(8) "Michigan corporation" means a corporation incorporated
under the business corporation act, 1972 PA 284, MCL 450.1101 to
450.2098, or the nonprofit corporation act, 1982 PA 162, MCL
450.2101 to 450.3192.
(9) "Michigan limited liability company" means a limited
liability company organized under the Michigan limited liability
company act, 1993 PA 23, MCL 450.4101 to 450.5200.
(10) "Michigan nonprofit corporation" means a corporation
incorporated under the nonprofit corporation act, 1982 PA 162, MCL
450.2101 to 450.3192.
(11) "Michigan strategic fund" means the Michigan strategic
fund as described in the Michigan strategic fund act, 1984 PA 270,
MCL 125.2001 to 125.2094.
Sec.
203. (1) An application filed with the commissioner under
this
act shall be in such a form and contain such information as
the
commissioner may require.An
applicant for a license under this
act shall file an application with the commissioner. Subject to
subsection (2), the commissioner shall establish the form of the
application and the information the applicant must provide on or
with the application form.
(2) For purposes of section 303, an application for a license
under this act shall include a business plan. If the applicant is
applying for a license as a business development enterprise, the
business plan must include the public policy objective or
objectives described in section 104(3)(a).
Sec. 301. A Michigan corporation or Michigan limited liability
company
may apply to the commissioner for licensure as a BIDCO. a
license
under this act. A person other than that is not a Michigan
corporation or Michigan limited liability company shall not apply
for, and the commissioner shall not grant, a license under this
act.
Sec. 303. (1) After a review of information regarding the
directors, officers, managers, and controlling persons of the
applicant, a review of the applicant's business plan, including at
least 3 years of detailed financial projections and other relevant
information, and a review of additional information considered
relevant by the commissioner, the commissioner shall approve an
application for a license if, and only if, the commissioner
determines all of the following:
(a) The applicant has a net worth, or firm financing
commitments that demonstrate that the applicant will have a net
worth when the applicant begins transacting business as a BIDCO, in
liquid form available to provide financing assistance, that is
adequate for the applicant to transact business as a BIDCO, as
determined under subsection (2).
(b) Each director, officer, manager, and controlling person of
the applicant is of good character and sound financial standing, is
competent to perform his or her functions with respect to the
applicant, and that the directors, officers, and managers of the
applicant are collectively adequate to manage the business of the
applicant
as a BIDCO.licensee.
(c) It is reasonable to believe that the applicant, if
licensed, will comply with this act.
(d) The applicant has reasonable promise of being a viable,
ongoing BIDCO and of satisfying the basic objectives of its
business plan.
(e) If the applicant is or will be a Michigan limited
liability company, the applicant's operating agreement and business
plan are consistent with the objectives of promoting the stability
and viability of the applicant and will not impede the ability of
the applicant to retain any earnings or increases to fund balances
and borrow funds to support the applicant's continued operations.
The applicant's operating agreement or articles of organization
shall contain provisions as the commissioner considers necessary to
satisfy this subsection.
(f) If the applicant is applying for a license as a business
development enterprise, the applicant has been designated as a
qualified business development enterprise by the Michigan strategic
fund under section 304.
(2) In determining if the applicant has a net worth or firm
financing commitments adequate to transact business as a BIDCO
under subsection (1)(a), the commissioner shall consider the types
and variety of financing assistance that the applicant plans to
provide, the experience that the directors, officers, managers, and
controlling persons of the applicant have in providing financing
assistance and managerial assistance to business firms, the
financial projections and other relevant information from the
applicant's business plan, and whether the applicant intends to
operate as a profit or nonprofit corporation or as a limited
liability
company. Except as otherwise provided in this act, For
purposes of subsection (1)(a), the commissioner shall require that
the applicant demonstrate that the applicant will have a net worth
when it begins transacting business that meets 1 of the following:
(a) Unless subdivision (b) or (c) applies, a minimum net worth
of not less than $1,000,000.00 and not more than $10,000,000.00.
(b) The commissioner may require a minimum net worth of less
than $1,000,000.00, but not less than $500,000.00, if, in the
context of the applicant's business plan, the initial
capitalization amount is adequate for the applicant to transact
business as a BIDCO because of special circumstances including, but
not limited to, funded overhead, low overhead, or specialized
opportunities.
(c) If the applicant is applying for a license as a business
development enterprise, a minimum net worth and firm financing
commitments of not less than $25,000,000.00.
(3) For the purposes of subsection (1), the commissioner may
find any of the following:
(a) That a director, officer, manager, or controlling person
of an applicant is not of good character if the director, officer,
manager, or controlling person, or a director, officer, or manager
of a controlling person, has been convicted of or has pleaded nolo
contendere to a crime involving fraud or dishonesty.
(b) That it is not reasonable to believe that an applicant, if
licensed, will comply with this act, if the applicant has been
convicted of or has pleaded nolo contendere to a crime involving
fraud or dishonesty.
(4) For purposes of subsection (1), subsection (3) shall not
be considered to be the only grounds upon which the commissioner
may find that a director, officer, manager, or controlling person
of an applicant is not of good character or that it is not
reasonable to believe that an applicant, if licensed, will comply
with this act.
Sec. 304. (1) Beginning January 1, 2012, the board of the
Michigan strategic fund may designate a Michigan corporation or
Michigan limited liability company as a qualified business
development enterprise under this section. The commissioner shall
not grant a license to an applicant for a license as a business
development enterprise under this act if the applicant has not
applied for and received a designation as a qualified business
development enterprise from the board of the Michigan strategic
fund.
(2) An application for designation as a qualified business
development enterprise shall include all of the following:
(a) A copy of the application and supporting documentation
submitted to the commissioner under section 301.
(b) A copy of the applicant's articles of incorporation and
bylaws if the applicant is a Michigan corporation, or its articles
or organization and operating agreement if the applicant is a
Michigan limited liability company,
(c) Documentation satisfactory to the board of the Michigan
strategic fund that the applicant meets the net worth requirements
of section 303(2)(c).
(d) Information concerning the background and business
experience of the directors, officers, managers, and controlling
persons of the applicant.
(e) A summary business plan, including at least 3 years of
detailed financial projections and other relevant information.
(f) Any other information considered relevant by the board of
the Michigan strategic fund.
(3) The board of the Michigan strategic fund shall apply the
following criteria in determining whether to designate a Michigan
corporation or Michigan limited liability company a qualified
business development enterprise:
(a) Whether the size and composition of the board of the
applicant meets section 403.
(b) Whether the business plan of the enterprise includes a
public policy objective or objectives acceptable to the board of
the Michigan strategic fund.
(c) Whether the applicant has demonstrated to the satisfaction
of the board of the Michigan strategic fund that it will meet any
transparency, reporting, and accountability requirements
established by the board by rule with respect to the public policy
objective or objectives of the enterprise.
(d) Whether the directors, officers, managers, and controlling
persons of the applicant have sufficient experience to demonstrate
to the satisfaction of the board of the Michigan strategic fund
that they have the ability to implement the proposed business plan
of the enterprise.
(4) For purposes of section 303(1)(f), the board of the
Michigan strategic fund shall notify the commissioner if it
designates a Michigan corporation or Michigan limited liability
company a qualified business development enterprise under this
section.
Sec. 304a. (1) A business development enterprise shall report
to the Michigan strategic fund at least annually the following
information for each business it supported, by providing or
facilitating the securing of capital, in the preceding 5-year
period:
(a) The total amount of private capital secured by the
business from its support.
(b) The estimated number of jobs the business created or
retained.
(c) An estimate of the state and local tax collections
attributable to its support of that business.
(2) The commissioner shall provide to the Michigan strategic
fund an annual summary report containing its assessment of the
financial condition of each business development enterprise. The
commissioner shall establish the form and contents of the report.
At a minimum, the report shall include an assessment of the
business development enterprise's ability to fund its operations in
the future.
(3) A business development enterprise shall provide the
commissioner any information he or she reasonably requests in
connection with his or her assessment of the financial condition of
the business development enterprise and the preparation of the
report described in subsection (2).
Sec.
401. (1) The Except
as provided in subsection (2), the
name of each licensee shall include the word "BIDCO".
(2) A business development enterprise is not required to
include the word "BIDCO" in its name.
(3) A licensee shall not transact business under a name other
than its name.
Sec. 403. (1) A licensee shall have a board of directors.
(2) The board of directors of each a licensee
that is not a
business
development enterprise shall consist of
not less than at
least 7 directors. All of the following apply to the board of
directors of a licensee that is a business development enterprise:
(a) The board shall consist of at least 3 directors.
(b) At least 1/3 of the members of the board shall be
individuals designated by the board of the Michigan strategic fund.
(3) If the licensee is a Michigan limited liability company,
the board may consist of members who are not managers of the
licensee.
(4) (2)
The board of directors of a
licensee shall hold a
meeting
not less than at least once each calendar quarter.
