La. Admin. Code tit. 10 § XV-331

Current through Register Vol. 50, No. 11, November 20, 2024

Section XV-331 - Qualified Technology Funds

A. An applicant seeking designation as a qualified technology fund shall provide to the secretary the following information along with the request for this designation:

1. the charter documents for the entity that will constitute the qualified technology fund;

2. copies of any management agreements to which the qualified technology fund contemplates being a party, and a description of any contemplated comparable arrangement;

3. a reasonably detailed description of how the qualified technology fund meets and will continue to meet the criteria of R.S. 51:1923(16);

4. a copy of the qualified technology fund's investment policy;

5. evidence in form and substance acceptable to the secretary by which the qualified technology fund agrees to make all of the investments made by it with the proceeds of any investment from a certified Louisiana capital company in qualified Louisiana technology-based businesses, as required by R.S. 51:1923(16)(b);

6. a written undertaking of the qualified technology fund in form and substance acceptable to the secretary by which the qualified technology fund agrees that the commissioner shall regulate the investment of the certified capital received by the qualified technology fund as required by R.S. 51:1923(16)(d);

7. a written undertaking of the qualified technology fund in form and substance acceptable to the secretary by which the qualified technology fund agrees to provide:

a. to the secretary by August 1 of each year the information required to be included in the secretary's report described in R.S. 51:1927.2, with respect to the operations and investments of the qualified technology fund, to the extent that such information is relevant to the qualified technology fund; and

b. to the commissioner the information required by R.S. 51:1926(F), by the dates set forth therein, to the extent that such information is relevant to the qualified technology fund; and

8. such additional information as may be requested by the secretary with regard to the qualified technology fund or its ownership, management or operations.

B. A qualified technology fund shall be designated by the secretary for purposes of qualifying an investment in the qualified technology fund under R.S. 51:1923(12)(d) if the applicant meets the criteria set forth in each of Paragraphs 1 through 4 of this Subsection B, or if it meets such additional or other criteria determined by the secretary from time to time.

1. The applicant has delivered to the secretary all of the information required by Subsection A of this Section.

2. The information delivered to the secretary pursuant to this Section demonstrates that the qualified technology fund meets the criteria under R.S. 51:1923(16).

3. The information delivered by the applicant shall demonstrate reasonable prospects for the qualified technology fund to invest the following percentages of each of the qualified technology fund's investment pools within the following time periods:

a. on or before the second anniversary of the investment date of the investment pool, 50 percent of the investment pool invested in qualified Louisiana-based technology businesses; and

b. on or before the third anniversary of the investment date of the investment pool, 100 percent of the investment pool invested in qualified Louisiana-based technology businesses.

4. The charter and/or management documents with respect to the applicant shall provide that:

a. the non-certified capital company representatives involved with the management of the applicant have the authority to appoint a majority of the members (including the chairman) of each of:

i. the board of directors, board of managers or other similar governing authority of the applicant and any entity responsible for the direction of the applicant's investment decisions; and

ii. any committee of the board of managers, board of directors or other similar governing authority of the applicant with the authority to approve investment decisions and any such committee of any entity responsible for the direction of the applicant's investment decisions; provided that the certified Louisiana capital companies investing in the qualified technology fund may retain a right to representation on any such boards or committees and a right to veto, by majority vote of those certified capital companies present and voting at any meeting for such purpose, investment decisions of such boards or committees;

b. the qualified technology fund shall have management representation from at least one of the Louisiana research parks identified in R.S. 51:1923(16)(a) or any other technology park certified by the secretary;

c. each member of any board, committee or other governing authority of the applicant or any entity responsible for applicant's investment decisions shall disclose in writing all conflicts of interest with respect to any prospective investment by the applicant (except for conflicts of interest existing solely because of a prior investment by the qualified technology fund or any investment pool or subsidiary thereof) and no such member may vote on any such matter; provided that, the fact that a business is located at or is being assisted or incubated by a Louisiana research park or other technology park shall not in and of itself constitute a conflict of interest for a representative of the park serving on the board of director or any committee of the qualified technology fund with respect to matters relating to that business; and

d. the applicant may not invest in any qualified Louisiana-based technology business in which a certified Louisiana capital company that is a participant in the qualified technology fund has previously invested except for a follow-on investment by the qualified technology fund to the extent that the certified Louisiana capital company's first investment in the qualified Louisiana-based technology business was closed contemporaneously with or after a previous investment by the qualified technology fund, and further provided that the investment by the qualified technology fund does not serve to directly or indirectly repay or refund all or a portion of the certified Louisiana capital company's previous investment.

C. Qualified technology funds which are approved by the secretary pursuant to this Section shall be subject to the following additional provisions.

1. The information provided by a qualified technology fund to the office or the department shall be subject to R.S. 51:1926(D) and 51:1934.

2. A qualified technology fund shall not make any investment in any qualified Louisiana-based technology business if either:

a. the business is involved in any of the lines of business identified in R.S. 51:1926 A(3); or

b. if after making the investment the total investment outstanding in such business and its affiliates would exceed the greater of:

i. 25 percent of the total certified capital invested by certified Louisiana capital companies in the qualified technology fund; or

ii. $500,000.

3. No initial investment by the qualified technology fund in a qualified Louisiana-based technology business, when aggregated with all other investments by the qualified technology fund in such business which are made within the 12 month period following the date of the initial investment, will exceed the greater of:

a. 15 percent of the total certified capital invested by certified Louisiana capital companies in the qualified technology fund; or

b. $300,000.

4. Before any investment is made by a qualified technology fund, the qualified technology fund shall obtain an affidavit from the qualified Louisiana-based technology business in the form required by R.S. 51:1926(G).

5.

a. All distributions made by a qualified technology fund to a certified Louisiana capital company which has invested in the qualified technology fund shall constitute certified capital which is subject to the requirements of R.S. 51:1928(C).

b. A qualified technology fund shall not make any payment or distribution to any CAPCO or affiliate of a certified Louisiana capital company which has invested in it that is not covered by Subparagraph C.5.a of this Section unless approved in advance by the secretary.

6.

a. An investment by a certified capital company in a qualified technology fund that is approved by the secretary in accordance with this Section shall be deemed to "further economic development within Louisiana" for purposes of R.S. 51:1923(12); provided that each investment by a qualified technology fund in qualified Louisiana technology-based businesses must:

i. "further economic development within Louisiana" as provided by rule with respect to qualified Louisiana businesses; and

ii. consist of the investment of cash and result in the acquisition of either:

(a). non-callable equity in a qualified Louisiana technology-based business; or

(b). a note issued by a qualified Louisiana technology-based business with a stated final maturity date of not less than three years; provided that the aggregate of all investments by the qualified technology fund in debt instruments with a stated maturity of less than five years may not exceed 25 percent of the total certified capital invested by certified capital companies in the qualified technology fund.

b. The qualified technology fund need not be a Louisiana business and industrial development corporation to provide financing assistance to qualified Louisiana technology-based businesses.

7. The aggregate management fees charged by a certified Louisiana capital company and a qualified technology fund with respect to funds invested by the certified Louisiana capital company in the qualified technology fund shall not exceed the amount permitted by R.S. 51:1928(C)(3).

8. The qualified technology fund shall submit to the commissioner, on or before April 30, annual audited financial statements which include the opinion of an independent certified public accountant.

9. The commissioner shall conduct an annual review of the qualified technology fund and its various investment pools similar to the annual review of certified capital companies pursuant to R.S. 51:1927(A).

D. An investment by a certified Louisiana capital company in a qualified technology fund approved by the secretary pursuant to this Section shall constitute an investment and a qualified investment for purposes of R.S. 51:1926(A)(1) and (2) on the date that the certified Louisiana capital company makes the investment in the qualified technology fund or in an investment pool sponsored and administered by the technology fund if the investment by the certified Louisiana capital company is in cash and is either in the form of equity which is not subject to redemption prior to the third anniversary of the date of investment or debt which has a stated final maturity date of not less than three years from the origination of the debt investment in the qualified technology fund.

E. An investment by a certified Louisiana capital company in a qualified technology fund approved by the secretary pursuant to this Section shall not constitute a qualified investment for purposes of R.S. 51:1927(C)(1), (2) and (3) and R.S. 51:1928(B)(3) until the qualified technology fund has invested an amount equal to 100 percent of the investment pool which includes the investment by the certified Louisiana capital company. If as of the third anniversary of the investment date of the investment pool which includes a certified Louisiana capital company's investment in a qualified technology fund the qualified technology fund has failed to invest 100 percent of the investment pool in qualified Louisiana-based technology businesses in accordance with R.S. 51:1923(16) and this Section, the certified Louisiana capital company may demand repayment or redemption of its pro rata share of the uninvested portion and:

1. the invested portion with respect to such certified Louisiana capital company shall be considered to have been invested in qualified investments for purposes of R.S. 51:1927.1(C)(1), (2) and (3) and R.S. 51:1928(B)(3); and

2. the uninvested portion returned to the certified Louisiana capital company shall thereafter only be deemed to have been invested in a qualified investment for purposes of R.S. 51:1927.1(C)(1), (2) and (3) and R.S. 51:1928(B)(3) when such funds are invested in qualified investments in qualified Louisiana-based technology businesses; and

3. the repayment or redemption shall not adversely affect the status of such funds as having been invested in a qualified investment for purposes of R.S. 51:1926(A)(1) and (2).

F. For purposes of this Section, the term investment pool means not less than all of the cash invested by certified Louisiana capital companies in a qualified technology fund on the same day.

G. A qualified technology fund may organize separate entities to separate the investments which comprise its different investment pools so long as each such separate entity is organized and managed in a manner materially the same as approved by the secretary pursuant to this Section. Each separate entity shall be subject to regulation as a "qualified technology fund" but need not be separately approved as such by the secretary.

H. The secretary shall respond to an application to become a qualified technology fund within 30 days of receipt of the information required by Subsection A of this Section.

I. To become certified as a "technology park" that is permitted to be involved in the management of a qualified technology fund pursuant to R.S. 51:1923(16)(a) [in addition to the entities specifically enumerated in R.S. 51:1923(16)(a)], an applicant shall submit to the secretary:

1. the charter documents for the applicant;

2. a detailed description of the management and operations of the applicant;

3. a statement showing all owners, operators, managers, beneficiaries or other interest holders of the applicant who benefit financially (directly or indirectly) from the operations of the applicant;

4. a list of qualified Louisiana-based technology businesses that have been assisted by the services provided by the applicant and a list of references from those entities, with contact information;

5. a copy of the applicant's mission statement, goals, purposes or other similar statements;

6. the audited financial statements of the applicant from the prior fiscal year with an opinion of independent certified public accountants;

7. information from which the secretary can determine whether the applicant meets the criteria of a Louisiana research park, as defined in R.S. 51:1923(11); and

8. such additional information as may be requested by the secretary with regard to the applicant.

J. The secretary shall approve an applicant as a "technology park" for purposes of participating in the management of a qualified technology fund if the applicant meets the following criteria or such additional or other criteria determined by the secretary from time to time:

1. the applicant is a Louisiana research park, as defined in R.S. 51:1923(11); and

2. in the secretary's reasonable opinion, the information delivered by the applicant to the secretary demonstrates that the applicant has a history and a mission materially contributing to the economic development of the state of Louisiana by providing assistance to qualified Louisiana-based technology businesses.

La. Admin. Code tit. 10, § XV-331

Promulgated by the Department of Economic Development, Office of the Secretary, and the Office of the Governor, Office of Financial Institutions, Office of the Commissioner, LR 30:1616 (August 2004).

AUTHORITY NOTE: Promulgated in accordance with R.S. 51:1929 and 1935.