By: Elkins, Lucio III, Button	H.B. No. 590

	A BILL TO BE ENTITLED
	AN ACT
	relating to the creation of research technology corporations for
	the development and commercialization of technologies owned by
	institutions of higher education or by certain medical centers with
	members that are institutions of higher education; providing for
	tax exemptions; providing a penalty.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subtitle H, Title 3, Education Code, is amended
	by adding Chapter 157 to read as follows:
	CHAPTER 157.  UNIVERSITY RESEARCH TECHNOLOGY CORPORATIONS
	Sec. 157.001.  PURPOSE AND FINDINGS. The legislature finds
	that the development and commercialization of technology owned by
	public and private institutions of higher education and by medical
	centers associated with those institutions are critical components
	of the educational and research missions of those institutions and
	key contributors to the economic development and well-being of this
	state. The activities authorized by this chapter directly support
	those important public purposes.
	Sec. 157.002.  DEFINITIONS. In this chapter:
	(1)  "Contribution" has the meaning assigned by Section
	1.002, Business Organizations Code.
	(2)  "Institution of higher education" means an
	institution of higher education or a private or independent
	institution of higher education as those terms are defined by
	Section 61.003.
	(3)  "Medical center development corporation" means a
	nonprofit corporation that is eligible to claim an ad valorem tax
	exemption under Section 11.23(j-1), Tax Code, for all or any part of
	the corporation's properties.
	(4)  "Qualified medical center," with respect to an
	institution of higher education, means a medical center development
	corporation that includes among its member institutions, as
	described in the corporation's books and records, one or more
	institutions of higher education, regardless of whether those
	institutions of higher education have membership status in the
	qualified medical center for purposes of the Business Organizations
	Code.
	(5)  "Technology" means the application of scientific
	knowledge for practical purposes and includes inventions,
	discoveries, patents, trade secrets, copyrighted materials, tools,
	machines, materials, processes to do work, processes to produce
	goods, processes to perform services, processes to carry out other
	useful activities, trademarks, and computer software.
	Sec. 157.003.  CREATION OF SPECIAL-PURPOSE CORPORATION. (a)
	Any person having the capacity to be an organizer of a corporation
	as provided by Section 3.004, Business Organizations Code, may
	create a special-purpose corporation for the exclusive purpose of
	developing and commercializing one or more technologies owned
	wholly or partly by an institution of higher education. To create
	the special-purpose corporation, an organizer of the corporation
	must present to the secretary of state written evidence that the
	organizer has a license to develop and commercialize a specific
	technology owned wholly or partly by an institution of higher
	education. The license may be conditioned on the creation of the
	special-purpose corporation.
	(b)  A person described by Subsection (a) may create a
	special-purpose corporation for the exclusive purpose of
	developing and commercializing technology owned wholly or partly by
	a qualified medical center.
	(c)  A special-purpose corporation created under Subsection
	(b) may be created in the same form and manner as a special-purpose
	corporation created under Subsection (a). To that extent, a
	qualified medical center that owns wholly or partly the technology
	for which a special-purpose corporation is created under Subsection
	(b) is governed by the same provisions of this chapter that are
	applicable to an institution of higher education.
	(d)  A corporation created under this chapter that engages in
	other purposes that are not incidental to the purposes authorized
	by this section is not entitled to the benefits of this chapter,
	including any tax exemption authorized by Section 157.008.
	(e)  The certificate of formation of a corporation created
	under this chapter must state that the corporation is governed by
	this chapter and state the name and purposes of the corporation and
	other information required by law. Except as otherwise provided by
	this chapter, a corporation created under this chapter is governed
	by Chapters 20 and 21, Business Organizations Code, and Title 1 of
	that code.
	(f)  The organizers of a corporation created under this
	chapter shall register the corporation with the comptroller.
	Sec. 157.004.  MANAGEMENT OF CORPORATION; RIGHTS OF CREATING
	INSTITUTION. (a)  The organizers of a corporation created under
	this chapter shall name the persons constituting the initial board
	of directors of the corporation.  Directors other than the initial
	directors shall be determined as provided by Chapter 21, Business
	Organizations Code.
	(b)  An institution of higher education that owns wholly or
	partly the technology for which a corporation is created under this
	chapter must at all times be a shareholder in the corporation. The
	institution of higher education shall be issued shares in the
	corporation when the corporation is created as agreed on by the
	organizers of the corporation according to any contribution of the
	institution.
	(c)  The institution of higher education described by
	Subsection (b) may be issued shares in the corporation in exchange
	for the contribution of rights in the technology of the institution
	of higher education or of other contractual obligations, as agreed
	on by the corporation's board of directors.
	Sec. 157.005.  TECHNOLOGY LICENSING. The institution of
	higher education that owns wholly or partly the technology for
	which a corporation is created under this chapter may license to the
	corporation any technology owned by the institution of higher
	education.
	Sec. 157.006.  REQUIRED OPERATIONS IN TEXAS. The principal
	offices of the corporation must be located in this state, and more
	than 50 percent of any goods produced or services performed by the
	corporation must be produced or performed in this state.
	Sec. 157.007.  DURATION. (a)  A corporation created under
	this chapter is limited in duration to 15 years. At the expiration
	of that period, the corporation may file a restated and amended
	certificate of formation under which the corporation continues in
	existence as a for-profit corporation governed by Chapters 20 and
	21, Business Organizations Code, and Title 1 of that code.  A
	corporation that files a restated and amended certificate of
	formation as authorized by this subsection is not governed by the
	other provisions of this chapter and is not entitled to an exemption
	authorized by Section 157.008.
	(b)  Subsection (a) does not limit the time or manner in
	which the corporation may be terminated as otherwise provided by
	law.
	Sec. 157.008.  TAX-EXEMPT STATUS OF CORPORATION. (a)  This
	section applies only to a corporation created under this chapter,
	other than a corporation that files a restated and amended
	certificate of formation as authorized by Section 157.007, that:
	(1)  is engaged exclusively in developing and
	commercializing one or more technologies owned wholly or partly by
	an institution of higher education or by a qualified medical
	center, including activities that are incidental to developing and
	commercializing those technologies; and
	(2)  complies with Section 157.006.
	(b)  The corporation is entitled to an exemption from ad
	valorem taxation of real and tangible personal property as provided
	by Section 11.232, Tax Code.
	(c)  The corporation is exempted from the sales and use tax
	imposed by Chapter 151, Tax Code, as provided by Section 151.3183 of
	that code.
	(d)  The corporation is exempted from the franchise tax
	imposed by Chapter 171, Tax Code, as provided by Section 171.089 of
	that code.
	(e)  This section does not limit the eligibility of the
	corporation for any other available tax benefit, including a tax
	benefit under Chapter 312 or 313, Tax Code.
	(f)  The corporation must maintain a complete record of all
	taxes for which the corporation would have been liable if the
	corporation had not been entitled to the exemptions authorized by
	this section.  The corporation shall report that information
	annually to the comptroller in the form and manner required by the
	comptroller.
	(g)  The comptroller shall adopt rules necessary to
	implement this section and administer the exemptions under
	Subsections (c) and (d).
	Sec. 157.009.  PENALTY FOR NONCOMPLIANCE WITH CORPORATE
	OPERATIONS REQUIREMENTS.  (a)  A corporation created under this
	chapter that ceases to comply with Section 157.006 is liable to the
	state for a penalty in an amount equal to any taxes, including ad
	valorem taxes, for which the corporation received an exemption
	under Section 157.008 for the four calendar years preceding the
	year in which the noncompliance began.  The comptroller shall
	determine the corporation's liability for the penalty and assess
	the amount owed.
	(b)  A penalty assessed under this section is due on the date
	designated by the comptroller, not later than the 90th day after the
	date assessed, and shall be collected in the same manner as a state
	tax. A lien exists on any property of the corporation to secure the
	payment of any amount assessed under this section. The comptroller
	is entitled to collect interest and penalties on the unpaid amount
	of a delinquent penalty in the same manner as the manner prescribed
	for the collection of a delinquent state tax.  The comptroller by
	rule shall establish the methods of payment and shall adopt other
	rules necessary to administer and enforce this section.
	(c)  Amounts received under this section shall be deposited
	in the state treasury to the credit of the general revenue fund.
	Sec. 157.010.  CONFLICT WITH BUSINESS ORGANIZATIONS CODE.
	To the extent of any conflict between a provision of this chapter
	and a provision of the Business Organizations Code, the provision
	of this chapter controls.
	SECTION 2.  Subchapter B, Chapter 11, Tax Code, is amended by
	adding Section 11.232 to read as follows:
	Sec. 11.232.  PROPERTY OWNED BY OR LEASED TO UNIVERSITY
	RESEARCH TECHNOLOGY CORPORATION. (a)  In this section,
	"institution of higher education," "medical center development
	corporation," "qualified medical center," and "technology" have
	the meanings assigned by Section 157.002, Education Code.
	(b)  Except as provided by Subsection (c), a corporation that
	qualifies as a university research technology corporation as
	provided by Subsection (g) is entitled to an exemption from ad
	valorem taxation of:
	(1)  the real and tangible personal property owned by
	the corporation that is used for a purpose described by Subsection
	(g)(2); and
	(2)  the real property owned by the corporation that
	consists of:
	(A)  an incomplete improvement that is under
	active construction or other physical preparation to make the
	property suitable to be used for a purpose described by Subsection
	(g)(2); and
	(B)  the land on which the incomplete improvement
	is located that will be reasonably necessary for the corporation's
	use of the improvement.
	(c)  A qualified university research technology corporation
	is not entitled to an exemption from taxation of real or tangible
	personal property:
	(1)  owned by an organizer or director of the
	corporation before the creation of the corporation; and
	(2)  subject to taxation in this state before being
	devoted exclusively to a purpose described by Subsection (g)(2).
	(d)  Notwithstanding Subsection (c), a qualified university
	research technology corporation is entitled to an exemption from
	taxation of the value of that portion of an improvement that
	consists of an expansion of an improvement described by that
	subsection if the improvement is devoted exclusively to a purpose
	described by Subsection (g)(2).
	(e)  A medical center development corporation is entitled to
	an exemption from taxation of the corporation's real and tangible
	personal property that is leased to or used or occupied primarily by
	a qualified university research technology corporation and used
	exclusively for a purpose described by Subsection (g)(2).
	(f)  Notwithstanding Section 25.07, a qualified university
	research technology corporation is entitled to an exemption from
	taxation of a possessory interest in property described by
	Subsection (e).
	(g)  To qualify as a university research technology
	corporation for purposes of this section, a corporation must:
	(1)  be a corporation created under Chapter 157,
	Education Code, other than a corporation created under that chapter
	that files a restated and amended certificate of formation as
	authorized by Section 157.007 of that code;
	(2)  be engaged exclusively in developing and
	commercializing one or more technologies owned wholly or partly by
	an institution of higher education or by a qualified medical
	center, including activities that are incidental to developing and
	commercializing those technologies; and
	(3)  be in compliance with Section 157.006, Education
	Code.
	SECTION 3.  Section 11.42(d), Tax Code, is amended to read as
	follows:
	(d)  A person who acquires property after January 1 of a tax
	year may receive an exemption authorized by Section 11.17, 11.18,
	11.19, 11.20, 11.21, 11.23, 11.231, 11.232, or 11.30 for the
	applicable portion of that tax year immediately on qualification
	for the exemption.
	SECTION 4.  The heading to Section 26.113, Tax Code, is
	amended to read as follows:
	Sec. 26.113.  PRORATING TAXES--ACQUISITION BY NONPROFIT
	ORGANIZATION OR UNIVERSITY RESEARCH TECHNOLOGY CORPORATION.
	SECTION 5.  Subchapter H, Chapter 151, Tax Code, is amended
	by adding Section 151.3183 to read as follows:
	Sec. 151.3183.  UNIVERSITY RESEARCH TECHNOLOGY CORPORATION.
	(a)  In this section, "university research technology corporation"
	means a corporation to which Section 157.008, Education Code,
	applies.
	(b)  A taxable item sold, leased, or rented to, or stored,
	used, or consumed by, a university research technology corporation
	is exempted from the taxes imposed by this chapter if the item is
	classified by the corporation as a capital asset.  An item is
	considered to be classified by the corporation as a capital asset if
	the item is considered to be a capital asset according to generally
	accepted accounting principles adopted by the Financial Accounting
	Standards Board and is recognized by the corporation as a capital
	asset on the corporation's federal income tax returns.
	(c)  The comptroller shall adopt rules necessary to
	implement this section, including rules to ensure that a taxable
	item with respect to which an exemption from the taxes imposed by
	this chapter is granted under this section meets the requirements
	of Subsection (b).
	SECTION 6.  Subchapter B, Chapter 171, Tax Code, is amended
	by adding Section 171.089 to read as follows:
	Sec. 171.089.  EXEMPTION--UNIVERSITY RESEARCH TECHNOLOGY
	CORPORATION.  (a)  In this section, "university research technology
	corporation" means a corporation to which Section 157.008,
	Education Code, applies.
	(b)  A university research technology corporation is
	exempted from the franchise tax.
	(c)  A corporation created as a university research
	technology corporation that files at the expiration of the period
	described by Section 157.007(a), Education Code, a restated and
	amended certificate of formation as authorized by that section is
	no longer exempted from the franchise tax by Subsection (b) on the
	expiration of that period.  Unless the corporation is otherwise
	exempted from the franchise tax, the date of the expiration of that
	period is considered the corporation's beginning date for purposes
	of determining the corporation's privilege periods and for all
	other purposes of this chapter.
	SECTION 7.  Section 11.232, Tax Code, as added by this Act,
	applies only to an ad valorem tax year that begins on or after the
	effective date of this Act.
	SECTION 8.  Section 151.3183, Tax Code, as added by this Act,
	does not affect tax liability accruing before the effective date of
	this Act. That liability continues in effect as if this Act had not
	been enacted, and the former law is continued in effect for the
	collection of taxes due and for civil and criminal enforcement of
	the liability for those taxes.
	SECTION 9.  The change in law made by this Act to Chapter
	171, Tax Code, applies only to a report originally due on or after
	the effective date of this Act.
	SECTION 10.  (a)  Except as provided by Subsection (b) of
	this section, this Act takes effect January 1, 2016.
	(b)  Section 157.008(b), Education Code, and Section 11.232,
	Tax Code, as added by this Act, and Sections 11.42(d) and 26.113,
	Tax Code, as amended by this Act, take effect January 1, 2016, but
	only if the constitutional amendment proposed by the 84th
	Legislature, Regular Session, 2015, authorizing the legislature to
	provide for an exemption from ad valorem taxation of certain
	property owned by or leased to or by a university research
	technology corporation is approved by the voters.  If that
	amendment is not approved by the voters, Section 157.008(b),
	Education Code, and Section 11.232, Tax Code, as added by this Act,
	and Sections 11.42(d) and 26.113, Tax Code, as amended by this Act,
	have no effect.