4.1. Separate Capital Base.4.1.a. General Rule; Amount. -- During each fiscal year, a Qualified Company may apply to the Authority to have a separate capital base designated as qualified. A separate capital base shall be in the amount of at least One Million Dollars but may not exceed Four Million Dollars.4.1.b. Application Requirements. -- The Qualified Company shall file an application on the form provided for in Subsection 3.3 of this Rule and shall provide the information required for Applicants under that Subsection, as it applies to the Qualified Company's separate capital base, with all references in the application to Applicants, investors, capital bases and designation as a Qualified Company being read to apply to Qualified Companies applying to have a separate capital base designated as qualified, investors in the separate capital base, the separate capital base sought and designation as qualified of the separate capital base, respectively, and shall also amend its original application to reflect any changes in the information that it initially filed with the Authority.4.1.c. Application; Receipt; Review; Action; Tax Credit Allocation. -- The provisions of Subsections 3.4 through 3.14 of this Rule apply to the application process, receipt and acceptance of applications, review of applications by the Director, action by the Authority and allocation of tax credits, with all references in Subsections 3.4 through 3.14 to Applicants and applications being read to apply to Qualified Companies applying for designation as qualified of a separate capital base and applications therefor, respectively.4.1.d. Separate Capital Base; Requirements. -- Designation of a separate capital base as qualified will create a separate capital base for the Qualified Company. Each separate capital base is subject to all investment and reporting requirements of the Act and Sections 6 and 7 of this Rule, independent of any other capital base of the Qualified Company.EXAMPLE:Qualified Company, in fiscal year 1991, has a capital base of Two Million Dollars ($2,000,000.00). In fiscal year 1992, Qualified Company may qualify a new and separate capital base (other than its original capital base of $2,000,000.00), pursuant to Subsection 4.1 of this Rule, in an amount of at least One Million Dollars ($1,000,000.00) and not to exceed Four Million Dollars ($4,000,000.00). The new and separate capital base qualified in 1992 is governed by the provisions of the Act as amended in 1991 and this Rule, including the 35-55-75 investment schedule of W. Va. Code § 5E-1-12(a) and Subsection 6.3 of this Rule.
4.2. Increases to Capital Base. 4.2.a. General Rule; Amount. -- During any fiscal year in which it has not received approval for the maximum tax credit under Subsection 5.2 of this Rule of Two Million Dollars for that year, a Qualified Company may apply to the Authority to have an increase in its existing capital base designated as qualified and additional tax credits on the increase in accordance with Subsection 5.3 of this Rule; provided, however, the maximum total amount to which an existing capital base may be increased is Four Million Dollars ($4,000,000.00).4.2.b. Application Requirements. -- The Qualified Company shall file an application on the form provided for in Subsection 3.3 of this Rule and shall provide the information required for Applicants under that Subsection, as it applies to the increase of the Qualified Company's capital base, with all references in the application to Applicants, investors, capital bases and designation as a Qualified Company being read to apply to Qualified Companies applying to have an increase to capital base designated as qualified, investors in the increase to capital base, the increase to capital base sought and designation as qualified of the increase to capital base, respectively, and shall also amend its original application to reflect any changes in the information that it initially filed with the Authority.4.2.c. Application; Receipt; Review; Action; Tax Credit Allocation. -- The provisions of Subsections 3.4 through 3.15 of this Rule apply to the application process, receipt and acceptance of applications, review of applications by the Director, action by the Authority and allocation of tax credits, with all references in the application to Applicants and applications being read to apply to Qualified Companies applying to have an increase to capital base designated as qualified, and applications for the increase, respectively.4.2.d. Fiscal Year. -- Designation of an increase to capital base as qualified will increase the Qualified Company's existing capital base regardless of the year in which the initial capital base was qualified, but tax credits resulting from the increase to capital base shall be allocated from tax credits authorized for the fiscal year in which application for the increase was made.4.2.e. Single Total Capital Base; Requirements. -- The initial capital base and all increases to it shall together constitute a single total capital base. That total capital base is subject to all investment and reporting requirements of the Act and Sections 6 and 7 of this Rule, on a prospective basis, as if the total capital base was qualified in its entirety at the time of qualification of the initial capital base; provided that, where a Qualified Company was designated as a Qualified Company prior to the 1991 amendments to the Act, and its increase to capital base was designated as qualified subsequent to the amendments, the pre-amendment requirements apply to the initial portion of the total capital base and the post-amendment requirements apply to the increase.4.2.f. Investment Schedule Limitation. -- Notwithstanding the provisions of Subsection 4.2 of this Section, an increase to capital base shall not be designated as qualified if, at the time of designation, the Qualified Company would be in violation of Subdivision 6.3.c of this Rule with regard to the total capital base.EXAMPLE 1:Qualified Company was qualified on February 1, 1989 with a capital base of $1,000,000.00. Qualified Company wishes to increase its capital base pursuant to Subsections 4.2 and 5.3 of this Rule. An increase of $500,000.00 is approved by the Authority on October 1, 1991. With the increase, Qualified Company has a single capital base of $1,500,000.00. However, the original $1,000,000.00 is subject to the 20-40-60 investment schedule under the Act prior to its 1991 amendment, while the $500,000.00 increase is subject to the 35-55-75 investment schedule of W. Va. Code § 5E-1-12(a) and Subsection 6.3 of this Rule. The $500,000.00 increase occurs in Year 3 of the original 20-40-60 investment schedule. Therefore, as illustrated below, by the end of Year 3, Qualified Company must have invested in a qualified manner a total of $975,000.00 (60% of the original $1.0 million plus 75% of the $500,000.00 increase).
| Year 1 -- 2/1/89 - 2/1/90 | |
| Cumulative Required | | |
| Investment | $200,000.00 | (20% of $1.0 million) |
| Total | $200,000.00 | |
| Year 2 -- 2/1/90 - 2/1/91 | |
| Cumulative Required | | |
| Investment | $400,000.00 | (40% of $1.0 million) |
| Total | $400,000.00 | |
| Year 3 -- 2/1/91 - 2/1/92 | |
| Cumulative Required | | |
| Investment | $600,000.00 | (60% of $1.0 million) |
| + | |
| $357,000.00 | (75% of $500,000.00) |
| Total | $975,000.00 | |
EXAMPLE 2:Qualified Company was qualified on February 1, 1987, with a capital base of $1,000,000.00. In 1991, Qualified Company wishes to increase its original capital base by $500,000.00. However, the original $1,000,000.00 was subject to the 20-40-60 investment schedule under the Act prior to its 1991 amendment, while the $500,000.00 increase, if approved, would be subject to the 35-55-75 investment schedule of W. Va. Code § 5E-1-12(a) and Subsection 6.3 of this Rule. Unless Qualified Company had invested $975,000.00 (60% of the original $1.0 million plus 75% of the $500,000.00 increase) by February 1, 1990, the $500,000.00 increase in 1991 would not be approved as an increase to the original capital base. Furthermore, given that each separate capital base must be in the amount of at least $1,000,000.00, Qualified Company would need to raise an additional $500,000.00 to be able to form a separate capital base pursuant to Subsection 4.1 of this Rule.