2010 Tennessee Code
Title 4 - State Government
Chapter 28 - Tennessee Small Business Investment Company Credit Act
4-28-106 - Maintaining certification Penalty for failure to meet performance measures Request for written determination that proposed investment will qualify as a qualified investment in a qualified business or a seed or early stage investment.

4-28-106. Maintaining certification Penalty for failure to meet performance measures Request for written determination that proposed investment will qualify as a qualified investment in a qualified business or a seed or early stage investment.

(a)  (1)  To maintain its certification, a qualified TNInvestco shall make qualified investments as follows:

          (A)  Within two (2) years after the allocation date, a qualified TNInvestco shall have invested an amount equal to at least fifty percent (50%) of its base investment amount in qualified investments;

          (B)  Within three (3) years after the allocation date, a qualified TNInvestco shall have invested an amount equal to at least seventy percent (70%) of its base investment amount in qualified investments;

          (C)  Within four (4) years after the allocation date, a qualified TNInvestco shall have invested an amount equal to at least eighty percent (80%) of its base investment amount in qualified investments; and

          (D)  Within six (6) years or any year thereafter, a qualified TNInvestco shall have invested an amount equal to ninety percent (90%) of its base investment amount in qualified investments provided that, either:

                (i)  Not more than twenty five percent (25%) can be attributable to the three hundred percent (300%) seed or early stage multiplier; or

                (ii)  Any amounts that have not been invested by the TNInvestco at the end of the investment period shall be forfeited and paid to the state to support the Tennessee rural opportunity fund.

     (2)  Failure to meet the performance measures set out in subdivision (a)(1) during any calendar year shall result in a two hundred fifty thousand dollar ($250,000) penalty fee against the qualified TNInvestco. The proceeds from any such penalty fee shall be deposited into the Tennessee rural opportunity fund to further the state's economic development efforts. Funds related to the investment tax credit shall not be used to pay the penalty fee imposed under this subdivision (a)(2).

(b)  Prior to making a proposed qualified investment in a specific business, a qualified TNInvestco must request from the department of economic and community development a written determination that the proposed investment will qualify as a qualified investment in a qualified business or, if applicable, a seed or early stage investment. The department shall notify a qualified TNInvestco within ten (10) business days from the receipt of a request of its determination. If the department fails to notify the qualified TNInvestco of its determination within ten (10) business days, the proposed investment will be deemed to be a qualified investment in a qualified business and, if applicable, a seed or early stage investment. If the department determines that the proposed investment does not meet the definition of a qualified investment, qualified business, or seed or early stage investment, the department may nevertheless consider the proposed investment a qualified investment, or a seed or early stage investment, and if necessary, the business a qualified business, if the department determines that the proposed investment will further state economic development.

(c)  All designated capital not invested in qualified investments by a qualified TNInvestco shall be held or invested in such manner as the qualified TNInvestco, in its discretion, deems appropriate.

(d)  A qualified TNInvestco may not invest more than fifteen percent (15%) of its designated capital in any one qualified business without the specific approval of the department of economic and community development.

[Acts 2009, ch. 610, § 7.]