Bill Text: NJ A3386 | 2012-2013 | Regular Session | Introduced
Bill Title: "New Jersey Venture Investment and Employment Program Act;" establishes program under NJ EDA to provide for qualified investments of capital in qualified businesses.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2012-10-15 - Introduced, Referred to Assembly Commerce and Economic Development Committee [A3386 Detail]
Download: New_Jersey-2012-A3386-Introduced.html
Sponsored by:
Assemblyman TROY SINGLETON
District 7 (Burlington)
Assemblyman ALBERT COUTINHO
District 29 (Essex)
SYNOPSIS
"New Jersey Venture Investment and Employment Program Act;" establishes program under NJ EDA to provide for qualified investments of capital in qualified businesses.
CURRENT VERSION OF TEXT
As introduced.
An Act establishing a program under the jurisdiction of the New Jersey Economic Development Authority to provide for qualified investments of capital in qualified businesses, supplementing P.L.1974, c.80 (C.34:1B-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "New Jersey Venture Investment and Employment Program Act."
2. As used in sections 1 through 30 of P.L. , c. (C. ) (pending before the Legislature as this bill):
"Assignee" means a person issued a tax credit certificate by the authority in accordance with section 9 or section 11 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Authority" means the New Jersey Economic Development Authority established by section 4 of P.L.1974, c.80 (C.34:1B-4).
"Board" means the New Jersey Venture Investment and Employment Program Advisory Board established by section 16 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Chief executive officer" means the chief executive officer of the authority.
"Director of the Division of Revenue" means the Director of the Division of Revenue in the Department of the Treasury.
"Director of the Division of Taxation" means the Director of the Division of Taxation in the Department of the Treasury.
"Economically distressed community" means a population census tract in this State, or in the case of an area not tracted for population census tracts the equivalent county division in this State, in which the poverty rate for that tract is not less than 20 percent; and 50 percent or more of the households in that tract have an income equal to or less than 60 percent of the area median gross income (if the tract is located within a metropolitan area), or the median household income in that tract does not exceed 80 percent of the Statewide median household income (if the tract is not located within a metropolitan area). "Economically distressed community" shall also include an area located within: an Historically Underutilized Business Zone as that term is defined by subsection (p) of section 3 of Pub.L.85-536 (15U.S.C. s.632); an Urban Empowerment Zone or Urban Enterprise Community, as designated by the Secretary of the United States Department of Housing and Urban Development; or a Rural Empowerment Zone or Rural Enterprise Community, as designated by the Secretary of the United States Department of Agriculture.
"Program" means the New Jersey Venture Investment and Employment Program established by section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Program fund" means the New Jersey Venture Investment and Employment Program Fund established by section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Purchaser" means a person issued a tax credit certificate by the authority in accordance with section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Qualified business" means a business that, at the time of the receipt of a qualified investment of capital by a qualified venture firm, is registered to do business in this State with the Director of the Division of Revenue; maintains its principal business operations in this State and intends to maintain its principal business operations in this State after the receipt of a qualified investment of capital; and employs fewer than 250 persons. "Qualified business" shall not include a business that is engaged in: retail sales; real estate development; insurance, banking, or lending; or the provision of professional services by accountants, attorneys, or physicians.
"Qualified investment of capital" means the investment of cash or equity in a qualified business by a qualified venture firm for the purchase of: a share of stock or other equity interest, a debt instrument convertible into equity, or an equity participation instrument.
"Qualified venture firm" means a venture firm that is certified as a qualified venture firm by the authority in accordance with section 20 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"State tax credit" means a tax credit that may be applied to reduce a State tax liability.
"State tax liability" means a liability for a tax that is payable to or collectible by the Director of the Division of Taxation.
"Venture firm" means a partnership, corporation, trust, or limited liability company that invests cash or equity in a business during the early or expansion stages of a business in exchange for an equity stake in the business in which the investment is made and that represents to its investors and its potential investors that it pursues a venture capital strategy.
3. There is established the New Jersey Venture Investment and Employment Program.
The program shall be under the jurisdiction of the authority and shall be administered by the chief executive officer and any clerical, technical, and other professional assistants as may be designated by the chief executive officer from among the personnel appointed and employed by the authority.
The purpose of the program shall be to facilitate economic development and the creation of jobs in this State, particularly in economically distressed communities.
To effectuate those purposes, the authority shall establish and maintain a dedicated fund, generate money to be credited to the fund through the issuance and the sale of State tax credits, and allocate money from the fund to qualified venture firms for qualified investments of capital in qualified businesses.
4. The authority shall establish and maintain a dedicated fund in the Department of the Treasury to be known as the "New Jersey Venture Investment and Employment Program Fund."
The authority shall credit to the program fund: private financial consideration paid to the authority in accordance with section 7, 9, and 11 of P.L. , c. (C. ) (pending before the Legislature as this bill); penalties collected by the Director of the Division of Taxation in accordance with section 8, 10, and 12 of P.L. , c. (C. ) (pending before the Legislature as this bill); distributions from payments or repayments made to the authority in accordance with section 26 of P.L. , c. (C. ) (pending before the Legislature as this bill); and earnings received, if any, from the investment or reinvestment of money credited to the program fund in the State of New Jersey Cash Management Fund established pursuant to section 1 of P.L.1977, c.281 (C.52:18A-90.4).
The authority shall utilize the program fund to allocate money to qualified venture firms for qualified investments of capital in qualified businesses in accordance with section 21 of P.L. , c. (C. ) (pending before the Legislature as this bill), and to offset, in whole or in part, costs incurred by the authority for the implementation and administration of the program.
5. The authority is authorized to issue State tax credits in the aggregate principal sum of up to $100,000,000 at the times, in the amounts, and subject to the terms and conditions the authority shall determine to be necessary and appropriate to effectuate the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill).
6. The authority is authorized to sell State tax credits issued in accordance with section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) to one or more persons through a competitive bidding process.
The authority shall procure the services of a third party to conduct the competitive bidding process through which State tax credits issued by the authority may be sold, on behalf of the authority, to one or more persons for a commitment of private financial consideration.
The third party shall determine the form and manner in which the competitive bidding is conducted; provided however, that the third party shall provide to potential purchasers notice of the date and time the competitive bidding will be conducted and instructions regarding the submission of commitments of private financial consideration for the purchase of State tax credits not later than 45 days prior to the date the bidding is conducted.
The third party shall determine the form and manner in which potential purchasers may submit a commitment of private financial consideration for the purchase of State tax credits; provided however, that each commitment submitted for the purchase of State tax credits shall include the requested amount of State tax credits to be purchased, which requested amount shall be not less than $250,000; and provided further, that each commitment submitted for the purchase of State tax credits shall specify the amount of private financial consideration to be committed for the requested amount of State tax credits to be purchased, which amount shall be not less than 75 percent of the amount of State tax credits requested to be purchased.
The third party shall require each potential purchaser to make and file an application with the third party prior to the date the potential purchaser submits a commitment of private financial consideration for the purchase of State tax credits, which application shall include the name and address of the potential purchaser and shall demonstrate to the third party the potential purchaser's ability to pay the private financial consideration committed for the purchase of State tax credits.
The third party shall provide written notification to each potential purchaser that makes a commitment of private financial consideration for the purchase of State tax credits through the competitive bidding process and shall indicate on the notification if the potential purchaser's commitment is successful and, if so, the amount of State tax credits to be issued to the potential purchaser by the authority.
The third party shall transmit to the authority a copy of each written notification provided to a potential purchaser that makes a successful commitment of private financial consideration for the purchase of State tax credits.
7. The authority shall enter into an agreement with each person who makes a successful commitment of private financial consideration for the purchase of State tax credits in accordance with section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The agreement shall require the purchaser to pay to the authority the amount of private financial consideration committed for the purchase of State tax credits in three separate but equal installments, which installments shall be due and required to be paid to the authority on or before July 1, 2014, on or before July 1, 2015, and on or before July 1, 2016.
The agreement shall require the authority to issue to each purchaser a tax credit certificate representing a State tax credit that is equal to that portion of the total amount of State tax credit purchased that the amount of private financial consideration bears to the total committed on or after the date each installment is paid.
The agreement shall require the authority to include the following information on each tax credit certificate issued to a purchaser: the amount of State tax credit that may be applied to reduce a State tax liability; the private financial consideration committed for the purchase of State tax credits; the year in which the State tax credit may be applied; the procedures to be used to apply the State tax credit; the procedures to be used to make and file an application for a tax credit transfer certificate; and the penalties that may be imposed by the authority for failure to pay an installment of private financial consideration.
The agreement shall prohibit the authority from issuing a tax credit certificate to a purchaser who fails to pay in full an installment of private financial consideration on or before the date the installment is due and required to be paid.
The agreement shall require the purchaser to pay a penalty imposed on the purchaser by the authority in accordance with section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The agreement shall prohibit the purchaser, or an affiliate of the purchaser, from: managing a qualified venture firm; beneficially owning, through rights, options, convertible interests, or otherwise, more than 15 percent of the voting securities or other voting ownership interests of a qualified venture firm; or controlling the direction of investments for a qualified venture firm.
The authority shall to transmit to the Director of the Division of Taxation a copy of each tax credit certificate issued to a purchaser.
The authority shall credit to the program fund the private financial consideration paid to the authority by the purchaser.
8. The authority shall impose a penalty on a purchaser who fails to pay an installment of private financial consideration in full on or before the date the payment is due and required to be paid to the authority under the terms and conditions of the agreement entered into in accordance with section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill) on the date the payment is due.
The penalty shall be equal to the difference between the amount of private financial consideration committed to be paid for the purchase of State tax credits issued by the authority and the amount of private financial consideration that remains unpaid on the date the installment is due and required to be paid.
A penalty imposed by the authority in accordance with this section shall be due and required to be paid to the Director of the Division of Taxation by the purchaser not later than 30 days after the date the penalty is imposed.
The Director of the Division of Taxation shall issue a deficiency assessment for the collection of a penalty or a portion of a penalty that remains unpaid more than 30 days after the date the penalty is imposed.
A penalty imposed by the authority in accordance with this section shall be deemed by the Director of the Division of Taxation to be a State tax subject to the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.
The amount of any penalty collected by the Director of the Division of Taxation in accordance with this section shall be forwarded to the authority by the Director of the Division of Taxation and shall be credited to the program fund by the authority.
9. The authority may assign to a person the amount or a portion of the amount of State tax credits for which a commitment of private financial consideration was made but remains unpaid by a purchaser of State tax credits who fails to pay an installment of private financial consideration in full on or before the date the installment is due and required to be paid to the authority under the terms and conditions of the agreement entered into in accordance with section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The authority shall enter into an agreement with each person who is assigned a defaulting purchaser's State tax credits in accordance with this section.
The agreement shall require the assignee to pay the balance of the past due installment of private financial consideration that remains unpaid by a defaulting purchaser not later than 30 days after the date the authority assigns the defaulting purchaser's State tax credits to the assignee, and shall require the authority to issue to the assignee a tax credit certificate representing a State tax credit that is equal to that portion of the total amount of State tax credit purchased that the amount of private financial consideration bears to the total committed on or after the date each past due installment is paid.
The agreement shall require the assignee to pay all future installments of private financial consideration on or before the date the installment was due and required to be paid to the authority by the defaulting purchaser, and shall require the authority to issue to the assignee a tax credit certificate representing a State tax credit that is equal to that portion of the total amount of State tax credit purchased that the amount of private financial consideration bears to the total committed on or after the date each installment is paid.
The agreement shall require the authority to include the following information on each tax credit certificate issued to an assignee: the amount of State tax credit that may be applied to reduce a State tax liability; the private financial consideration committed for the purchase of State tax credits; the year in which the State tax credit may be applied; the procedures to be used to apply the State tax credit; the procedures to be used to make and file an application for a tax credit transfer certificate; and the penalties that may be imposed by the authority for failure to pay an installment of private financial consideration.
The agreement shall prohibit the authority from issuing a tax credit certificate to an assignee who fails to pay in full an installment of private financial consideration on or before the date the installment is due and required to be paid.
The agreement shall require an assignee to pay a penalty imposed on the assignee by the authority in accordance with section 10 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The agreement shall prohibit the assignee, or an affiliate of the assignee, from: managing a qualified venture firm; beneficially owning, through rights, options, convertible interests, or otherwise, more than 15 percent of the voting securities or other voting ownership interests of a qualified venture firm; or controlling the direction of investments for a qualified venture firm.
The authority shall transmit to the Director of the Division of Taxation a copy of each tax credit certificate issued to an assignee.
The authority shall credit to the program fund the private financial consideration paid to the authority as an installment of private financial consideration by an assignee.
10. The authority shall impose a penalty on an assignee who fails to pay an installment of private financial consideration in full on or before the date the installment is due and required to be paid to the authority under the terms and conditions of the agreement entered into in accordance with section 9 of P.L. , c. (C. ) (pending before the Legislature as this bill) on the date the installment is due.
The penalty shall be equal to the difference between the amount of private financial consideration committed to be paid for the purchase of State tax credits issued by the authority and the amount of private financial consideration that remains unpaid on the date the installment is due and required to be paid.
A penalty imposed by the authority in accordance with this section shall be due and required to be paid to the Director of the Division of Taxation by the assignee not later than 30 days after the date the penalty is imposed.
The Director of the Division of Taxation shall issue a deficiency assessment for the collection of a penalty or a portion of a penalty that remains unpaid more than 30 days after the date the penalty is imposed.
A penalty imposed by the authority in accordance with this section shall be deemed by the Director of the Division of Taxation to be a State tax subject to the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.
The amount of any penalty collected by the Director of the Division of Taxation in accordance with this section shall be forwarded to the authority by the Director of the Division of Taxation and shall be credited to the program fund by the authority.
11. The authority may assign to a person the amount or a portion of the amount of State tax credits for which a commitment of private financial consideration was made but remains unpaid by an assignee of State tax credits who fails to pay an installment of private financial consideration in full on or before the date the installment is due and required to be paid to the authority under the terms and conditions of the agreement entered into in accordance with section 9 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The authority shall enter into an agreement with each person who is assigned a defaulting assignee's State tax credits in accordance with this section.
The agreement shall require the assignee to pay the balance of the past due installment of private financial consideration that remains unpaid by a defaulting assignee not later than 30 days after the date the authority assigns the defaulting assignee's State tax credits to the subsequent assignee, and shall require the authority to issue to each subsequent assignee a tax credit certificate representing a State tax credit that is equal to that portion of the total amount of State tax credit purchased that the amount of private financial consideration bears to the total committed on or after the date each past due installment is paid.
The agreement shall require the assignee to pay all future installments of private financial consideration on or before the date the payment was due and required to be paid to the authority by the defaulting assignee, and shall require the authority to issue to each assignee a tax credit certificate representing a State tax credit that is equal to that portion of the total amount of State tax credit purchased that the amount of private financial consideration bears to the total committed on or after the date each installment is paid.
The agreement shall require the authority to include the following information on each tax credit certificate issued to an assignee: the amount of State tax credit that may be applied to reduce a State tax liability; the private financial consideration committed for the purchase of State tax credits; the year in which the State tax credit may be applied; the procedures to be used to apply the State tax credit; the procedures to be used to make and file an application for a tax credit transfer certificate; and the penalties that may be imposed by the authority for failure to pay an installment of private financial consideration.
The agreement shall prohibit the authority from issuing a tax credit certificate to an assignee who fails to pay in full an installment of private financial consideration on or before the date the installment is due and required to be paid.
The agreement shall require an assignee to pay a penalty imposed on the assignee by the authority in accordance with section 12 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The agreement shall prohibit the assignee, or an affiliate of the assignee, from: managing a qualified venture firm; beneficially owning, through rights, options, convertible interests, or otherwise, more than 15 percent of the voting securities or other voting ownership interests of a qualified venture firm; or controlling the direction of investments for a qualified venture firm.
The authority shall transmit to the Director of the Division of Taxation a copy of each tax credit certificate issued to an assignee.
The authority shall credit to the program fund the private financial consideration paid to the authority as an installment of private financial consideration by an assignee.
12. The authority shall impose a penalty on an assignee who fails to pay an installment of private financial consideration in full on or before the date the installment is due and required to be paid to the authority under the terms and conditions of the agreement entered into in accordance with section 11 of P.L. , c. (C. ) (pending before the Legislature as this bill) on the date the installment is due.
The penalty shall be equal to the difference between the amount of private financial consideration committed to be paid for the purchase of State tax credits issued by the authority and the amount of private financial consideration that remains unpaid on the date the installment is due and required to be paid.
A penalty imposed by the authority in accordance with this section shall be due and required to be paid to the Director of the Division of Taxation by the assignee not later than 30 days after the date the penalty is imposed.
The Director of the Division of Taxation shall issue a deficiency assessment for the collection of a penalty or a portion of a penalty that remains unpaid more than 30 days after the date the penalty is imposed by the authority.
A penalty imposed by the authority in accordance with this section shall be deemed by the Director of the Division of Taxation to be a State tax subject to the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.
The amount of any penalty collected by the Director of the Division of Taxation in accordance with this section shall be forwarded to the authority by the Director of the Division of Taxation and shall be credited to the program fund by the authority.
13. Notwithstanding the provisions of any other law to the contrary, the authority may waive a penalty imposed on a defaulting purchaser or a defaulting assignee in accordance with section 8, 10, or 12 of P.L. , c. (C. ) (pending before the Legislature as this bill) if the assignment of a defaulting purchaser's or a defaulting assignee's State tax credits to another person results in a commitment of private financial consideration in an amount that is equal to the amount of private financial consideration committed to be paid for the purchase of State tax credits by the defaulting purchaser or the defaulting assignee.
14. A purchaser or an assignee who is issued a tax credit certificate by the authority may first apply a State tax credit for which the tax credit certificate is issued to reduce a State tax liability of the purchaser or the assignee that is due and required to be paid on or after January 1, 2017.
The amount of State tax credit that may be applied by a purchaser or an assignee to reduce a State tax liability in any one year shall not exceed 20 percent of the aggregate amount of the State tax credit for which the tax credit certificate is issued.
The amount of State tax credit that may be applied by a purchaser or an assignee to reduce a State tax liability in any one year shall not, when taken together with any other tax credit, deduction, or adjustment allowed by law, exceed 50 percent of the tax liability otherwise due and required to be paid for the year for which the State tax credit is applied, and, if the amount of State tax credit that may be applied by a purchaser or an assignee is used to reduce a tax liability imposed in accordance with section 5 of P.L.1945, c.162 (C.54:10A-5), shall not reduce the tax liability otherwise due and required to be paid to an amount less than the statutory minimum provided in subsection (e) of that section.
The amount of State tax credit that cannot be applied to reduce a purchaser's or an assignee's State tax liability otherwise due and required to be paid in any year following the year in which the State tax credit is applied may be carried forward, if necessary, to each of the seven years following the year in which the State tax credit is first applied.
The order of priority of the application of a State tax credit and of any other tax credit, deduction, or adjustment allowed by law shall be determined in accordance with any terms and conditions that may be prescribed by the Director of the Division of Taxation.
15. A purchaser or an assignee who is issued a tax credit certificate by the authority may make and file an application with the Director of the Division of Taxation for a tax credit transfer certificate in lieu of the purchaser or the assignee being allowed to apply any amount of the State tax credit for which a tax credit certificate is issued.
Upon the review and approval of the Director of the Division of Taxation, the director shall issue to the purchaser or the assignee a tax credit transfer certificate.
The tax credit transfer certificate issued to a purchaser or an assignee by the Director of the Division of Taxation may be sold to another person for private financial consideration provided to the purchaser or the assignee by the person purchasing the tax credit transfer certificate.
The tax credit transfer certificate issued to a purchaser or an assignee by the Director of the Division of Taxation shall include a statement waiving the purchaser's or the assignee's right to claim the State tax credit that the purchaser or the assignee is electing to sell.
The sale of any amount of a tax credit transfer certificate to the person purchasing the tax credit transfer certificate from the purchaser or assignee shall not be made for private financial consideration of less than 75 percent of the transferred State tax credit amount.
The tax credit transfer certificate issued to a purchaser or an assignee by the Director of the Division of Taxation shall be subject to any limitations and conditions imposed on the application of State tax credits in accordance with section 14 of P.L. , c. (C. ) (pending before the Legislature as this bill) and any other terms and conditions that may be prescribed by the Director of the Division of Taxation.
16. There is established within the authority the New Jersey Venture Investment and Employment Program Advisory Board.
The purpose of the board shall be to identify and to evaluate venture firms that are eligible to be certified as qualified venture firms and to recommend to the authority venture firms that should be certified and receive allocations of money from the program fund for qualified investments of capital in qualified businesses.
The board shall be comprised of nine members, of whom three shall be appointed by the Governor, three shall be appointed by the President of the Senate, and three shall be appointed by the Speaker of the General Assembly.
Of the members appointed to the board by the Governor: two shall have experience raising capital for a seed-stage to venture-stage company, providing professional services to the venture capital industry, or owning a small business and raising venture capital; and one shall have expertise in higher education research and development and technology transfer projects.
Of the members appointed to the board by the President of the Senate: two shall have experience raising capital for a seed-stage to venture-stage company, providing professional services to the venture capital industry, or owning a small business and raising venture capital; and one shall have expertise in meeting the equity capital needs of a seed-stage to venture-stage company that maintains it principal business operations in an economically distressed community.
Of the members appointed to the board by the Speaker of the General Assembly: two shall have experience raising capital for a seed-stage to venture-stage company, providing professional services to the venture capital industry, or owning a small business and raising venture capital; and one shall have expertise in community economic development in an economically distressed community.
A member of the board shall not be a candidate for or hold elective public office at the time of appointment to or while serving as a board member.
A member of the board shall be a resident of this State at the time of appointment to and while serving as a board member.
A member of the board shall be a public officer and required to file annually with the State Ethics Commission a financial disclosure statement in accordance with Executive Order No. 24 of 2010, as that order is in effect on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), while serving as a board member.
A member of the board and the immediate family members of a board member shall not have an interest in a purchaser or an assignee during the period commencing one year prior to the date the member is appointment to the board and ending one year following the date the board is dissolved.
A member of the board and the immediate family members of a board member shall not have an interest in a qualified business, a venture firm that makes and files an application for consideration in accordance with section 17 of P.L. , c. (C. ) (pending before the Legislature as this bill), or a qualified venture firm during the period commencing one year prior to the date the member is appointment to the board and ending one year after the date the board is dissolved.
The members appointed to the board by the Governor may be removed from the board by the Governor, for cause, upon notice and opportunity to be heard.
The members appointed to the board by the President of the Senate may be removed from the board by the President, for cause, upon notice and opportunity to be heard.
The members appointed to the board by the Speaker of the General Assembly may be removed from the board by the Speaker, for cause, upon notice and opportunity to be heard.
Vacancies in the membership of the board shall be filled in the same manner as provided for in the original appointment of its members; provided however, that a vacancy in the membership of the board occurring after the original appointment of its members shall be filled within 30 days of the occurrence thereof.
The members of the board shall elect a chairperson and a vice-chairperson from among the members appointed to the board, and may select and appoint a secretary who need not be a board member.
The board shall meet at the call of the chairperson and may hold hearings at the times and in the places the chairperson deems necessary and appropriate.
The board may request and shall be entitled to receive from the authority any assistance and information the board deems necessary and appropriate.
The board shall be entitled to call to its assistance and avail itself of the services of any clerical, technical, and other professional assistants from among the personnel appointed and employed by the authority as the board deems necessary and appropriate.
Actions may be taken and motions and resolutions may be adopted by the board at a meeting of the board by an affirmative vote of not fewer than five board members.
The members of the board shall serve without compensation, but may be reimbursed for travel and other miscellaneous expenses incurred in the performance of their duties, within the limits of funds appropriated or otherwise made available to the board for its purposes.
The board shall be dissolved on the 30th day following the date the board forwards its recommendations for certification to the authority in accordance with section 19 of P.L. , c. (C. ) (pending before the Legislature as this bill).
17. The board shall identify venture firms that are eligible to be certified as qualified venture firms, and to effectuate that purpose it shall be the duty and responsibility of the board to establish an application process and determine the form and manner through which a venture firm may make and file an application for consideration to the board.
The application for consideration shall include the name and the address of the venture firm applying to the board.
The application for consideration shall include the name, address, and investment and employment experience of each of the principal officers, directors, and senior investment professionals of the venture firm applying to the board and, if the venture firm is a subsidiary of another entity, the name and addresses of the parent entity and the name, address, and investment and employment experience of the parent entity's principal officers, directors, and senior investment professionals.
The application for consideration shall include a description of the venture firm's investment strategy or a copy of the business plan used by the venture firm applying to the board.
The application for consideration shall include information demonstrating the venture firm's experience in investing in venture-stage businesses, in attracting co-investments and syndicate investments, and in creating jobs through its investments.
The application for consideration shall include a statement detailing the venture firm's potential impact on the State's economy if the venture firm is certified as a qualified venture firm and receives allocations of money from the program fund.
The application for consideration shall include information demonstrating the venture firm's commitment to the State through the presence of property or employees in this State, through current and previous investments in venture-stage businesses in this State, and through current and previous relationships with other venture firms and academic institutions in this State.
The application for consideration shall include information demonstrating the venture firm's commitment to economically distressed communities through the presence of property or employees in economically distressed communities, through current and previous investments in venture-stage businesses in economically distressed communities, and through current and previous relationships with other venture firms and academic institutions located in economically distressed communities.
The application for consideration shall include a comprehensive financial statement that covers all of the operations and activities of the venture firm during the three years immediately preceding the year in which the application for consideration is made and filed with the board, and that has been prepared by a certified public accountant who is licensed in accordance with the "Accountancy Act of 1997," P.L.1997, c.259 (C.45:2B-42 et seq.), or licensed in accordance with the laws of another state.
18. The board shall evaluate venture firms that are eligible to be certified as qualified venture firms by the authority, and to effectuate that purpose it shall be the duty and responsibility of the board to design and develop an objective standard of assessment against which each application for consideration will be evaluated.
The objective standard of assessment designed and developed by the board shall be comprised of individual standards related to the management and operations of a venture firm applying to the board, including: the investment experience of each of the principal officers, directors, and senior investment professionals of a venture firm; a venture firm's reputation in the venture capital community and a venture firm's ability to attract co-investment capital and syndicate investments in qualified businesses; the knowledge, experience, and capabilities of a venture firm in subject areas relevant to venture-stage businesses in this State; and the tenure and turnover rate of the principal officers, directors, and senior investment professionals of a venture firm.
The objective standard of assessment shall be comprised of individual standards related to the investment strategy of a venture firm applying to the board, including: a venture firm's record of investing in venture-stage businesses; a venture firm's history of attracting co-investment capital and syndicate investments; the feasibility of a venture firm's investment strategy and the compatibility of that strategy with business opportunities in this State; and a venture firm's history of job creation through its investments.
The objective standard of assessment shall be comprised of individual standards related to a venture firm's commitment to making investments that to the fullest extent possible: create employment opportunities in the State, particularly in economically distressed communities; contribute to the long-term growth of the State's economy and the success of qualified businesses; compliment the research and development projects of academic institutions in this State; and foster the development of technologies and industries that present opportunities for the growth of qualified businesses.
The objective standard of assessment shall be comprised of individual standards related to a venture firm's commitment to the State, including: a venture firm's presence in this State through the maintenance of offices or through affiliation with local investment firms; the presence of a venture firm's principal officers, directors, and senior investment professionals; a venture firm's experience investing in venture-stage businesses in this State; a venture firm's ability to identify investment opportunities through working relationships with State research and development institutions and State-based businesses; a venture firm's relationship with other venture firms in the region; a venture firm's experience of investing in areas relevant to venture-stage businesses in this State; and a venture firm's commitment to making qualified investments of capital in qualified businesses.
The objective standard of assessment shall be comprised of individual standards related to a venture firm's commitment to economically distressed communities, including: a venture firm's presence in economically distressed communities through the establishment and maintenance of local offices or through affiliation with local investment firms; the presence of a venture firm's principal officers, directors, and senior investment professionals in economically distressed communities; a venture firm's experience investing in venture-stage businesses in economically distressed communities; a venture firm's relationship with other venture firms in economically distressed communities; a venture firm's experience of investing in areas relevant to venture-stage businesses in economically distressed communities; and a venture firm's commitment to making qualified investments of capital in qualified businesses that maintain their principal business operations in economically distressed communities.
19. The board shall recommend to the authority venture firms that should be certified as a qualified venture firm and receive allocations of money from the program fund for qualified investments of capital in qualified businesses, and to effectuate that purpose it shall be the duty and responsibility of the board to evaluate each complete application for consideration against the objective standard of assessment designed and developed by the board in accordance with section 18 of P.L. , c. (C. ) (pending before the Legislature as this bill) and to issue recommendations to the authority based on its evaluation.
The board shall determine the form and manner in which the evaluation of each complete application for consideration is conducted; provided however, that the board shall incorporate a point-based system of evaluation that awards numerical points to each venture firm that makes and files a complete application for consideration based on the ability of that venture firm to meet or achieve the objective standard of assessment designed and developed by the board.
The board shall determine the minimum number of points necessary to receive a recommendation for certification from the board and shall issue a recommendation for certification to each venture firm that meets or exceeds the minimum number of points determined to be necessary.
The board shall not issue a recommendation for certification to a venture firm that fails to meet or exceed the minimum number of points determined to be necessary.
The board shall forward its recommendations for certification to the authority and shall provide written notification to each venture firm that receives a recommendation for certification and each venture firm that fails to receive a recommendation, communicating in detail the grounds for the board's determination to not issue a recommendation.
20. The authority shall review each recommendation for certification issued by the board in accordance with section 19 of P.L. , c. (C. ) (pending before the Legislature as this bill) and shall certify or refuse to certify a venture firm as a qualified venture firm.
The authority shall not certify a venture firm as a qualified venture firm if the venture firm has an equity capitalization, net assets, or written commitments of less than $500,000 in the form of cash or cash equivalents on the date the determination for certification is made.
The authority shall not certify a venture firm as a qualified venture firm if the venture firm has fewer than two principals or persons employed to direct the qualified investment of capital who have at least five years of money management experience in the venture capital or private equity sectors on the date the determination for certification is made.
The authority shall provide written notification to each venture firm that is certified as a qualified venture firm by the authority and shall provide written notification to each venture firm that the authority refuses to certify as a qualified venture firm communicating in detail the grounds for the authority's refusal.
21. The authority is authorized to allocate money credited to the program fund to one or more venture firms that are certified as a qualified venture firm by the authority in accordance with section 20 of P.L. , c. (C. ) (pending before the Legislature as this bill) at the times, in the amounts, and subject to the terms and conditions as the authority shall determine to be necessary and appropriate to effectuate the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill).
22. The authority shall make and enter into an agreement with each qualified venture firm that is allocated money from the program fund in accordance with section 21 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The agreement shall require the qualified venture firm to make qualified investments of capital in one or more qualified businesses from program fund money allocated to the qualified venture firm in accordance with section 23 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The agreement shall require the qualified venture firm to make administrative distributions from program fund money allocated to the qualified venture firm in accordance with section 24 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The agreement shall require the qualified venture firm to make sales, liquidations, and other dispositions of qualified investments of capital in qualified businesses in accordance with section 25 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The agreement shall require the qualified venture firm to make distributions of money derived from the sale, liquidation, and other disposition of qualified investments of capital in qualified businesses and to make distributions of money derived from a return on a qualified investment of capital in qualified businesses in accordance with section 26 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The agreement shall require the qualified venture firm to cause an audit of its books and accounts to be conducted at least once in each year in accordance with section 27 of P.L. , c. (C. ) (pending before the Legislature as this bill).
The agreement shall require the qualified venture firm to make and file an annual report with the authority in accordance with section 28 of P.L. , c. (C. ) (pending before the Legislature as this bill).
23. A qualified venture firm that has made and entered into an agreement with the authority in accordance with section 22 of P.L. , c. (C. ) (pending before the Legislature as this bill) is authorized to make qualified investments of capital in one or more qualified businesses from program fund money allocated to the qualified venture firm by the authority at the times, in the amounts, and subject to the terms and conditions as the qualified venture firm determines to be necessary and appropriate; provided however, that a qualified venture firm shall enter into an agreement with each qualified business that receives a qualified investment of capital, which agreement shall, at a minimum, require the qualified business to use the qualified investment of capital to support its business operations in this State, or in the case of a start-up business, to establish and support its business operations in this State; and provided further, that not less than 80 percent of the program fund money allocated to the qualified venture firm by the authority shall be used by the qualified venture firm for qualified investments of capital in one or more qualified businesses that maintain their principal business operations in an economically distressed community.
24. A qualified venture firm that has made and entered into an agreement with the authority in accordance with section 22 of P.L. , c. (C. ) (pending before the Legislature as this bill) is authorized to make administrative distributions from program fund money allocated to the qualified venture firm by the authority at the times, in the amounts, and subject to the terms and conditions as the qualified venture firm determines to be necessary and appropriate; provided however, that a qualified venture firm shall not make administrative distributions from program fund money to offset costs or expenses paid or incurred by the qualified venture firm for government relations services, including lobbying; and provided further, that administrative distributions from program fund money shall be limited to: costs incurred by the qualified venture firm to organize and syndicate the qualified venture firm, which costs shall not exceed $125,000; amounts expended by the qualified venture firm for professional services, which amounts shall not exceed $50,000 per year; and annual fees paid by the qualified venture firm for the management of program fund money, which annual fees shall not exceed 2.5 percent of the program fund money allocated to the qualified venture firm by the authority.
25. A qualified venture firm that has made and entered into an agreement with the authority in accordance with section 22 of P.L. , c. (C. ) (pending before the Legislature as this bill) is authorized to sell, liquidate, or dispose of, in whole or in part, its qualified investment of capital in a qualified business at the times, in the amounts, and subject to the terms and conditions as the qualified venture firm determines to be necessary and appropriate; provided however, that the money or equity received by the qualified venture firm from the sale, liquidation, or disposition of a qualified investment of capital shall be distributed by the qualified venture firm in accordance with section 26 of P.L. , c. (C. ) (pending before the Legislature as this bill).
26. A qualified venture firm that has made and entered into an agreement with the authority in accordance with section 22 of P.L. , c. (C. ) (pending before the Legislature as this bill) is authorized to make distributions of money derived from the sale, liquidation, or disposition of a qualified investment of capital in a qualified business and is authorized to make distributions of money derived from a return on a qualified investment of capital in a qualified business if the qualified venture firm first repays to the authority the amount of program fund money allocated to the qualified venture firm by the authority.
After a qualified venture firm has repaid the amount of program fund money allocated to the qualified venture firm by the authority, each additional distribution of money derived from the sale, liquidation, or disposition of a qualified investment of capital in a qualified business or derived from a return on a qualified investment of capital in a qualified business shall be made as follows: 80 percent to the authority and 20 percent to the qualified venture firm.
The authority shall credit to the program fund payments or repayments made to the authority by a qualified venture firm.
27. A qualified venture firm that has made and entered into an agreement with the authority in accordance with section 22 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall cause an audit of its books and accounts to be conducted by a certified public accountant, who is licensed in accordance with the "Accountancy Act of 1997," P.L.1997, c.259 (C.45:2B-42 et seq.), or licensed in accordance with the laws of another state, at least once in each year in which the qualified venture firm is in receipt of program fund money or in which the qualified venture firm is responsible for the management of program fund money allocated to the qualified venture firm by the authority.
The qualified venture firm shall transmit to the chief executive officer a copy of the audit report and any statements of finding or fact that may be made in connection with an audit.
28. A qualified venture firm that has made and entered into an agreement with the authority in accordance with section 22 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall make an annual report regarding its qualified investments of capital in qualified businesses.
The report shall include a statement detailing the management and operations of the qualified venture firm during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the name and address of the qualified venture firm and the name and address of each person employed by the qualified venture firm during the preceding calendar year who is responsible for the management of program fund money allocated to the qualified venture firm by the authority.
The report shall include a statement detailing the amount of program fund money allocated to the qualified venture firm by the authority during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the amount of program fund money invested as a qualified investment of capital in one or more qualified businesses during the preceding calendar year and the amount of program fund money that remains uninvested as a qualified investment of capital on December 31 of the preceding calendar year.
The report shall include a statement detailing the performance of each qualified investment of capital in a qualified business during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the investment's fair market value on the date the qualified investment of capital was made and on December 31 of the preceding calendar year.
The report shall include a statement detailing the management and operation of each qualified business that is in receipt of a qualified investment of capital during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the name of the qualified business, the address at which the qualified business maintains its principal business operations, the address at which the qualified business maintains any other business operations, and the classification of the qualified business according to the industrial sector and the size of the business on the date the qualified investment was made and on December 31 of the preceding calendar year.
The report shall include a statement detailing the jobs created or retained as a result of each qualified investment of capital in a qualified business during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the number of persons employed on a full-time and part-time basis by each qualified business, the average hourly wage or the annual remuneration paid to each person employed on a full-time and part-time basis by each qualified business, and the benefits provided or otherwise made available to each person employed on a full-time and a part-time basis by each qualified business on the date the qualified investment was made and on December 31 of the preceding calendar year.
The report shall include a statement detailing each administrative distribution made by the qualified venture firm from program fund money allocated to the qualified venture firm during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the date of each administrative distribution, the amount of each administrative distribution, and the purpose for which each administrative distribution was made.
The report shall include a statement detailing each sale, liquidation, or other disposition of a qualified investment of capital in a qualified business during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the date of the sale, liquidation, or disposition, the amount of money or the value of equity received from the sale, liquidation, or disposition, and the purpose for which the sale, liquidation, or disposition of its qualified investment of capital in a qualified business was made.
The report shall include a statement detailing the distribution of any money derived from the sale, liquidation, or disposition of a qualified investment of capital in a qualified business or derived from a return on a qualified investment of capital in a qualified business that is made by the qualified venture firm during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the date of the distribution, the amount of the distribution, and the purpose for which the distribution was made.
The report shall include a statement prepared by a certified public accountant, who is licensed in accordance with the "Accountancy Act of 1997," P.L.1997, c.259 (C.45:2B-42 et seq.), or licensed in accordance with the laws of another state, certifying that the accountant has reviewed the report and that the information and representations contained in the report are accurate.
The qualified venture firm shall file the report made in accordance with this section with the authority on or before April 1 of each year immediately following a year in which the qualified venture firm was in receipt of program fund money or responsible for the management of program fund money allocated to the qualified venture firm by the authority.
29. The authority shall make an annual report regarding the implementation and administration of the program.
The report shall include a statement detailing each purchaser and assignee who is issued a tax credit certificate by the authority during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the name and address of the purchaser or assignee, the amount of State tax credits issued to the purchaser or assignee by the authority, the amount of private financial consideration paid to the authority by the purchaser or assignee, and the amount of State tax credits for which a tax credit transfer certificate is issued by the Director of the Division of Taxation during the preceding calendar year. The statement shall also specify if a purchaser or assignee failed to pay an installment of private financial consideration in full on or before the date the payment is due and required to be paid, the amount of any penalties imposed on a purchaser or assignee, and the amount of any penalty waived by the authority during the preceding calendar year.
The report shall include a statement detailing each qualified venture firm that is allocated program fund money by the authority during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the name and address of the qualified venture firm, the name and address of each person employed by the qualified venture firm who is responsible for the management of program fund money allocated to the qualified venture firm, the amount of program fund money allocated to the qualified venture firm that is invested in one or more qualified businesses during the preceding calendar year, and the amount of program fund money allocated to the qualified venture firm that remains uninvested on December 31 of the preceding calendar year. The statement shall also specify each administrative distribution, each sale, liquidation, or other disposition of a qualified investment of capital in a qualified business, and each distribution of money derived from the sale, liquidation, or other disposition of a qualified investment of capital in a qualified business or derived from a return on a qualified investment of capital in a qualified business that is made by a qualified venture firm during the preceding calendar year.
The report shall include a statement detailing each qualified business that receives or maintains a qualified investment of capital from a qualified venture firm during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the name of the qualified business, the address at which the qualified business maintains its principal business operations, the address at which the qualified business maintains any other business operations, and the classification of the qualified business according to the industrial sector and the size of the business on the date the qualified investment was made by the qualified venture firm and on December 31 of the preceding calendar year. The statement shall also specify the full-time and part-time jobs created or retained as a result of the qualified investment of capital in the qualified business and provide a summary of the performance of the qualified investment of capital during the preceding calendar year.
The report shall include a statement detailing the authority's implementation and administration of the program during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify the costs incurred by the authority to implement and administer the program, the job title of each clerical, technical, and other professional assistant designated from the personnel appointed and employed by the authority to implement and administer the program, and the rules and regulations or practices and procedures adopted or prescribed by the chief executive officer or the Director of the Division of Taxation to implement and administer the program during the preceding calendar year.
The report shall include a statement detailing the performance of the program fund during the calendar year immediately preceding the calendar year in which the report is required to be filed, which shall specify each credit made to the program fund, each withdrawal or allocation made from the program fund, and the balance of money remaining in the program fund on December 31 of the preceding calendar year. The statement shall also specify the earnings, if any, received from the investment or reinvestment of money credited to the program fund.
The authority shall file the report made in accordance with this section with the Governor and the Legislature, in accordance with section 2 of P.L.1991, c.164 (C.52:14-19.1), on or before July 1 next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) and on or before July 1 of each year thereafter in which an annual report is made and filed by a qualified venture firm in accordance with section 28 of P.L. , c. (C. ) (pending before the Legislature as this bill).
30. Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the chief executive officer and the Director of the Division of Taxation may adopt immediately upon filing with the Office of Administrative Law such rules and regulations as the chief executive officer and the director deem necessary and appropriate to effectuate the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill), which regulations shall be effective for a period not to exceed 360 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) and may thereafter be amended, adopted, or readopted by the chief executive officer and the director in accordance with P.L.1968, c.410 (C.52:14B-1 et seq.).
31. This act shall take effect on the first day of the ninth month next following the date of enactment.
STATEMENT
This bill, the "New Jersey Venture Investment and Employment Program Act," establishes the New Jersey Venture Investment and Employment Program under the jurisdiction of the New Jersey Economic Development Authority and provides for the administration and funding of the program.
The bill provides that the purpose of the program is to facilitate economic development and the creation of jobs, particularly in economically distressed communities within this State. To effectuate those purposes, the bill permits the authority to issue and sell State tax credits, to establish a fund and credit to the fund money generated from the sale of State tax credits, and to allocate money credited to the fund to qualified venture firms for qualified investments of capital in qualified businesses.
Issuance and Sale of Tax Credits. The bill permits the New Jersey Economic Development Authority to issue State tax credits in the aggregate principal sum of up to $100,000,000, and to sell those tax credits for commitments of private financial consideration.
The bill requires State tax credits issued by the authority to be sold through a competitive bidding process, and requires the authority to procure the services of a third party to conduct the sale. The bill authorizes the third party to determine the form and manner in which the sale is conducted, and to determine the process by which potential purchasers submit commitments of private financial consideration for the purchase of State tax credits.
Under the bill, each potential purchaser must make a commitment for the purchase of at least $250,000 in State tax credits. The bill provides that each potential purchaser must make a commitment of private financial consideration that is not less than 75 percent of the requested amount of State tax credits to be purchased.
The bill requires the authority to enter into an agreement with each purchaser of State tax credits. The bill provides that the agreement generally must require the purchaser to pay the private financial consideration committed for the purchase of State tax credits to the authority in three separate but equal installments (July 1, 2014, July 1, 2015, and July 1, 2016), require the authority to issue to each purchaser a tax credit certificate equal to that portion of the total amount of State tax credit purchased that the amount of private financial consideration bears to the total committed, prohibit the authority from issuing a tax credit certificate to a defaulting purchaser, and prohibit the purchaser, and its affiliates, from managing, owning, or controlling the direction of investments of a qualified venture firm.
The bill requires the authority to impose penalties on purchasers who fail to pay installments of private financial consideration on or before the dates the installments are due and required to be paid. The bill provides that the amount of the penalty is equal to the difference between the amount of private financial consideration committed to be paid for the purchase of State tax credits and the amount of private financial consideration that remains unpaid on the date the installment is due and required to be paid, and requires the Director of the Division of Taxation in the Department of the Treasury to collect unpaid penalties.
The bill permits the authority to reassign a defaulting purchaser's State tax credits to another person, and permits the authority to reassign a defaulting assignee's State tax credits to another person. The bill requires the authority to enter into an agreement with persons assigned a defaulting purchaser's or assignee's State tax credits that is substantially similar to the agreement initially made and entered into with each purchaser, and requires the authority to impose similar penalties on assignees who subsequently default on a commitment.
The bill permits the authority to waive penalties imposed on a purchaser or an assignee. The bill provides that if the assignment of State tax credits to another person results in a commitment of private financial consideration that is equal to the amount committed by a defaulting purchaser or a defaulting assignee, the authority may waive the penalty.
The bill permits purchasers and assignees of State tax credits to first apply the credits issued by the authority to reduce State tax liabilities that are due and required to be paid on or after January 1, 2017. The bill provides that the tax credit applied by a purchaser or an assignee in any one year is limited to 20 percent of the aggregate amount of the tax credit issued to a purchaser or an assignee, and provides that the amount of the tax credit that may be applied to reduce a State tax liability in any one year shall not exceed 50 percent of the tax liability otherwise due and required to be paid. The bill authorizes purchasers and assignees to carry forward unutilized tax credits, and authorizes the Director of the Division of Taxation to prescribe the order in which tax credits issued by the authority may be applied in combination with any other credits allowed by law.
The bill permits purchasers and assignees to transfer State tax credits issued by the authority, upon application to and approval by the Director of the Division of Taxation. The bill provides that the subsequent sale or assignment of State tax credits to another person cannot be exchanged for private financial consideration of less than 75 percent of the transferred State tax credit amount.
Establishment and Maintenance of Special Fund. The bill establishes a special dedicated fund in the Department of the Treasury to be known as the "New Jersey Venture Investment and Employment Program Fund."
The bill requires the authority to credit to the fund proceeds from the sale, assignment, or reassignment of State tax credits, penalties paid by defaulting purchasers and assignees, certain distributions from payments or repayments made to the authority by qualified venture firms, and net earnings, if any, derived from the investment or reinvestment of money credited to the fund.
The bill authorizes the authority to utilize the fund to make allocations of money to qualified venture firms for qualified investments of capital in qualified businesses, and to offset, in whole or in part, costs incurred by the authority for the implementation and administration of the program.
Allocations of Monies Credited to the Program Fund. The bill establishes an advisory board within the New Jersey Economic Development authority to be known as the New Jersey Venture Investment and Employment Program Advisory Board. The bill provides that the board is to be comprised of nine members, of whom three are appointed by the Governor, three are appointed by the President of the Senate, and three are appointed by the Speaker of the General Assembly.
The bill provides that the purposes of the board is to identify and to evaluate venture firms that are eligible to be certified as qualified venture firms, and to recommend to the authority the venture firms that should be certified and receive allocations of money from the program fund for qualified investments of capital in qualified businesses. The bill requires the board to establish an application process and determine the procedures through which venture firms may make and file applications for consideration, to design and develop an objective standard against which applications will be evaluated, and issue recommendations for certification to the authority based on its evaluation of complete applications.
The bill requires the authority to review each recommendation for certification issued by the board and to certify or refuse to certify a venture firm as a qualified venture firm. The bill prohibits the authority from certifying a venture firm as a qualified venture firm if the firm has an equity capitalization, net assets, or written commitments of less than $500,000 in the form of cash or cash equivalents, or if the firm has fewer than two principals or persons employed to direct the qualified investment of capital who have at least five years of money management experience.
The bill permits the authority to make allocations of money credited to the program fund to venture firms that are certified as a qualified venture firm by the authority at the times, in the amounts, and subject to the terms and conditions as may be prescribed by the authority, and requires the authority to make and enter into an agreement with each qualified venture firm that is allocated money from the program fund. The bill provides that the agreement generally must require the qualified venture firm to make qualified investments of capital in qualified businesses, to cause an annual audit of its books and records, and to make and file an annual report with the authority.
The bill authorizes each qualified venture firm that has entered into an agreement with the authority to: make qualified investments of capital in qualified businesses from program fund money allocated to the qualified venture firm by the authority; to make administrative distributions from program fund money allocated to the qualified venture firm; to sell, liquidate, or dispose of, in whole or in part, qualified investments of capital in qualified businesses; and to make distributions of money derived from the sale, liquidation, or disposition of a qualified investment of capital in a qualified business and is authorized to make distributions of money derived from a return on a qualified investment of capital in a qualified business if the qualified venture firm first repays to the authority the money allocated to the qualified venture firm by the authority.
The bill provides that of the amount of program fund money allocated to each qualified venture firm by the authority not less than 80 percent shall be used by the qualified venture firm for qualified investments of capital in one or more qualified businesses that maintain their principal business operations in an economically distressed community in this State.
The bill requires qualified venture firms to make and file an annual report with the authority regarding its qualified investments of capital in qualified businesses.
The bill requires the authority to make and file an annual report with the Governor and the Legislature regarding the implementation and administration of the program.
The bill authorizes the chief executive officer of the authority and the Director of the Division of Taxation to adopt regulations, and permits the immediate filing of those regulations with the Office of Administrative Law, effective for a period of not more than 360 days following the effective date of the bill.
The bill takes effect on the first day of the ninth month next following the date of enactment.
