Section 457-307-1 - DefinitionsA. "At-risk" means that the repayment of an investment is entirely dependent upon the success of the business operations.B. "Authority" means the Finance Authority of Maine.C. "Business" means a business meeting the applicable eligibility criteria of Section 3, in which an investor proposes to make an investment.D. "Certificate" means a tax credit certificate issued by the Authority in accordance with this rule.E. "Chief Executive Officer" means the Chief Executive Officer of the Finance Authority of Maine, or a person acting under the supervisory control of the Chief Executive Officer. E-1. "Extraordinary Labor Event" means a sudden and significant change in employment in an area, on account of, among other things, a business closure or employee layoff, closure of a military base through a base closure and realignment commission process, increase in population, or other like, but out-of-the-ordinary, occurrences, as determined by the Chief Executive Officer.E-2. "Flow-Through Entity" means a distinct private legal entity that is treated for federal tax purposes as a flow-through entity, such that the entity itself is not taxed, but income or loss is passed through to the owners of the entity in proportion to their percentage of ownership in the entity, or as provided in the entity's organizational documents. Such entities may include, but are not limited to, S Corporations, limited liability companies, partnerships, and certain trusts. For the purposes of this rule, Private Venture Capital Funds shall not be treated as flow-through entities unless they so elect, in which case they shall be eligible only for non-refundable tax credits at the 60% level for investments prior to January 1, 2014, at the 50% level for investments made on or after January 1, 2014 and before April 1, 2020, and at the 40% level for investments made on or after April 1, 2020.F. "Fund" means each distinct private legal entity organized for the purpose of combining monies from two or more unrelated parties to be used to make equity or equity-like investments in businesses unrelated to such entity, in which an investor proposes to make an investment. This definition applies only to investments made prior to January 1, 2012.G. "Gross sales" means amounts received or to be received from the sale of goods or services in the ordinary course of business.G-1. "High unemployment area" means a Labor Market Area (as defined by the Maine Department of Labor), which has an average unemployment rate greater than the average unemployment rate for the State as determined by the Maine Department of Labor, such status to be determined annually by the Chief Executive Officer based on the unemployment determinations made for the twelve months ending the preceding October, to be effective for the next succeeding calendar year. In addition to the foregoing:
(1) the Chief Executive Officer may add Labor Market Areas to the list of high unemployment areas when an extraordinary labor event in such area has caused the unemployment rate for such area to increase significantly to a rate above then current State average, all as determined by the Chief Executive Officer. For a business to be considered to be located in a high unemployment area, the business must have its sole location in such an area, or, for businesses with more than one location, the business must establish to the satisfaction of the Authority, that the investment for which a credit is sought is to be used almost exclusively in connection with its location in a high unemployment area. Whether a business is located in a high unemployment area shall be determined as of the date of the applicable investor's application, provided however, that if the Labor Market Area in which the business is located is added to the list of high unemployment areas in connection with an extraordinary labor event as set forth above, after the date the investor's application is received but prior to the issuance of the investor's credit, then the business shall be considered to be in the high unemployment area for the purposes of that investor's application; and(2) the footprint of a former United States military installation in the State that is closed pursuant to a base closure and realignment commission process shall be considered a "high unemployment area" for a period of 10 years commencing on the date that the real estate on the former base is transferred to a redevelopment authority or similar entity. This definition applies only to investments made prior to January 1, 2012.H. "Investment" means a transaction in which an eligible business or eligible fund or private venture capital fund receives cash from an eligible investor for business purposes authorized under the applicable provisions of Section 3, 3-A or 3-B of this rule, and includes loans.I. "Investor" means an individual, partnership, trust, limited liability company, corporation or other legal business entity, and includes a prospective investor where the context requires. In the case of entities treated as flow-through entities for tax purposes, the individual shareholders, members, partners or beneficiaries shall be treated as the investors under this rule.J. "Members" means the members of the Finance Authority of Maine.K. "Natural resource enterprise" shall have the meaning given that term in 10 M.R.S.A. §963-A(41), which includes agricultural, forestry and fishing enterprises but does not include selling of food at wholesale or retail except when that selling is carried out as part of the natural resource enterprise.L. "Principal owners" means one or more persons who control the business, whether by owning an aggregate of 50% or more of the business, by holding any ownership interests in the business and being directly involved in the day-to-day management of a business as a full-time professional activity, or otherwise, all as determined by the Chief Executive Officer. For investments made prior to January 1, 2012, to the extent the principal owners do not collectively own 50% or more of the business, the business must designate additional holders of ownership interests in the business who, when aggregated with the principal owners, own a total of at least 50% of the business, which such designated holders of interests shall not participate in the program.L-1. "Private Venture Capital Fund" means a professionally managed pool of capital organized to make equity or equity-like investments in unrelated private companies using capital derived from multiple limited partners or members, at least half of which, measured in dollar commitments, are unaffiliated and unrelated, and includes any venture capital fund licensed by the U.S. Small Business Administration. A Private Venture Capital Fund may but need not be a Fund as defined in this Rule. This definition applies only to investments made on or after January 1, 2012.M. "Program" means the Maine Seed Capital Tax Credit Program governed by this rule.N. "Value-Added" means an enhancement to a product or service that increases the value or marketability of the product or service.94-457 C.M.R. ch. 307, § 1