MISSISSIPPI LEGISLATURE
2010 Regular Session
To: Ways and Means
By: Representative Watson
AN ACT TO CREATE THE MISSISSIPPI SMALL BUSINESS INVESTMENT COMPANY ACT; TO PROVIDE FOR AN INSURANCE PREMIUM TAX CREDIT FOR INSURANCE COMPANIES THAT INVEST DESIGNATED CAPITAL IN MISSISSIPPI SMALL BUSINESS INVESTMENT COMPANIES FOR INVESTMENT IN QUALIFIED BUSINESSES; TO DEFINE CERTAIN TERMS FOR THE PURPOSES OF THIS ACT; TO PROVIDE THAT THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO EIGHTY PERCENT OF THE AMOUNT OF DESIGNATED CAPITAL BY A PARTICIPATING INVESTOR IN A MISSISSIPPI SMALL BUSINESS INVESTMENT COMPANY; TO PROVIDE THAT THE TAX CREDITS AUTHORIZED UNDER THIS ACT SHALL BE ALLOCATED BY THE MISSISSIPPI DEVELOPMENT AUTHORITY AND THAT THE AGGREGATE AMOUNT OF THE TAX CREDITS THAT MAY BE ALLOCATED TO ALL PARTICIPATING INVESTORS UNDER THIS ACT CANNOT EXCEED $100,000,000.00; TO PROVIDE FOR THE RECAPTURE OF ALL OR A PORTION OF THE CREDIT UNDER CERTAIN CIRCUMSTANCES; TO AMEND SECTION 27-15-129, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE INVESTMENTS THAT MAY REDUCE A TAXPAYER'S INSURANCE PREMIUM TAX LIABILITY UNDER SUCH SECTION SHALL NOT INCLUDE ANY INVESTMENT FOR WHICH A CREDIT IS ALLOCATED UNDER THIS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Sections 1 through 6 of this act shall be known and may be cited as the Mississippi Small Business Investment Company Act.
SECTION 2. As used in Sections 2 through 6 of this act, the following terms and phrases shall have the meanings ascribed in this section unless the context clearly indicates otherwise:
(a) "Affiliate" means:
(i) Any person who, directly or indirectly, beneficially owns, controls, or holds power to vote fifteen percent (15%) or more of the outstanding voting securities or other voting ownership interest of a Mississippi small business investment company or insurance company; and
(ii) Any person, fifteen percent (15%) or more of whose outstanding voting securities or other voting ownership interests are directly or indirectly beneficially owned, controlled, or held, with power to vote by a Mississippi small business investment company or insurance company. Notwithstanding this paragraph (a), an investment by a participating investor in a Mississippi small business investment company pursuant to an allocation of tax credits under Sections 1 through 6 of this act does not cause that Mississippi small business investment company to become an affiliate of that participating investor.
(b) "Allocation date" means the date on which credits are allocated to the participating investors of a Mississippi small business investment company under Sections 1 through 6 of this act.
(c) "Commission" means the State Tax Commission.
(d) "MDA" means the Mississippi Development Authority.
(e) "Department" means the Mississippi Department of Banking and Consumer Finance.
(f) "Designated capital" means an amount of money that:
(i) Is invested by a participating investor in a Mississippi small business investment company; and
(ii) Fully funds the purchase price of a participating investor's equity interest in a Mississippi small business investment company or a qualified debt instrument issued by a Mississippi small business investment company, or both.
(g) "Mississippi small business investment company" means a partnership, corporation, trust, or limited liability company, organized on a for-profit basis, that:
(i) Has its principal office located in Mississippi or is headquartered in Mississippi;
(ii) Has as its primary business activity the investment of cash in qualified businesses; and
(iii) Is certified by the MDA as meeting the criteria described in this section to qualify as either a primary or secondary Mississippi small business investment company.
(h) "Participating investor" means any insurer that contributes designated capital pursuant to Sections 1 through 6 of this act.
(i) "Person" means any natural person or entity, including, but not limited to, a corporation, general or limited partnership, trust, or limited liability company.
(j) "Qualified business" means a business that is independently owned and operated and meets all of the following requirements:
(i) It is headquartered in Mississippi, its principal business operations are located in Mississippi and at least eighty percent (80%) of its employees are located in Mississippi;
(ii) It has not more than one hundred (100) employees at the time of the first qualified investment in the business;
(iii) It is not predominately engaged in:
1. Professional services provided by accountants, doctors, or lawyers;
2. Banking or lending;
3. Real estate development;
4. Insurance; or
5. Making loans to or investments in a Mississippi small business investment company or an affiliate; and
(iv) It is not a franchise of and has no financial relationship with a Mississippi small business investment company or any affiliate of a Mississippi small business investment company prior to a Mississippi small business investment company's first qualified investment in the business.
A business classified as a qualified business at the time of the first qualified investment in the business will remain classified as a qualified business and may receive continuing qualified investments from any Mississippi small business investment company. Continuing investments will constitute qualified investments even though the business may not meet the definition of a qualified business at the time of such continuing investments.
(k) "Qualified debt instrument" means a debt instrument issued by a Mississippi small business investment company that meets all of the following criteria:
(i) It is issued at par value or a premium;
(ii) It has an original maturity date of at least four (4) years from the date of issuance and a repayment schedule that is not faster than a level principal amortization over four (4) years; and
(iii) Has no interest or payment features that allow for the prepayment of interest or are tied to the profitability of the Mississippi small business investment company or the success of its investments.
(l) "Qualified distribution" means any distribution or payment by a Mississippi small business investment company in connection with the following:
(i) Costs and expenses of forming, syndicating and organizing the Mississippi small business investment company, including fees paid for professional services and the costs of financing and insuring the obligations of a Mississippi small business investment company, provided no such payment is made to a participating investor or an affiliate of a participating investor;
(ii) An annual management fee not to exceed two percent (2%) of designated capital on an annual basis to offset the costs and expenses of managing and operating a Mississippi small business investment company;
(iii) Reasonable and necessary fees in accordance with industry custom for ongoing professional services, including, but not limited to, legal and accounting services related to the operation of a Mississippi small business investment company, not including lobbying or governmental relations; and
(iv) Payments of principal and interest to holders of qualified debt instruments issued by a Mississippi small business investment company may be made without restriction.
(m) "Qualified investment" means the investment of money by a Mississippi small business investment company in a qualified business for the purchase of any debt, debt participation, equity, or hybrid security of any nature and description, including a debt instrument or security that has the characteristics of debt but which provides for conversion into equity or equity participation instruments such as options or warrants. Any repayment of a qualified investment prior to one (1) year from the date of issuance shall result in the amount of the qualified investment being reduced by fifty percent (50%) for purposes of the cumulative investment requirement set forth in Section 5(c) of this act.
(n) "State premium tax liability" means any liability incurred by an insurance company under the provisions of Section 27-15-103, 27-15-109 or 27-15-123 or in the case of a repeal or a reduction by the state of the liability imposed by Section 27-15-103, 27-15-109 or 27-15-123, any other tax liability imposed upon an insurance company by the state.
SECTION 3. (1) (a) The MDA must provide a standardized format for applying for the Mississippi small business investment credit authorized under Sections 1 through 6 of this act, and for certification as a Mississippi small business investment company.
(b) An applicant for certification as a primary Mississippi small business investment company must:
(i) File an application with the MDA;
(ii) Pay a nonrefundable application fee of Seven Thousand Five Hundred Dollars ($7,500.00) at the time of filing the application;
(iii) Submit as part of its application an audited balance sheet that contains an unqualified opinion of an independent certified public accountant issued not more than thirty-five (35) days before the application date that states that the applicant has an equity capitalization of Five Hundred Thousand Dollars ($500,000.00) or more in the form of unencumbered cash, marketable securities or other liquid assets; and
(iv) Have at least two (2) principals or persons, at least one (1) of which is primarily located in Mississippi, employed or engaged to manage the funds who each have a minimum of five (5) years of money management experience in the venture capital or private equity or banking industry.
(c) An applicant for certification as a secondary Mississippi small business investment company must:
(i) File an application with the MDA;
(ii) Pay a nonrefundable application fee of Three Thousand Seven Hundred Fifty Dollars ($3,750.00) at the time of filing the application;
(iii) Submit as part of its application an audited balance sheet that contains an unqualified opinion of an independent certified public accountant issued not more than thirty-five (35) days before the application date that states that the applicant has an equity capitalization of One Hundred Fifty Thousand Dollars ($150,000.00) or more in the form of unencumbered cash, marketable securities or other liquid assets;
(iv) Demonstrate that fifty percent (50%) of all secondary investment company investments have been in Mississippi, and all of the applicant's employees have lived in Mississippi for at least two (2) years prior to the application being filed, and that those who are employed or engaged to manage the funds have a minimum of three (3) years of money management experience in the venture capital or private equity or banking industry; and
(v) Submit as part of its application a signed and notarized partnership agreement letter with a certified primary Mississippi small business investment company.
(d) The MDA may certify partnerships, corporations, trusts, or limited liability companies, organized on a for-profit basis, which submit an application to be designated as a Mississippi small business investment company if the applicant is located, headquartered, and licensed or registered to conduct business in Mississippi, has as its primary business activity the investment of cash in qualified businesses, and meets the other criteria set forth in Sections 1 through 6 of this act.
(e) The MDA must:
(i) Review the organizational documents of each applicant for certification and the business history of each applicant;
(ii) Determine whether the applicant has satisfied the requirements of Sections 1 through 6 of this act; and
(iii) Determine whether the officers and the board of directors, general partners, trustees, managers or members are trustworthy and are thoroughly acquainted with the requirements of Sections 1 through 6 of this act.
(f) Within forty-five (45) days after the receipt of an application, the MDA must issue the certification or refuse the certification and communicate in detail to the applicant the grounds for refusal, including suggestions for the removal of the grounds.
(g) The MDA must begin accepting applications to become a Mississippi small business investment company not later than August 1, 2010.
(h) Certification by the MDA and operation of a primary Mississippi small business investment company is not subject to completion of any relationship or agreement with a secondary Mississippi small business investment company, and it is not the intent of Sections 1 through 6 of this act to compel any such agreement.
(2) (a) An insurance company or affiliate of an insurance company must not, directly or indirectly:
(i) Beneficially own, whether through rights, options, convertible interest, or otherwise, fifteen percent (15%) or more of the voting securities or other voting ownership interest of a Mississippi small business investment company;
(ii) Manage a Mississippi small business investment company; or
(iii) Control the direction of investments for a Mississippi small business investment company.
(b) A Mississippi small business investment company may obtain one (1) or more guaranties, indemnities, bonds, insurance policies, or other payment undertakings for the benefit of its participating investors from any entity, except that in no case can more than one (1) participating investor of a Mississippi small business investment company on an aggregate basis with all affiliates of the participating investor, be entitled to provide guaranties, indemnities, bonds, insurance policies, or other payment undertakings in favor of the participating investors of a Mississippi small business investment company and its affiliates in this state.
(c) This subsection (2) does not preclude a participating investor, insurance company or other party from exercising its legal rights and remedies, including, without limitation, interim management of a Mississippi small business investment company, in the event that a Mississippi small business investment company is in default of its statutory obligations or its contractual obligations to a participating investor, insurance company, or other party, or from monitoring a Mississippi small business investment company to ensure its compliance with Sections 1 through 6 of this act or disallowing any investments that have not been approved by the MDA.
(d) The MDA may contract with an independent third party to review, investigate, and certify that the applications comply with the provisions of Sections 1 through 6 of this act.
(3) (a) A participating investor is allowed a credit against the participating investor's state premium tax liability in an amount equal to seventy-five percent (75%) of the participating investor's investment of designated capital in a Mississippi small business investment company. From and after January 1, 2013, a participating investor may claim the credit as follows:
(i) For the 2013 taxable year, an amount equal to fifteen percent (15%) of the participating investor's investment of designated capital;
(ii) For the 2014 taxable year, an amount equal to fifteen percent (15%) of the participating investor's investment of designated capital;
(iii) For the 2015 taxable year, an amount equal to fifteen percent (15%) of the participating investor's investment of designated capital;
(iv) For the 2016 taxable year, an amount equal to fifteen percent (15%) of the participating investor's investment of designated capital; and
(v) For the 2017 taxable year, an amount equal to fifteen percent (15%) of the participating investor's investment of designated capital.
(b) The credit for any taxable year cannot exceed the state premium tax liability of the participating investor for the taxable year. If the amount of the credit exceeds the state premium tax liability of the participating investor for the taxable year, the excess is an investment tax credit carryover to future taxable years without limitation. Credits may be used in connection with both final payments and prepayments of a participating investor's state premium tax liability.
(c) A participating investor claiming a credit under Sections 1 through 6 of this act is not required to pay any additional retaliatory tax under Section 27-15-123 levied as a result of claiming the credit.
(d) A participating investor is not required to reduce the amount of tax pursuant to the state premium tax liability included by the participating investor in connection with ratemaking for any insurance contract written in this state because of a reduction in the participating investor's tax liability based on the tax credit allowed under Sections 1 through 6 of this act.
(e) If the taxes paid by a participating investor with respect to its state premium tax liability constitute a credit against any other tax that is imposed by this state, the participating investor's credit against the other tax shall not be reduced by virtue of the reduction in the participating investor's tax liability based on the tax credit allowed under Sections 1 through 6 of this act.
(f) Final decertification of a Mississippi small business investment company under Sections 1 through 6 of this act may result in the disallowance and the recapture of the credit allowed under Sections 1 through 6 of this act. The amount to be disallowed and recaptured must be assessed as follows:
(i) Decertification of a Mississippi small business investment company within two (2) years of its allocation date and prior to meeting the requirements of Section 4(1)(a)(i) of this act shall result in the disallowance of all of the credits allowed under Sections 1 through 6 of this act.
(ii) Decertification of a Mississippi small business investment company that has already met the requirements of Section 4(1)(a)(i) of this act shall not cause the disallowance of any credits allowed under this act nor the recapture of any portion of the credits that was previously taken.
(g) A participating investor must not transfer, agree to transfer, sell, or agree to sell the credit under Sections 1 through 6 of this act until one hundred eighty (180) days after the date on which the participating investor invested designated capital. After one hundred eighty (180) days from the date of investment, a participating investor may transfer credits based upon rules adopted by the MDA to facilitate such transfers. A credit may not be transferred more than one (1) time under this paragraph (g). Any transfer or sale of the credits does not affect the time schedule for claiming the credit. Any tax credits recaptured under this subsection (3) remain the liability of the participating investor that actually applied the credit towards its tax liability.
(4) (a) (i) The aggregate amount of investment tax credits that may be allocated to all participating investors of Mississippi small business investment companies under this section shall not exceed One Hundred Million Dollars ($100,000,000.00). No Mississippi small business investment company, on an aggregate basis with its affiliates, may file credit allocation claims that exceed One Hundred Million Dollars ($100,000.000.00).
(ii) The One Hundred Million Dollar ($100,000,000.00) aggregate amount of investment tax credits shall be divided into a primary tax credit pool which may be applied for by certified primary Mississippi small business investment companies and a secondary tax credit pool which may be applied for by certified secondary Mississippi small business investment companies. The secondary tax credit pool shall be Sixteen Million Dollars ($16,000,000.00) of the total One Hundred Million Dollars ($100,000,000.00) aggregate amount of investment tax credits. Secondary Mississippi small business investment companies may not apply for more than Eight Million Dollars ($8,000,000.00) worth of credits on a single application. A certified secondary Mississippi small business investment company may apply for additional tax credit allocation from the secondary tax credit pool, if the credits are available, after fifty percent (50%) of its previously allocated credits are used in qualified investments.
(iii) If there are any tax credits remaining available for allocation in the secondary tax credit pool on August 1, 2013, those available tax credits shall revert to the primary tax credit pool and be made available to primary Mississippi small business investment companies according to rules and regulations promulgated by the MDA. Prior to August 1, 2013, primary Mississippi small business investment companies, including any wholly owned subsidiary company, shall be prohibited from making application to the MDA to be additionally certified as a secondary Mississippi small business investment company and prohibited from applying for any tax credit allocation from the secondary tax credit pool. A certified primary Mississippi small business investment company may have ownership equity in a certified secondary Mississippi small business investment company, but the equity interest owned by the certified primary Mississippi small business investment company shall not exceed forty percent (40%).
(iv) The maximum aggregate amount of investment tax credits that may be allocated shall be reduced, if necessary, by an amount that will provide sufficient insurance premium tax revenues for the purposes described in Sections 83-1-37, 83-1-39 and 83-34-39.
(b) Credits must be allocated to participating investors in the order that the credit allocation claims are filed with the MDA, provided that all credit allocation claims filed with the MDA on the same day must be treated as having been filed contemporaneously. Any credit allocation claims filed with the MDA before the initial credit allocation claim filing date will be deemed to have been filed on the initial credit allocation claim filing date. The MDA will set the initial credit allocation claim filing date to be not less than one hundred twenty (120) days and not more than one hundred fifty (150) days after the date the MDA begins accepting applications for certification.
(c) If two (2) or more Mississippi small business investment companies file credit allocation claims with the MDA on behalf of their respective participating investors on the same day and the aggregate amount of credit allocation claims exceeds the aggregate limit of credits authorized under this subsection (4) or the lesser amount of credits that remain unallocated on that day, then the credits shall be allocated among the participating investors who filed on that day on a pro rata basis with respect to the amounts claimed. The pro rata allocation for any one (1) participating investor is the product obtained by multiplying a fraction, the numerator of which is the amount of the credit allocation claim filed on behalf of a participating investor and the denominator of which is the total of all credit allocation claims filed on behalf of all participating investors on that day, by the aggregate limit of credits authorized under this subsection (4) or the lesser amount of credits that remain unallocated on that day.
(d) Within ten (10) business days after the MDA receives a credit allocation claim filed by a Mississippi small business investment company on behalf of one or more of its participating investors, the MDA must notify the Mississippi small business investment company of the amount of credits allocated to each of the participating investors of that Mississippi small business investment company. In the event a Mississippi small business investment company does not receive an investment of designated capital from each participating investor required to earn the amount of credits allocated to the participating investor within ten (10) business days of the Mississippi small business investment company's receipt of notice of allocation, then it shall notify the MDA on or before the next business day, and the credits allocated to the participating investor of the Mississippi small business investment company will be forfeited. The MDA must then reallocate those forfeited credits among the participating investors of the other Mississippi small business investment companies on a pro rata basis with respect to the credit allocation claims filed on behalf of the participating investors. The MDA may levy a fine of not more than Fifty Thousand Dollars ($50,000.00) on any participating investor that does not invest the full amount of designated capital required to fund the credits allocated to it by the MDA in accordance with the credit allocation claim filed on its behalf.
(e) No participating investor, on an aggregate basis with its affiliates, may file an allocation claim for more than twenty-five percent (25%) of the maximum amount of investment tax credits authorized under this subsection (4), regardless of whether the claim is made in connection with one or more Mississippi small business investment companies.
SECTION 4. (1) (a) To maintain its certification, a Mississippi small business investment company must make qualified investments as follows:
(i) Within two (2) years after the allocation date, a Mississippi small business investment company must invest an amount equal to at least thirty-five percent (35%) of its designated capital in qualified investments; and
(ii) Within four (4) years after the allocation date, a Mississippi small business investment company must invest an amount equal to at least fifty percent (50%) of its designated capital in qualified investments.
(b) Before making a proposed qualified investment in a specific business, a Mississippi small business investment company must request from the MDA a written determination that the proposed investment will qualify as a qualified investment in a qualified business. The MDA must notify a Mississippi small business investment company within ten (10) business days from the receipt of a request of its determination and an explanation thereof. If the MDA fails to notify the Mississippi small business investment company of its determination within the ten-day period, the proposed investment must be deemed to be a qualified investment in a qualified business. If the MDA determines that the proposed investment does not meet the definition of a qualified investment or qualified business, or both, the MDA may nevertheless consider the proposed investment a qualified investment or a qualified business if the MDA determines that the proposed investment will further economic development.
(c) All designated capital not invested in qualified investments by a Mississippi small business investment company shall be held or invested in the manner the Mississippi small business investment company deems appropriate. Designated capital and proceeds of designated capital returned to a Mississippi small business investment company after being originally invested in qualified investments may be invested again in qualified investments and the investment shall count toward the requirements of paragraph (a) of this subsection (1) with respect to making investments of designated capital in qualified investments.
(d) (i) If, within five (5) years after its allocation date, a Mississippi small business investment company has not invested at least eighty percent (80%) of its designated capital in qualified investments, the Mississippi small business investment company shall not be permitted to pay management fees.
(ii) If within seven (7) years after its allocation date, a Mississippi small business investment company has not invested at least one hundred percent (100%) of its designated capital in qualified investments, the Mississippi small business investment company shall not be permitted to pay management fees.
(e) A Mississippi small business investment company may not invest more than fifteen percent (15%) of its designated capital in any one (1) qualified business without the specific approval of the MDA.
(f) For the purposes of calculating the investment percentage thresholds of paragraph (a) of this subsection (1), the cumulative amount of all qualified investments made by a Mississippi small business investment company from the allocation date must be considered.
(2) (a) Each Mississippi small business investment company must report the following to the MDA and the commission:
(i) As soon as practicable after the receipt of designated capital:
1. The name of each participating investor from which the designated capital was received, including the participating investor's insurance tax identification number;
2. The amount of each participating investor's investment of designated capital; and
3. The date on which the designated capital was received;
(ii) On an annual basis, on or before January 31 of each year:
1. The amount of the Mississippi small business investment company's designated capital that remains to be invested in qualified investments at the end of the immediately preceding taxable year;
2. Whether or not the Mississippi small business investment company has invested more than fifteen percent (15%) of its total designated capital in any one (1) qualified business;
3. All qualified investments that the Mississippi small business investment company has made in the previous taxable year, including the number of employees of each qualified business in which it has made investments at the time of the investment and as of December 1 of the preceding taxable year; and
4. For any qualified business where the Mississippi small business investment company no longer has an investment, the Mississippi small business investment company must provide employment figures for that business as of the last day before the investment was terminated;
(iii) Other information that the MDA and/or the commission may reasonably request that will help the MDA ascertain the impact of the Mississippi small business investment company program both directly and indirectly on the economy of the State of Mississippi including, but not limited to, the number of jobs created by qualified businesses that have received qualified investments;
(iv) Within ninety (90) days after the close of its fiscal year, annual audited financial statements of the Mississippi small business investment company, which must include the opinion of an independent certified public accountant; and
(v) An "agreed upon procedures report" or equivalent regarding the operations of the Mississippi small business investment company.
(b) A Mississippi small business investment company must pay to the MDA an annual, nonrefundable certification fee of Two Thousand Five Hundred Dollars ($2,500.00) on or before April 1, or Five Thousand Dollars ($5,000.00) if later. However, no annual certification fee is required if the payment date for the fee is within six (6) months of the date a Mississippi small business investment company is first certified by the MDA.
(c) Upon satisfying the requirements of subsection (1)(a)(ii) of this section, a Mississippi small business investment company shall provide notice of the satisfaction to the MDA, and the MDA shall, within sixty (60) days of receipt of the notice, either confirm that the Mississippi small business investment company has satisfied the requirements of subsection (1)(a)(ii) of this section as of that date or provide notice of noncompliance and an explanation of any existing deficiencies. If the MDA does not provide the notice within sixty (60) days, the Mississippi small business investment company shall be deemed to have satisfied the requirements of subsection (1)(a)(ii) of this section.
(3) A Mississippi small business investment company may make qualified distributions at any time. In order for a Mississippi small business investment company to make a distribution other than a qualified distribution to its equity holders, the cumulative amount of all qualified investments of the Mississippi small business investment company must equal or exceed one hundred percent (100%) of its designated capital.
SECTION 5. (1) (a) The MDA, or at its discretion the department, shall conduct an annual review of each Mississippi small business investment company to determine if a Mississippi small business investment company is abiding by the requirements of certification and to ensure that no investment has been made in violation of Sections 1 through 6 of this act. The cost of the annual review must be paid by each Mississippi small business investment company according to a reasonable fee schedule adopted by the MDA and/or the department. In the event the department conducts the annual review, the department shall provide copies of the review to the MDA. The MDA shall provide copies of each Mississippi small business investment company's annual review to the Mississippi small business investment company reviewed.
(b) Any material violation of Sections 1 through 6 of this act, including any material misrepresentation made to the MDA in connection with the application process, may be grounds for decertification of a Mississippi small business investment company and the disallowance of credits under Sections 1 through 6 of this act, provided that in all instances the MDA shall provide notice to the Mississippi small business investment company of the grounds of the proposed decertification and the opportunity to remedy the violation before the decertification becomes effective.
(c) After a Mississippi small business investment company has invested an amount cumulatively equal to one hundred percent (100%) of its designated capital in qualified investments, provided that the Mississippi small business investment company has met all other requirements under Sections 1 through 6 of this act as of that date, the Mississippi small business investment company shall no longer be subject to regulation by the MDA or the department or the reporting requirements under Section 4(2) of this act. Upon receiving certification by a Mississippi small business investment company that it has invested an amount equal to one hundred percent (100%) of its designated capital, the MDA must notify a Mississippi small business investment company within sixty (60) days that it has or has not met the requirements, with a reason for the determination if it has not met the requirements. If the MDA does not provide such notification within sixty (60) days, the Mississippi small business investment company shall be deemed to have met the requirements and shall be deemed to no longer be subject to regulation by the MDA.
(d) The MDA must send written notice of any decertification proceedings to the commission, the department, and to the address of each participating investor whose tax credit may be subject to recapture or forfeiture, using the address shown on the last filing submitted to the MDA.
(2) All investments by participating investors for which tax credits are awarded under Sections 1 through 6 of this act must be registered or specifically exempt from registration.
(3) The MDA must make an annual report to the Governor, the Chairman of the House Ways and Means Committee and Chairman of the Senate Finance Committee. The report must include:
(a) The number of Mississippi small business investment companies holding designated capital;
(b) The amount of designated capital invested in each Mississippi small business investment company:
(c) The cumulative amount that each Mississippi small business investment company has invested as of January 1, 2011, and the cumulative total each year thereafter;
(d) The cumulative amount of follow-on capital that the investments of each Mississippi small business investment company have created in terms of capital invested in qualified businesses at the same time or subsequent to investments made by a Mississippi small business investment company in the businesses by sources other than a Mississippi small business investment company;
(e) The total amount of investment tax credits applied for and allocated under Sections 1 through 6 of this act for each year;
(f) The performance of each Mississippi small business investment company with regard to the requirements for continued certification;
(g) The classification of the companies in which each Mississippi small business investment company has invested according to industrial sector and size of company;
(h) The gross number of jobs created by investments made by each Mississippi small business investment company and the number of jobs retained;
(i) The location of the companies in which each Mississippi small business investment company has invested;
(j) Those Mississippi small business investment companies that have been decertified, including the reasons for decertification; and
(k) Other related information necessary to evaluate the effect of this act on economic development.
SECTION 6. The MDA and the department each may promulgate rules and regulations, in accordance with the Mississippi Administrative Procedures Law, for the implementation and administration of Sections 1 through 6 of this act.
SECTION 7. Section 27-15-129, Mississippi Code of 1972, is amended as follows:
27-15-129. (1) The amount of premium tax payable pursuant to Sections 27-15-103, 27-15-109, 27-15-119 and 83-31-45, Mississippi Code of 1972, shall be reduced from the amount otherwise fixed in such sections if the payer files a sworn statement with the required annual report showing as of the beginning of the reporting period that at least the following amounts of the total admitted assets of the payer were invested and maintained in qualifying Mississippi investments as hereinafter defined in subsection (2) of this section over the period covered by such report:
Percentage of Total Admitted Percentage of Premium
Assets in Qualifying Tax Payable
Mississippi Investments
1% 99%
2% 98%
3% 97%
4% 96%
5% 95%
6% 94%
7% 93%
8% 92%
9% 91%
10% 80%
15% 70%
20% 60%
25% 50%
(2) For the purpose of this section, "a qualifying Mississippi investment" is hereby defined as follows:
(a) Certificates of deposit issued by any bank or savings and loan association domiciled in this state;
(b) Bonds of this state or bonds of municipal, school, road or levee districts, or other political subdivisions of this state;
(c) Loans evidenced by notes and secured by deeds of trust on property located in this state;
(d) Real property located in this state;
(e) Policy loans to residents of Mississippi, or other loans to residents of this state, or to corporations domiciled in this state;
(f) Common or preferred stock, bonds and other evidences of indebtedness of corporations domiciled in this state; and
(g) Cash on deposit in any bank or savings and loan association domiciled in this state.
"A qualifying Mississippi investment" shall not include any investment for which a credit is allocated under Section 57-105-1 and/or Sections 1 through 6 of this act.
(3) If the credits, or any part thereof, authorized by the preceding provisions of this section shall be held by a court of final jurisdiction to be unconstitutional and void for any reason or to make the annual premium taxes levied by Sections 27-15-103, 27-15-109, 27-15-119 and 83-31-45, Mississippi Code of 1972, unlawfully discriminatory or otherwise invalid under the Fourteenth Amendment or the Commerce Clause of the Constitution of the United States or under any state or other federal constitutional provisions, it is hereby expressly declared that such fact shall in no way affect the validity of the annual premium taxes levied thereby, and that such provisions would have been enacted even though the Legislature had known this credit section would be held invalid.
(4) This section shall apply to taxes accruing and investments existing from and after July 1, 1985.
SECTION 8. This act shall take effect and be in force from and after July 1, 2010, and shall stand repealed from and after June 30, 2010.