2016 Kentucky Revised Statutes CHAPTER 154 - DEVELOPMENT Subchapter 20 - Financing of Development Generally 154.20-234 Angel Investor Program qualification requirements.
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154.20-234 Angel Investor Program qualification requirements.
The requirements for small businesses, investors, and investments to be qualified for
participation in the Angel Investor Program are as follows:
(1) To be certified as a qualified small business, the business shall demonstrate to the
authority that it is an entity which, at the time the small business requests
certification:
(a) Has a net worth of ten million dollars ($10,000,000) or less or net income
after federal income taxes for each of the two (2) preceding fiscal years of
three million dollars ($3,000,000) or less;
(b) Is actively and principally engaged in a qualified activity within the
Commonwealth, or will be actively and principally engaged in a qualified
activity within the Commonwealth after the receipt of a qualified investment
by a qualified investor;
(c) Has no more than one hundred (100) full-time employees;
(d) Has more than fifty percent (50%) of its assets, operations, and employees
located in the Commonwealth; and
(e) Has at no time received an aggregate amount of qualified investments that has
allowed qualified investors to receive more than one million dollars
($1,000,000) in angel investor credits;
(2) To be certified as a qualified investor, an individual investor shall demonstrate to
the authority that he or she:
(a) Is an individual natural person;
(b) Qualifies as an accredited investor pursuant to Regulation D of the United
States Securities and Exchange Commission, 17 C.F.R. sec. 230.501, in effect
as of the date the individual investor requests certification;
(c) Does not hold in excess of twenty percent (20%) ownership interest in, and is
not employed by, the qualified small business prior to making the qualified
investment in that qualified small business;
(d) Is not closely related to an individual who holds in excess of twenty percent
(20%) ownership interest in, or who is employed by, the qualified small
business prior to making the qualified investment in that qualified small
business. For purposes of this paragraph, "closely related" means the parent,
spouse, or child of an individual; and
(e) Seeks a financial return from the investment made in the qualified small
business; and
(3) To be certified as a qualified investment, the investment shall:
(a) Be a cash investment of at least ten thousand dollars ($10,000), in a qualified
small business by a qualified investor;
(b) Be offered and executed in compliance with applicable state and federal
securities laws and regulations; and
(c) Be exchanged for consideration in the form of an equity interest in the
qualified small business, such as a general or limited partnership interest,
common or preferred stock with or without voting rights and without regard to
seniority position, or forms of subordinate or convertible unsecured debt, or
both, with warrants, rights, or other means of equity conversion attached.
Effective: July 15, 2014
History: Created 2014 Ky. Acts ch. 102, sec. 23, effective July 15, 2014.
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