S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         4434
                              2015-2016 Regular Sessions
                                 I N  A S S E M B L Y
                                   January 30, 2015
                                      ___________
       Introduced  by  M.  of  A.  SILVER,  SCHIMMINGER,  LUPARDO, SCARBOROUGH,
         MAGNARELLI, GALEF, ZEBROWSKI, JAFFEE, SCHIMEL -- Multi-Sponsored by --
         M. of A. BRENNAN, COLTON, CYMBROWITZ, MARKEY -- read once and referred
         to the Committee on Ways and Means
       AN ACT to amend the tax law, in relation to program six certified  capi-
         tal companies; and to repeal section 84 of part A of chapter 62 of the
         laws of 2011 relating to constituting chapter 18-A of the consolidated
         laws  relating  to  financial  services, relating to certain reporting
         requirements
         THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section  1. The opening paragraph of paragraph 7 of subdivision (a) of
    2  section 11 of the tax law, as amended by section 19 of part A of chapter
    3  63 of the laws of 2005, is amended to read as follows:
    4    "Qualified business" - A QUALIFIED SEED FUND OR an independently owned
    5  and operated business that meets all of the following conditions  as  of
    6  the time of the first investment in the business:
    7    S  2. Paragraph 10 of subdivision (a) of section 11 of the tax law, as
    8  amended by section 19 of part A of chapter 63 of the laws  of  2005,  is
    9  amended to read as follows:
   10    (10)  "Qualified  investment"  - the investment of cash by a certified
   11  capital company in a qualified business for the purchase  of  any  debt,
   12  equity  or  hybrid  security,  of  any  nature and description whatever,
   13  including a debt instrument or security which has the characteristics of
   14  debt but which provides for conversion into  equity  or  equity  partic-
   15  ipation  instruments  such  as options or warrants, provided however, in
   16  the case of certified capital programs three, four  [and],  five[,]  AND
   17  SIX  that  any  such debt instrument have a maturity of at least twenty-
   18  four months from the date such debt is incurred;  and  further  provided
   19  that a certified capital company, after the investment and assuming full
   20  conversion  and  exercise of any equity participation instruments, shall
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD06781-01-5
       A. 4434                             2
    1  not own more than fifty percent of the voting equity  of  the  qualified
    2  business,  except in the case of a follow-on investment where a specific
    3  exemption is granted by the department under subparagraph (D)  of  para-
    4  graph one of subdivision (c) of this section OR AN INVESTMENT IN A QUAL-
    5  IFIED  SEED  FUND  BY A PROGRAM SIX CERTIFIED CAPITAL COMPANY.  Further-
    6  more, except in the case of  a  follow-on  investment,  if  a  certified
    7  capital company owns more than fifteen percent of the equity in a compa-
    8  ny  or  has  a  seat  on  the board of directors of such company, then a
    9  certified capital company cannot  invest  in  such  company  unless  the
   10  following conditions are met: (i) at least one other investor who is not
   11  an  affiliate  of the certified capital company participates in the same
   12  round of investment on the same terms and conditions  as  the  certified
   13  capital  company;  and (ii) the certified capital company and its affil-
   14  iates invest no more than fifty percent of the total investment made  in
   15  that round of investment.
   16    S 3. Subdivision (a) of section 11 of the tax law is amended by adding
   17  two new paragraphs 17 and 18 to read as follows:
   18    17. "QUALIFIED SEED FUND" - IS ANY FUND THAT HAS BEEN CERTIFIED BY THE
   19  SUPERINTENDENT  AS  SUCH  BY  RULE OR REGULATION. THE SUPERINTENDENT MAY
   20  CERTIFY PARTNERSHIPS, CORPORATIONS, TRUSTS, OR LIMITED LIABILITY  COMPA-
   21  NIES  ORGANIZED  ON  A  FOR-PROFIT BASIS, OR NOT-FOR-PROFIT FUNDS, WHICH
   22  SUBMIT AN APPLICATION TO BE DESIGNATED AS A QUALIFIED SEED FUND OPERATOR
   23  IF SUCH APPLICANT IS LOCATED, HEADQUARTERED AND LICENSED  OR  REGISTERED
   24  TO  CONDUCT  BUSINESS  IN  NEW YORK. QUALIFIED SEED FUNDS SHALL BE UNDER
   25  EXPERIENCED PROFESSIONAL MANAGEMENT FAMILIAR WITH SEED  CAPITAL  INVEST-
   26  MENT,  APPROPRIATE  BUSINESS  PRACTICES AND TECHNOLOGY-ORIENTED PRODUCTS
   27  AND SERVICES, AND FORMED FOR THE PURPOSE OF PROVIDING PRIVATE EQUITY  TO
   28  TECHNOLOGY-BASED COMPANIES IN THEIR FORMATIVE STAGES AND INVEST IN QUAL-
   29  IFIED  ENTERPRISES  LOCATED  WITHIN NEW YORK STATE. QUALIFIED SEED FUNDS
   30  MUST DEMONSTRATE (A) CAPACITY TO PERFORM DUE DILIGENCE IN MAKING INVEST-
   31  MENT DECISIONS AND TO PROVIDE MANAGEMENT EXPERTISE AND OTHER VALUE-ADDED
   32  SERVICES;  (B)  FINANCIAL  RESOURCES  FOR  IDENTIFYING   AND   INVESTING
   33  SEED-STAGE  COMPANIES;  AND  (C) ABILITY TO EVALUATE EMERGING TECHNOLOGY
   34  COMMERCIALIZATION.
   35    18. "MATCH" - A CASH INVESTMENT IN OR LOAN  TO  A  QUALIFIED  BUSINESS
   36  MADE  NO MORE THAN THREE MONTHS BEFORE OR SIX MONTHS AFTER AN INVESTMENT
   37  OF CERTIFIED CAPITAL BY A CERTIFIED CAPITAL COMPANY PROGRAM SIX IN  SUCH
   38  QUALIFIED  BUSINESS,  OTHER THAN AN INVESTMENT MADE WITH CERTIFIED CAPI-
   39  TAL. THE TERM SHALL ALSO INCLUDE CASH INVESTED IN OR LENT TO A QUALIFIED
   40  BUSINESS BY A CERTIFIED CAPITAL COMPANY THAT HAS  INVESTED  ONE  HUNDRED
   41  PERCENT OF ITS CERTIFIED CAPITAL IN QUALIFIED BUSINESSES.
   42    S  4.  Paragraph 9 of subdivision (b) of section 11 of the tax law, as
   43  amended by section 19 of part A of chapter 63 of the laws  of  2005,  is
   44  amended to read as follows:
   45    (9)  The superintendent shall start accepting applications to become a
   46  certified capital company in certified capital company  program  two  by
   47  November  first, nineteen hundred ninety-nine, and shall start accepting
   48  applications to become a certified capital company in certified  capital
   49  company  program  three  by  August first, two thousand, and shall begin
   50  accepting applications to become a certified capital company  in  certi-
   51  fied  capital  company  program  four  by the later of August first, two
   52  thousand four or not more than sixty days after the  effective  date  of
   53  section  one of part D of chapter fifty-nine of the laws of two thousand
   54  four and shall begin accepting applications to become a certified  capi-
   55  tal  company  in  certified capital company program five by the later of
   56  July first, two thousand five or not more  than  sixty  days  after  the
       A. 4434                             3
    1  effective  date  of  the  chapter of the laws of two thousand five which
    2  amended this paragraph, AND SHALL BEGIN ACCEPTING APPLICATIONS TO BECOME
    3  A CERTIFIED CAPITAL COMPANY IN PROGRAM SIX BY JULY FIRST,  TWO  THOUSAND
    4  FIFTEEN  OR  NOT  MORE  THAN  SIXTY DAYS AFTER THE EFFECTIVE DATE OF THE
    5  CHAPTER  OF  THE  LAWS  OF  TWO  THOUSAND  FIFTEEN  WHICH  AMENDED  THIS
    6  PARAGRAPH.
    7    S  5. Subparagraph (A) of paragraph 1 of subdivision (c) of section 11
    8  of the tax law, as amended by section 19 of part A of chapter 63 of  the
    9  laws of 2005, is amended to read as follows:
   10    (A)  Within  two years after the starting date of a specific certified
   11  capital company program of a certified capital company, at  least  twen-
   12  ty-five  percent  of  its  certified capital allocable to such certified
   13  capital company program must be placed in qualified investments  AND  IN
   14  THE  CASE  OF PROGRAM SIX, AT LEAST TEN PERCENT OF ITS CERTIFIED CAPITAL
   15  MUST HAVE BEEN PLACED IN QUALIFIED SEED FUNDS. ALL QUALIFIED INVESTMENTS
   16  MADE IN QUALIFIED SEED FUNDS UNDER PROGRAM SIX SHALL COUNT  TOWARDS  THE
   17  TWENTY-FIVE PERCENT INVESTMENT REQUIREMENT OF THIS SUBPARAGRAPH.
   18    S  6. Subparagraph (C) of paragraph 1 of subdivision (c) of section 11
   19  of the tax law, as amended by section 19 of part A of chapter 63 of  the
   20  laws of 2005, is amended to read as follows:
   21    (C)  Within four years after the starting date of a specific certified
   22  capital company program of a certified capital company, at  least  fifty
   23  percent  of  its  certified  capital allocable to such certified capital
   24  company program must be placed in qualified investments, at least  fifty
   25  percent of which must have been placed in early stage businesses, except
   26  that  in  the  case of program four and any subsequent program, at least
   27  twenty-five percent of which must have been placed in early stage  busi-
   28  nesses  and  an  additional  twenty-five percent of which must have been
   29  placed in start-up businesses, and except that in the case of  qualified
   30  investments  made in qualified businesses located in empire zones estab-
   31  lished pursuant to article eighteen-B of the general municipal law under
   32  the provisions of certified capital company program three, program  four
   33  and program five from allocations of certified capital made specifically
   34  for  such targeted investments in such zones, the requirement for quali-
   35  fied investments in early stage and start-up businesses shall not apply.
   36  AN INVESTMENT IN A QUALIFIED SEED FUND SHALL COUNT TOWARDS THE  REQUIRE-
   37  MENT  UNDER  PROGRAM  SIX FOR QUALIFIED INVESTMENTS IN EARLY STAGE BUSI-
   38  NESSES.
   39    S 7. Subparagraph (D) of paragraph 1 of subdivision (c) of section  11
   40  of  the tax law, as amended by section 19 of part A of chapter 63 of the
   41  laws of 2005, is amended to read as follows:
   42    (D) A certified capital company, at least fifteen working  days  prior
   43  to making a proposed investment in a specific business, shall certify in
   44  writing to the superintendent that (i) the business in which it proposes
   45  to  invest  meets the definition of a qualified business as set forth in
   46  subdivision (a) of this section or, in the case of a  follow-on  invest-
   47  ment, that such business continues to meet the requirements set forth in
   48  subparagraphs  (A) and (C) of paragraph seven of subdivision (a) of this
   49  section and, in either case, an explanation of  its  determination  that
   50  the  business meets such requirements, [and] (ii) with respect to certi-
   51  fied capital company program  three,  program  four  and  program  five,
   52  whether  or  not  such business is located in an empire zone established
   53  pursuant to article eighteen-B of the general municipal  law  or  in  an
   54  underserved area outside an empire zone AND (III) WITH RESPECT TO CERTI-
   55  FIED CAPITAL COMPANY PROGRAM SIX, WHETHER OR NOT SUCH INVESTMENT IS IN A
   56  QUALIFIED  SEED  FUND.    The  certification to the superintendent shall
       A. 4434                             4
    1  include a sworn statement from the business in which the certified capi-
    2  tal company proposes to  invest,  which  statement  shall  evidence  the
    3  intention  of  the business to maintain its headquarters in New York and
    4  conduct  its  primary business operations in the state of New York after
    5  its receipt of the investment by the certified capital company.  If  the
    6  superintendent determines that the business does not meet the definition
    7  of a qualified business, or, in the case of a follow-on investment, that
    8  such  business does not meet the requirements set forth in subparagraphs
    9  (A) and (C) of paragraph seven of subdivision (a) of this section,  then
   10  it  shall,  within the fifteen working day period prior to the making of
   11  the proposed investment, notify the certified  capital  company  of  its
   12  determination  and  provide  an  explanation thereof, provided, however,
   13  that the department may, upon written request  of  a  certified  capital
   14  company  and  at the discretion of the department, grant, in writing, an
   15  exemption to the percentage limitations of paragraph ten of  subdivision
   16  (a) of this section.
   17    S  8. Subparagraph (F) of paragraph 1 of subdivision (c) of section 11
   18  of the tax law, as amended by section 19 of part A of chapter 63 of  the
   19  laws of 2005, is amended to read as follows:
   20    (F)  If  within ten years after the starting date of certified capital
   21  company program four [or], program  five  OR  PROGRAM  SIX,  and  within
   22  twelve  years  after  the  starting  date  of  certified capital company
   23  programs one, two, and three, one hundred percent of the certified capi-
   24  tal allocable to a certified capital  company  participating  in  [such]
   25  program  ONE,  TWO, THREE, FOUR OR FIVE has not been placed in qualified
   26  investments AND, WITH RESPECT TO PROGRAM SIX, ONE HUNDRED PERCENT OF THE
   27  CERTIFIED CAPITAL HAS NOT BEEN PLACED IN QUALIFIED INVESTMENTS WITH  TEN
   28  PERCENT OF SUCH AMOUNT BEING PLACED IN QUALIFIED SEED FUNDS, the specif-
   29  ic  certified  capital  company  shall no longer be permitted to receive
   30  management fees; provided that such restriction shall not apply (i) with
   31  respect to certified capital company programs one, two,  and  three,  to
   32  any  certified  capital  company  that has not, prior to October thirty-
   33  first, two thousand four, received, as opposed to accrued,  any  manage-
   34  ment  fees,  or  (ii)  with  respect  to  any  certified capital company
   35  program, to a certified capital company in which at least fifty  percent
   36  of  the voting stock, capital, membership interests, or other beneficial
   37  ownership interests, as the case may be, are owned by an entity that  is
   38  managed, directly or indirectly, by a non-profit corporation.
   39    S  9.   Paragraph 1 of subdivision (c) of section 11 of the tax law is
   40  amended by adding a new subparagraph (G) to read as follows:
   41    (G) IF WITHIN ONE YEAR OF  THE  STARTING  DATE  OF  CERTIFIED  CAPITAL
   42  COMPANY  PROGRAM  SIX,  THE CERTIFIED CAPITAL COMPANY HAS NOT ACHIEVED A
   43  MATCH OF AT LEAST ONE HUNDRED PERCENT OF THE AMOUNT OF QUALIFIED INVEST-
   44  MENTS MADE BY SUCH CERTIFIED CAPITAL COMPANY WITH PROGRAM SIX  CERTIFIED
   45  CAPITAL  AS  OF  SUCH DATE, THE SPECIFIC CERTIFIED CAPITAL COMPANY SHALL
   46  NOT BE PERMITTED TO RECEIVE MANAGEMENT FEES UNTIL IT HAS  ACHIEVED  SUCH
   47  MATCH.  IF  WITHIN THREE YEARS OF THE STARTING DATE OF CERTIFIED CAPITAL
   48  COMPANY PROGRAM SIX, THE CERTIFIED CAPITAL COMPANY HAS  NOT  ACHIEVED  A
   49  MATCH OF AT LEAST ONE HUNDRED PERCENT OF THE AMOUNT OF QUALIFIED INVEST-
   50  MENTS  MADE BY SUCH CERTIFIED CAPITAL COMPANY WITH PROGRAM SIX CERTIFIED
   51  CAPITAL COMPANY AS OF SUCH DATE, THE SPECIFIC CERTIFIED CAPITAL  COMPANY
   52  SHALL  NOT BE PERMITTED TO RECEIVE MANAGEMENT FEES UNTIL IT HAS ACHIEVED
   53  SUCH MATCH. IF WITHIN FIVE YEARS OF THE STARTING DATE OF CERTIFIED CAPI-
   54  TAL COMPANY PROGRAM SIX, THE CERTIFIED CAPITAL COMPANY HAS NOT  ACHIEVED
   55  A  MATCH  OF  AT  LEAST  ONE  HUNDRED PERCENT OF THE AMOUNT OF QUALIFIED
   56  INVESTMENTS MADE BY SUCH CERTIFIED  CAPITAL  COMPANY  WITH  PROGRAM  SIX
       A. 4434                             5
    1  CERTIFIED  CAPITAL COMPANY AS OF SUCH DATE, THE SPECIFIC CERTIFIED CAPI-
    2  TAL COMPANY SHALL NOT BE PERMITTED TO RECEIVE MANAGEMENT FEES  UNTIL  IT
    3  HAS ACHIEVED SUCH MATCH.
    4    S  10.   Subparagraph (A) of paragraph 6 of subdivision (c) of section
    5  11 of the tax law, as amended by section 19 of part A of chapter  63  of
    6  the laws of 2005, is amended to read as follows:
    7    (A)  As  soon as practicable after the receipt of certified capital or
    8  an irrevocable funding commitment subject only  to  the  receipt  of  an
    9  allocation  pursuant to subdivision (h) of this section, (i) the name of
   10  each certified investor from which the certified capital  was  received,
   11  including such certified investor's insurance tax identification number;
   12  (ii)  the  amount  of  each certified investor's investment of certified
   13  capital; and (iii) the date on which the certified capital was received.
   14  Provided, however, that requests for  allocation  of  tax  credits  with
   15  respect  to  certified  capital company program two by certified capital
   16  companies on behalf of their certified investors which are  received  by
   17  the  superintendent  on  or  before  March  first, two thousand shall be
   18  treated as having been received on March first,  two  thousand  for  tax
   19  credits  to  be utilized in two thousand one, and if satisfactory, shall
   20  be given equal priority for  allocation,  and  provided,  however,  that
   21  requests for allocation of tax credits with respect to certified capital
   22  company  program three by certified capital companies on behalf of their
   23  certified investors which are  received  by  the  superintendent  on  or
   24  before  December  first,  two  thousand  shall be treated as having been
   25  received on December first, two thousand for tax credits to be  utilized
   26  in  two thousand two, and if satisfactory, shall be given equal priority
   27  for allocation, and provided, however, that requests for  allocation  of
   28  tax  credits  with  respect to certified capital company program four by
   29  certified capital companies on behalf of their certified investors which
   30  are received by the superintendent on  or  before  December  first,  two
   31  thousand  four  shall  be  treated  as  having been received on December
   32  first, two thousand four for tax credits to be utilized in two  thousand
   33  six,  and if satisfactory, shall be given equal priority for allocation,
   34  and provided, however, that requests for allocation of tax credits  with
   35  respect  to  certified capital company program five by certified capital
   36  companies on behalf of their certified investors which are  received  by
   37  the  superintendent  on  or  before the later of (i) November first, two
   38  thousand five and (ii) the one hundred twentieth day after the  date  on
   39  which  the superintendent began accepting applications for certification
   40  in connection with certified capital company program  five  pursuant  to
   41  paragraph  nine  of  subdivision (b) of this section shall be treated as
   42  having been received on such later date for tax credits to  be  utilized
   43  in two thousand seven, and if satisfactory, shall be given equal priori-
   44  ty  for  allocation, AND PROVIDED, HOWEVER, THAT REQUESTS FOR ALLOCATION
   45  OF TAX CREDITS WITH RESPECT TO CERTIFIED CAPITAL COMPANY PROGRAM SIX  BY
   46  CERTIFIED CAPITAL COMPANIES ON BEHALF OF THEIR CERTIFIED INVESTORS WHICH
   47  ARE  RECEIVED BY THE SUPERINTENDENT ON OR BEFORE THE LATER OF (I) NOVEM-
   48  BER FIRST, TWO THOUSAND FIFTEEN AND (II) THE ONE HUNDRED  TWENTIETH  DAY
   49  AFTER  THE DATE ON WHICH THE SUPERINTENDENT BEGAN ACCEPTING APPLICATIONS
   50  FOR CERTIFICATION IN  CONNECTION  WITH  CERTIFIED  CAPITAL  PROGRAM  SIX
   51  PURSUANT  TO  PARAGRAPH NINE OF SUBDIVISION (B) OF THIS SECTION SHALL BE
   52  TREATED AS HAVING BEEN RECEIVED ON SUCH LATER DATE FOR TAX CREDITS TO BE
   53  UTILIZED IN TWO THOUSAND NINETEEN, AND IF SATISFACTORY, SHALL  BE  GIVEN
   54  EQUAL PRIORITY FOR ALLOCATION.
       A. 4434                             6
    1    S 11. Subparagraph (B) of paragraph 6 of subdivision (c) of section 11
    2  of  the tax law, as amended by section 19 of part A of chapter 63 of the
    3  laws of 2005, is amended to read as follows:
    4    (B)  On  an  annual  basis,  on or before January thirty-first of each
    5  year, (i) the amount of the certified capital company's certified  capi-
    6  tal  at  the  end of the immediately preceding year; (ii) whether or not
    7  the certified capital company has invested more than fifteen percent  of
    8  its  total  certified  capital  in any one business; (iii) all qualified
    9  investments that the certified capital company made during the  previous
   10  calendar year, including the number of employees of each qualified busi-
   11  ness in which it has made investments at the time of such investment and
   12  as  of  December first of the preceding calendar year. For any qualified
   13  business where the certified capital company no longer  has  an  invest-
   14  ment, the certified capital company shall provide employment figures for
   15  such  company  as  of the last day before the investment was terminated.
   16  Such report shall provide a separate accounting by each certified  capi-
   17  tal company program; [and] (iv) all qualified investments made in empire
   18  zones  and underserved areas outside such empire zones as required under
   19  certified capital  company  program  three,  certified  capital  company
   20  program  four  and  certified capital company program five; AND (V) WITH
   21  RESPECT TO CERTIFIED CAPITAL COMPANY PROGRAM SIX, ALL QUALIFIED  INVEST-
   22  MENTS MADE IN UNDERSERVED AREAS, ALL QUALIFIED INVESTMENTS MADE IN QUAL-
   23  IFIED  SEED FUNDS, INCLUDING THE NUMBER OF EMPLOYEES OF EACH BUSINESS IN
   24  WHICH A QUALIFIED SEED FUND HAS MADE INVESTMENTS AT  THE  TIME  OF  SUCH
   25  INVESTMENT  AND  AS OF DECEMBER FIRST OF THE PRECEDING CALENDAR YEAR AND
   26  THE MATCH ACHIEVED BY THE CERTIFIED CAPITAL COMPANY.   FOR ANY  BUSINESS
   27  WHERE THE QUALIFIED SEED FUND NO LONGER HAS AN INVESTMENT, THE CERTIFIED
   28  CAPITAL  COMPANY SHALL PROVIDE EMPLOYMENT FIGURES FOR SUCH COMPANY AS OF
   29  THE LAST DAY BEFORE THE INVESTMENT WAS TERMINATED.
   30    S 12. Paragraph 1 of subdivision (d) of section 11 of the tax law,  as
   31  amended  by  section  19 of part A of chapter 63 of the laws of 2005, is
   32  amended to read as follows:
   33    (1) A certified capital company may make  qualified  distributions  at
   34  any  time.  In  order for a certified capital company to make a distrib-
   35  ution other than a  qualified  distribution  from  a  certified  capital
   36  company program, to its equity holders, either (A) the aggregate cumula-
   37  tive  amount of all qualified investments for such program must equal or
   38  exceed one hundred percent of its certified capital  allocable  to  such
   39  certified  capital  company program AND WITH RESPECT TO PROGRAM SIX, THE
   40  CERTIFIED CAPITAL COMPANY MUST HAVE ACHIEVED A MATCH OF AT LEAST  NINETY
   41  PERCENT  OF  THE  CERTIFIED  CAPITAL ALLOCABLE TO SUCH CERTIFIED CAPITAL
   42  COMPANY, or (B) it must have received written authorization to make such
   43  distribution from the superintendent.  In no event, however,  shall  any
   44  such distribution to its equity holders, other than a qualified distrib-
   45  ution,  be  made by a certified capital company from a certified capital
   46  company program unless an amount equal cumulatively to at  least  ninety
   47  percent  of  its certified capital of such program is invested in compa-
   48  nies that conduct their principal business operations in New York state.
   49    S 13. Paragraph 5 of subdivision (e) of section 11 of the tax law,  as
   50  amended  by  section  19 of part A of chapter 63 of the laws of 2005, is
   51  amended to read as follows:
   52    (5) Once a certified capital company has invested  an  amount  cumula-
   53  tively  equal  to  one  hundred  percent  of  its certified capital with
   54  respect to a particular certified capital company program  in  qualified
   55  investments  and  has met all other requirements under this subdivision,
   56  INCLUDING THE REQUIREMENT THAT A PROGRAM SIX CERTIFIED  CAPITAL  COMPANY
       A. 4434                             7
    1  INVEST  TEN PERCENT OF ITS CERTIFIED CAPITAL IN QUALIFIED SEED FUNDS AND
    2  ACHIEVE A MATCH OF AT LEAST NINETY  PERCENT  OF  THE  CERTIFIED  CAPITAL
    3  ALLOCABLE  TO  SUCH  CERTIFIED  CAPITAL  COMPANY,  the certified capital
    4  company  shall  no longer be subject to regulation by the superintendent
    5  and shall no longer be subject to the requirements of subdivision (c) of
    6  this section with respect to such  program.  Upon  receiving  documented
    7  certification  by a certified capital company that it has invested, WITH
    8  RESPECT TO PROGRAMS ONE, TWO, THREE, FOUR AND FIVE, an amount  equal  to
    9  one  hundred  percent  of  its  certified  capital  AND, WITH RESPECT TO
   10  PROGRAM SIX, AN AMOUNT EQUAL TO ONE HUNDRED  PERCENT  OF  ITS  CERTIFIED
   11  CAPITAL WITH TEN PERCENT OF SUCH CERTIFIED CAPITAL INVESTED IN QUALIFIED
   12  SEED  FUNDS  AND,  WITH  RESPECT  TO PROGRAM SIX, ACHIEVED A MATCH OF AT
   13  LEAST NINETY PERCENT OF THE CERTIFIED CAPITAL ALLOCABLE TO  SUCH  CERTI-
   14  FIED  CAPITAL  COMPANY,  the  department shall have sixty days to notify
   15  such certified capital company that it has or has not met such  require-
   16  ment with a reason for such determination if it has not, in the judgment
   17  of  the  department,  met  such  requirement. If the department does not
   18  provide such notification  within  sixty  days,  the  certified  capital
   19  company shall then be deemed to have met such requirement.
   20    S  14.  Subdivision  (h)  of  section  11 of the tax law is amended by
   21  adding a new paragraph 6 to read as follows:
   22    (6) CERTIFIED CAPITAL COMPANY PROGRAM SIX.  THE  AGGREGATE  AMOUNT  OF
   23  CERTIFIED  CAPITAL  FOR WHICH TAXPAYERS MAY BE ALLOCATED AND ALLOWED TAX
   24  CREDITS PURSUANT TO  THIS  PARAGRAPH  AND  SUBDIVISION  (K)  OF  SECTION
   25  FIFTEEN  HUNDRED ELEVEN OF THIS CHAPTER MAY NOT EXCEED ONE HUNDRED FIFTY
   26  MILLION DOLLARS FOR CALENDAR YEAR TWO THOUSAND NINETEEN, WHICH CERTIFIED
   27  CAPITAL MAY BE INVESTED IN  CERTIFIED  CAPITAL  COMPANIES  BEGINNING  IN
   28  CALENDAR YEAR TWO THOUSAND FIFTEEN.
   29    DURING  ANY  CALENDAR  YEAR  IN WHICH THE LIMITATION DESCRIBED IN THIS
   30  PARAGRAPH WILL LIMIT THE AMOUNT OF CERTIFIED CAPITAL, CERTIFIED  CAPITAL
   31  WILL  BE ALLOCATED IN ORDER OF PRIORITY BASED UPON THE DATE OF FILING OF
   32  INFORMATION DESCRIBED IN SUBPARAGRAPH (A) OF PARAGRAPH SIX  OF  SUBDIVI-
   33  SION  (C) OF THIS SECTION. THE SUPERINTENDENT SHALL ADVISE ANY CERTIFIED
   34  CAPITAL COMPANY IN WRITING, WITHIN FIFTEEN  DAYS  AFTER  RECEIVING  SUCH
   35  FILING, WHETHER THE LIMITATIONS OF THIS PARAGRAPH THEN IN EFFECT WILL BE
   36  APPLICABLE WITH RESPECT TO THE INVESTMENTS AND CREDITS DESCRIBED IN SUCH
   37  FILING WITH THE SUPERINTENDENT.
   38    CERTIFIED CAPITAL MAY BE RAISED BY EACH CERTIFIED CAPITAL COMPANY WITH
   39  RESPECT  TO CERTIFIED CAPITAL COMPANY PROGRAM SIX AT ANY TIME SUBSEQUENT
   40  TO ITS CERTIFICATION DATE, AND CREDITS SHALL BE ALLOCATED TO AND IRREVO-
   41  CABLY VESTED BY THE STATE IN CERTIFIED INVESTORS AT  THE  TIME  OF  EACH
   42  SUCH  INVESTMENT  AS  PROVIDED  IN THIS PARAGRAPH, ALTHOUGH SUCH CREDITS
   43  SHALL NOT BE FIRST ALLOWED OR INCURRED FOR STATE TAX PURPOSES, UNTIL, AT
   44  THE EARLIEST, TAX YEARS BEGINNING IN TWO THOUSAND NINETEEN.  IN ORDER TO
   45  SATISFY THE REQUIREMENTS OF PARAGRAPH FIVE OF SUBDIVISION  (E)  OF  THIS
   46  SECTION,  A  CERTIFIED  CAPITAL  COMPANY MUST HAVE MADE, ON A CUMULATIVE
   47  BASIS, (A) AN AMOUNT OF QUALIFIED INVESTMENTS  IN  QUALIFIED  BUSINESSES
   48  LOCATED  IN UNDERSERVED AREAS EQUAL TO AT LEAST TWO-THIRDS OF THE CERTI-
   49  FIED CAPITAL RAISED BY SUCH CERTIFIED CAPITAL COMPANY  WITH  RESPECT  TO
   50  CERTIFIED  CAPITAL  COMPANY  PROGRAM  SIX,  (B) QUALIFIED INVESTMENTS IN
   51  QUALIFIED SEED FUNDS IN AN AMOUNT EQUAL TO AT LEAST TEN PERCENT  OF  THE
   52  CERTIFIED  CAPITAL RAISED BY SUCH CERTIFIED CAPITAL COMPANY WITH RESPECT
   53  TO CERTIFIED CAPITAL COMPANY PROGRAM SIX AND (C)  QUALIFIED  INVESTMENTS
   54  IN  QUALIFIED  BUSINESSES  THAT ARE INVOLVED IN COMMERCE FOR THE PRIMARY
   55  PURPOSE OF DEVELOPING AND MANUFACTURING PRODUCTS AND SYSTEMS COVERED  BY
   56  THE  ACTIVITIES SET FORTH IN PARAGRAPH (B) OF SUBDIVISION ONE OF SECTION
       A. 4434                             8
    1  THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW AND HAVE A  RATIO
    2  OF  RESEARCH  AND  DEVELOPMENT EXPENDITURES TO NET SALES WHICH EQUALS OR
    3  EXCEEDS SIX PERCENT DURING THE FISCAL  YEAR  IMMEDIATELY  PRECEDING  THE
    4  QUALIFIED INVESTMENT IN AN AMOUNT EQUAL TO AT LEAST THIRTY-THREE PERCENT
    5  OF  THE  CERTIFIED CAPITAL RAISED BY SUCH CERTIFIED CAPITAL COMPANY WITH
    6  RESPECT TO PROGRAM SIX; PROVIDED, HOWEVER, THAT  ALL  QUALIFIED  INVEST-
    7  MENTS  IN QUALIFIED SEED FUNDS SHALL COUNT TOWARD THE AMOUNT REQUIRED BY
    8  SUBPARAGRAPH (C) OF THIS PARAGRAPH.
    9    S 15. Subdivision (i) of section 11 of the  tax  law,  as  amended  by
   10  section  19  of  part A of chapter 63 of the laws of 2005, is amended to
   11  read as follows:
   12    (i) Maximum certified capital. The maximum amount of certified capital
   13  per certified capital company program invested in one or more  certified
   14  capital  companies allowed in any one year to any one certified investor
   15  shall not exceed ten  million  dollars  for  certified  capital  company
   16  programs  one and three, [and] eight million dollars for certified capi-
   17  tal company programs two, four and five,  AND  FIFTEEN  MILLION  DOLLARS
   18  FROM  CERTIFIED  CAPITAL  COMPANY  PROGRAM  SIX for such year, provided,
   19  however, that if the aggregate amount  of  certified  capital  for  such
   20  year,  as  set  forth  in  subdivision (h) of this section, has not been
   21  reached sixty days prior to the end of the year to which such  aggregate
   22  amount  applies, the provisions of this subdivision shall cease to apply
   23  for the remainder of such year. In addition, the aggregate amount of tax
   24  credits allowed in any taxable year to any affiliated group of taxpayers
   25  in relation to certified capital may not  exceed  such  maximum  amount,
   26  whether  or not such taxpayers file a combined return pursuant to subdi-
   27  vision (f) of section fifteen  hundred  fifteen  of  this  chapter.  For
   28  purposes  of  the  preceding sentence, the term "affiliated group" shall
   29  have the same meaning as described  in  section  1504  of  the  internal
   30  revenue code, except that the references to "at least eighty percent" in
   31  such section 1504 shall be read as "more than fifty percent".
   32    S  16.  Subdivision  (j)  of  section 11 of the tax law, as amended by
   33  section 19 of part A of chapter 63 of the laws of 2005,  is  amended  to
   34  read as follows:
   35    (j)  Reports.  The  superintendent  shall  report to the governor, the
   36  temporary president of the senate, and the speaker of the  assembly,  on
   37  or  before  June  first of each year beginning in the year two thousand,
   38  the number of certified capital companies holding certified capital; the
   39  amount of certified capital invested in each certified capital  company;
   40  the  cumulative  amount that each certified capital company has invested
   41  as of January first of the year two thousand and  the  cumulative  total
   42  each year thereafter; the cumulative amount that the investments of each
   43  certified capital company have leveraged in terms of capital invested by
   44  other  sources  of  capital  in qualified businesses at the same time or
   45  subsequent to investments made by a certified capital  company  in  such
   46  businesses;  the  total amount of tax credits granted under this section
   47  each year that credits have been awarded under this section and subdivi-
   48  sion (k) of section fifteen hundred eleven of this chapter; the perform-
   49  ance of each certified capital company with regard to  the  requirements
   50  for  recertification  set  forth in subdivision (c) of this section; the
   51  classification of companies in which each certified capital company  has
   52  invested  according  to industrial sector and size of company; the total
   53  gross number of jobs created by investments made by each certified capi-
   54  tal company using certified capital and the number of jobs retained; the
   55  location of companies  in  which  each  certified  capital  company  has
   56  invested  in  a  manner  to  indicate  if the requirements for qualified
       A. 4434                             9
    1  investments in qualified businesses located in empire zones  established
    2  pursuant  to  article  eighteen-B of the general municipal law set forth
    3  for programs three, four and five and in underserved areas outside  such
    4  empire  zones  have  been met; the total gross number of jobs created in
    5  empire zones established pursuant to article eighteen-B of  the  general
    6  municipal law and in underserved areas outside such empire zones made by
    7  each  certified  capital  company  using  certified capital in certified
    8  capital company programs three, four and five,  reported  by  geographic
    9  location of each empire zone and underserved area and the number of jobs
   10  retained;  and those certified capital companies that have been decerti-
   11  fied, or have had their certifications revoked,  including  the  reasons
   12  for  decertification  or  revocation; THE LOCATION OF COMPANIES IN WHICH
   13  EACH CERTIFIED CAPITAL COMPANY HAS INVESTED IN A MANNER TO  INDICATE  IF
   14  THE  REQUIREMENTS  FOR  QUALIFIED  INVESTMENTS  IN  QUALIFIED BUSINESSES
   15  LOCATED IN UNDERSERVED AREAS AS SET FORTH  IN  PROGRAM  SIX;  THE  TOTAL
   16  GROSS  NUMBER OF JOBS CREATED IN UNDERSERVED AREAS USING CERTIFIED CAPI-
   17  TAL IN CERTIFIED CAPITAL COMPANY PROGRAM SIX  AND  THE  NUMBER  OF  JOBS
   18  RETAINED;  THE  AMOUNT OF QUALIFIED INVESTMENTS MADE INTO QUALIFIED SEED
   19  FUNDS FOR PROGRAM SIX CERTIFIED CAPITAL COMPANIES; THE CLASSIFICATION OF
   20  COMPANIES IN WHICH EACH QUALIFIED SEED FUND HAS  INVESTED  ACCORDING  TO
   21  INDUSTRIAL  SECTOR  AND  SIZE OF COMPANY; THE TOTAL GROSS NUMBER OF JOBS
   22  CREATED BY INVESTMENTS MADE BY EACH QUALIFIED SEED FUND USING THE NUMBER
   23  OF JOBS RETAINED.
   24    S 17.  Paragraph 2 of subdivision (k) of section 1511 of the tax  law,
   25  as amended by section 2 of part S of chapter 407 of the laws of 1999, is
   26  amended to read as follows:
   27    (2) Ten percent of such credit shall be allowed in the taxable year to
   28  which  such  investment  is allocated pursuant to PARAGRAPHS ONE THROUGH
   29  FIVE OF subdivision (h) of section eleven of this chapter and in each of
   30  the nine following taxable years. TWENTY-FIVE  PERCENT  OF  SUCH  CREDIT
   31  SHALL  BE  ALLOWED IN THE TAXABLE YEAR TO WHICH SUCH INVESTMENT IS ALLO-
   32  CATED PURSUANT TO PARAGRAPH SIX OF SUBDIVISION (H) OF SECTION ELEVEN  OF
   33  THIS  CHAPTER AND IN EACH OF THE THREE FOLLOWING TAXABLE YEARS. In addi-
   34  tion, in any taxable year subsequent  to  the  taxable  year  for  which
   35  [such]  ANY  investment  is so allocated UNDER SUCH SUBDIVISION (H), any
   36  amount carried forward under paragraphs three and four of this  subdivi-
   37  sion  may  be  carried  forward  indefinitely  until  such  credits  are
   38  utilized.
   39    S 18. Section 84 of part A of chapter 62 of the laws of 2011  relating
   40  to constituting chapter 18-A of the consolidated laws relating to finan-
   41  cial services is REPEALED.
   42    S  19.  Notwithstanding  the  provisions  of  article 5 of the general
   43  construction law, the provisions of subdivision (j) of section 11 of the
   44  tax law, as repealed by section 84 of part A of chapter 62 of  the  laws
   45  of  2011, are hereby revived and shall continue in full force and effect
   46  as such provisions existed on March 30, 2011.
   47    S 20. This act shall take effect immediately.