2006 Nebraska Revised Statutes - § 58-321 — Small Business Investment Fund; created; use; purchase of qualified securities; requirements; limits.

Section 58-321
Small Business Investment Fund; created; use; purchase of qualified securities; requirements; limits.

(1) There is hereby created a Small Business Investment Fund to which shall be deposited any money made available to such fund.

(2) The authority shall hold the investment fund in an account or accounts separate from other funds. The authority shall invest and reinvest the fund and the income thereof in only two ways:

(a) In qualified securities issued by enterprises for the purpose of raising equity capital, if such investment complies with the requirements of the Small Business Development Authority Act and the authority makes the findings in connection with such investment required by this section; and

(b) In such securities as may be lawful investments for fiduciaries in the state. All appropriations, grants, contractual reimbursements, and all other funds designated for this purpose, and the proceeds of all investments made pursuant to this subsection, may be used to pay for the proper general expenses of the authority.

(3) The authority shall purchase qualified securities issued by an enterprise only after:

(a) Receipt of an application from the enterprise which contains a business plan including a description of the enterprise and its management, product, and market; a statement of the amount, timing, and projected use of the capital required; a statement of the potential economic impact of the enterprise, including an estimate of the number of jobs expected to be created; and such other information as the authority shall request; and

(b) Approval of the investment by the authority after the authority finds, based upon the application submitted by the enterprise and such additional investigation as the staff of the authority shall make, that:

(i) The proceeds of the investment will only be used to cover the equity capital needs of the enterprise except as otherwise authorized in the Small Business Development Authority Act;

(ii) The enterprise has a reasonable chance of success;

(iii) Authority participation is necessary for the success of the enterprise because funding for the enterprise is unavailable in the traditional capital markets or because funding has been offered on terms that substantially hinder the success of the enterprise;

(iv) The enterprise has the reasonable potential to create substantial employment within the state;

(v) The entrepreneur and other founders of the enterprise have already made or are prepared to make a substantial financial and time commitment to the enterprise;

(vi) The securities to be purchased are qualified securities, except that the agreement to purchase the qualified securities may include a provision which allows the enterprise to redeem or repurchase the qualified securities;

(vii) There is a reasonable possibility that the authority will recoup at least its initial investment in a reasonable period of time;

(viii) Binding commitments have been made to the authority by the enterprise for adequate reporting of financial data to the authority, which shall include a requirement for an annual or other periodic audit of the books of the enterprise, and for such control on the part of the authority as the board considers prudent over the management of the enterprise, so as to protect the investment of the authority, including, in the discretion of the board and without limitation, right of access to financial and other records of the enterprise; and

(ix) A reasonable effort has been made to find a professional investor to make an investment in the enterprise as a joint venture, and that such effort was unsuccessful.

Such findings when made by the authority shall be conclusive.

(4) The corporation shall not make investment in qualified securities issued by enterprises in excess of the following limits:

(a) Not more than three hundred thousand dollars shall be invested in the qualified securities of any one enterprise or not more than ten percent of the net capital of the authority shall at any time be invested in the qualified securities of one enterprise, whichever is greater. For the purpose of complying with this subdivision, the good faith determination of the board, based on the annual audit provided in section 58-325, of the value of such assets shall be conclusive; and

(b) The authority shall not own securities representing more than forty-nine percent of the voting stock of any one enterprise at the time of purchase by the authority after giving effect to the conversion of all outstanding convertible securities of the enterprise.

Source:

Laws 1984, LB 1117, § 21

~Reissue Revised Statutes of Nebraska