2015 Mississippi Code
Title 57 - PLANNING, RESEARCH AND DEVELOPMENT
Chapter 115 - MISSISSIPPI SMALL BUSINESS INVESTMENT COMPANY ACT
§ 57-115-7 - Requirements for maintaining certification as small business investment company; reports; distributions

(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 and comply with the Mississippi small business investment company's business plan previously approved by the MDA. 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 determines that the proposed investment does not meet the definition of a qualified investment, qualified business or comply with the Mississippi small business investment company's business plan, 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. A Mississippi small business investment company may at any time apply to the MDA to amend its business plan, which the MDA may approve if it determines that the proposed amendment will further economic development in the state.

(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 within the limits of this chapter. 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 in additional qualified investments and the investment shall count toward the requirements of paragraph (a) of this subsection (1) and of Section 57-115-9(1)(c) with respect to making investments of designated capital in qualified investments, provided that the qualified business returning the initial qualified investment of the designated capital;

(i) Returns the capital pursuant to regularly scheduled amortization payments;

(ii) Returns the capital after a change in control or sale of the company or substantially all of its assets;

(iii) Returns the capital to the Mississippi small business investment company after defaulting on the terms of the qualified investment; or

(iv) Has attracted follow-on investment equal to the amount returned to the Mississippi small business investment company from a source other that a Mississippi small business investment company.

(d) (i) If, within five (5) years after its allocation date, a Mississippi small business investment company has no longer invested at least eighty-five percent (85%) of its designated capital in qualified investments, the Mississippi small business investment company shall not be permitted to pay management fees until it has invested such amount of designated capital in qualified investments.

(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.

(2) (a) Each Mississippi small business investment company must report the following to the MDA and the Department of Revenue:

(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, and each participating investor's affiliates that may claim credits, including the insurance tax identification number of the participating investor and its affiliates, if any;

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;

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 Department of Revenue 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; and

(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.

(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.

(3) (a) 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:

(i) The qualified investments of the Mississippi small business investment company must equal or exceed one hundred percent (100%) of its designated capital; and

(ii) The Mississippi small business investment company must attract follow-on investment from sources other than itself or another Mississippi small business investment company in the qualified businesses in which it made qualified investments equal to one hundred percent (100%) of its designated capital.

(b) For all distributions other than qualified distributions, if the Mississippi small business investment company has not met or exceeded the jobs creation goal agreed to by the MDA and the Mississippi small business investment company in its application, the Mississippi small business investment company shall pay all such distributions to the state as a fee until the Mississippi small business investment company has paid to the state an amount equal to the penalty amount. For purposes of this section, the penalty amount shall equal one percent (1%) of the cumulative management fees previously paid by the Mississippi small business investment company for every one percent (1%) by which a Mississippi small business investment company fails to meet the jobs creation goal agreed to by the MDA and the Mississippi small business investment company in its application.