W. Va. Code R. § 117-3-5

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 117-3-5 - Investors

5.1. Minimum Requirements of Investors; Confirmation.

5.1.a. Minimum Requirements. -- All investors in any Fund or Fund Share, and any individual or Entity applying for a tax credit under this Rule, shall meet the following requirements:

5.1.a.1. Accredited Investor. Each investor shall meet the requirements to be an accredited investor as set forth, from time to time, in Regulation D promulgated by the U.S. Securities and Exchange Commission under the Securities Act of 1933 or shall meet any other more stringent requirements as may be designated, from time to time, by the Authority; and

5.1.a.2. Minimum Investment. Each investor shall invest in a Fund, or as an allocation amongst Fund Shares of a Fund, a minimum of Two Hundred Thousand Dollars ($200,000.00) or other amount set by the Authority.

5.1.b. Confirmation. -- During the times specified by the Authority, individuals and entities meeting the minimum requirements of investors as set forth in Subdivision 5.1.a of this Rule and desiring to consider investment in a Fund or Fund Share shall submit evidence to the Authority, in a form acceptable to the Authority, so that the Authority can confirm that the individual or Entity does meet the minimum requirements for investors set forth in Subdivision 5.1.a of this Rule. Only after confirmation has been made by the Authority may the individual or Entity apply for investment in any Fund or Fund Share and for receipt of any tax credits authorized under the Act.

5.2. Investor Applications.

5.2.a. -- Announcement. The Authority shall announce, to all individuals and entities which in accordance with Subdivision 5.1.b of this Rule have been confirmed by the Authority to meet the minimum requirements of investors as set forth in Subdivision 5.1.a of this Rule, the acceptance of applications for investment in a Fund or Fund Share. The announcement shall occur at least thirty (30) calendar days before the date set for acceptance of applications. The notice shall set forth:

5.2.a.1. The first day upon which applications may be submitted to the Director;

5.2.a.2. The name of the Fund or Fund Share for which applications will be taken;

5.2.a.3. Information disclosing the Fund Managers for the Fund or Fund Share and other information pertaining to the Fund or Fund Share as desired by the Authority; and

5.2.a.4. Any other information desired by the Authority.

5.2.b. -- Application. Individuals and entities desiring to invest in a Fund or Fund Share shall submit to the Director a written application on forms provided by the Authority.

5.2.c. -- Contents of Application. The application shall be signed and verified by the applicant or by a duly authorized representative of the applicant, and shall contain the following:

5.2.c.1. The full legal name and tax identification number of the applicant;

5.2.c.2. The applicant's physical address, mailing address and telephone number;

5.2.c.3. If the applicant is a business Entity, the titles, names, home and business addresses and telephone numbers of, as applicable, the individuals and entities serving on the Managing Body of, or having an ownership interest in, the applicant. The addresses shall include street and number, city or town, state and zip code;

5.2.c.4. Information evidencing that the applicant continues to satisfy all minimum requirements for investors as set forth in Subdivision 5.1.a of this Rule;

5.2.c.5. A statement that the Applicant, if accepted as an investor, will comply with all requirements of the Act, this Rule and the applicable Governance Agreement;

5.2.c.6. A statement that the Applicant understands the risks and restrictions of investing in the applicable Fund and the applicable Fund Share;

5.2.c.7. A statement as to the percentage, which shall not exceed fifty percent of the amount of the applicant's investment, which the applicant agrees to receive as a tax credit under the Act if the applicant is accepted as an investor; provided, that the percentage shall not exceed ten percent in the case of qualified capital companies under the West Virginia Capital Company Act, W. Va. Code §§ 5E-1-1 et seq., which have received the consent of the Authority to submit an application for investment in a Fund or Fund Share of monies from their capital bases which are not required to be invested in qualified investments;

5.2.c.8. A statement that, to the best knowledge of the investor, investment in the Fund or Fund Share applied for will not violate the provisions of Subsection 5.11 of this Rule;

5.2.c.9. An irrevocable letter of credit representing the proposed investment in an amount equal to or exceeding the minimum investment amount as determined in accordance with Paragraph 5.1.a.2 of this Rule and a certified check for any initial capital call: Provided, that the economic development authority may authorize a reduction in the amount of the irrevocable letter of credit to correspond to a payment made towards the proposed investment; and

5.2.c.10. Any and all additional information or statements as requested by the Authority.

5.2.d. Application Forms. -- The form for applying to become an investor in a Fund or Fund Share may be obtained from the Director at the following address: West Virginia Economic Development Authority, NorthGate Business Park, 160 Association Drive, Charleston, WV 25311-1217.

5.2.e. Filing. -- Each Applicant shall file with the Director three (3) complete applications with original signatures.

5.2.f. Applications of Qualified Capital Companies. -- Qualified capital companies under the West Virginia Capital Company Act, W. Va. Code §§ 5E-1-1 et seq. must receive the prior written consent of the Authority in order to submit an application for investment in a Fund or Fund Share. Any investment, if made, may only constitute in whole or in part monies from their capital bases which are not required to be invested in qualified investments. The application process and the requirements of investors set forth in this Rule also apply to qualified capital companies.

5.3. Application Receipt and Review.

5.3.a. Acceptance in General. -- During regular business hours of the Authority, applications shall be received by the Director (which shall for purposes of receipt of applications include other representatives of the Authority) on a first come, first served basis beginning on the day set forth in the announcement for acceptance of applications; provided, however, that all applications received by the Director on the same calendar day shall be considered simultaneously received regardless of the time of day of actual delivery. The Director shall record the time and date of receipt of an application. The Director shall not receive applications prior to the day set forth in the announcement for acceptance of applications.

5.3.b. Delivery. -- Applications shall be considered received by the Director and submitted by the applicant on the day of actual delivery to the Director, whether the delivery is performed in person, by mail, by courier or delivery service, or otherwise.

5.3.c. Review of Applications.

1. General Rule. -- The Director shall review all applications in the order of their receipt to determine if each application is complete. The Director has sole discretion to determine whether an application is complete. The Director's determination shall be made within forty-five (45) days of the application's receipt. In the event that the Director determines an application to be incomplete, the Director shall notify the applicant, in writing, of the reasons for that determination and shall return the incomplete application to the applicant. The applicant may resubmit the application after correcting the deficiencies stated in the notice. If an application, though incomplete, is substantially complete as determined in the sole discretion of the Director, the time of receipt of the resubmitted application, for purposes of review by the Director, shall be considered to be the time of receipt of the initial application. If an application is not substantially complete as determined in the sole discretion of the Director, the resubmitted application shall be considered received, for purposes of review by the Director, when resubmitted.

2. Review of Simultaneously Received Applications.

a. In the event of simultaneously received applications submitted by applicants, the Director shall first review the applications to determine the tax credits sought by each application, and the total of the tax credits sought by all the simultaneously received applications. If the total tax credits sought by all the simultaneously received applications are less than the tax credits authorized for the Fund or Fund Share, after taking into account applications reviewed previously and determined to be complete or substantially complete, the Director shall proceed to review the simultaneously received applications for completeness and the applications shall be considered simultaneously reviewed.

b. If the total tax credits sought by all the simultaneously received applications exceed the tax credits authorized for the Fund or Fund Share, after taking into account applications reviewed previously and determined to be complete or substantially complete, the Director shall issue tax credits by giving preference to those applicants which have agreed in their application to accept a tax credit based on a lower percentage of their investment than that requested by the other applicants.

c. If authorized tax credits still remain after giving that preference, then the Director shall, within thirty (30) days, but not earlier than five (5) days, after the receipt of the applications, conduct a lottery to determine the order of review of the simultaneously received applications which have not been awarded tax credits based upon the preference of Paragraph b of this Subdivision, as follows:

i. The Director shall provide all applicants that submitted simultaneously received applications and which have not been awarded tax credits based upon the preference of Paragraph b of this Subdivision written notice of the lottery and the opportunity for their designated representative to attend the lottery.

ii. To conduct the lottery, the Director shall:

(a) prepare for each applicant, on index cards of the same fundamental character, an index card setting forth the applicant's name and the tax credits sought by the applicant by its application;

(b) deposit in a container one index card for each applicant;

(c) select and draw from the container one index card in a manner that the Director may not determine the applicant set forth on the index card;

(d) announce and record the applicant whose index card was drawn and the amount of tax credits sought by that applicant; and

(e) repeat steps (c) and (d) until all applicants' cards are drawn from the container.

iii. Each application shall be then reviewed for completeness by the Director in the order in which it was drawn from the container.

iv. Prior to commencement of the lottery process, all applicants participating in the lottery may, by written agreement in a form acceptable to the Authority, agree as to how the remaining tax credits are to be divided amongst the applicants; provided, however, that the minimum investment requirements set forth in Paragraph 5.1.a.2 of this Rule shall be satisfied.

v. If for any reason an applicant selected for a tax credit allocation does not become an investor, the Authority shall award the unused credit to the next qualified applicant.

5.4. False Information. -- Upon the submittal of any false or misleading information by an applicant, the Director may reject the application and deny further consideration of the applicant for qualification in that and subsequent fiscal years.

5.5. Complete Application. -- Upon a determination by the Director that an application is complete, the Director shall place the complete application on the agenda of the next duly or regularly scheduled meeting of the Authority. Complete applications shall be placed on the agenda in the order of their review by the Director.

5.6. Action of Authority. -- The Authority shall consider all applications in the order they are placed on the agenda of any duly or regularly scheduled meeting of the Authority.

5.7. Allocation of Tax Credits. -- In the order set forth in this Section, the Authority shall issue certificates of tax credit to the applicants for each Fund or Fund Share after each applicant has executed the applicable Governance Agreement and any other documentation requested by the Authority and the applicable Governing Entity. Upon issuance of tax credits to an applicant, the applicant becomes an investor in the Fund or Fund Share.

5.8. Notification of Action. -- The Director shall notify each applicant in writing of the Authority's action with regard to the application.

5.9. Suspension of Qualification Process. -- In any fiscal year, upon the allocation to applicants of the total tax credits authorized for that Fund or Fund Share, the Authority shall suspend the qualification process and the Director shall reject all subsequently submitted applications.

5.10. Obligation to Update Application. -- Any applicant shall immediately notify the Director in writing of any changes in any of the information filed with the Authority as part of an application filed under this Rule or any other information submitted to the Authority pursuant to this Rule.

5.11. Relationship with Fund Manager Prohibited.

5.11.1. General Rule. -- W. Va. Code § 5E-2-4(b) provides for the issuance of tax credits to investors which invest in a fund authorized by the Authority which is independently operated by qualified managers and is not directly or indirectly operated by the investors.

5.11.2. Ownership. -- At all times during investment in a Fund or Fund Share, an investor in a Fund or Fund Share shall not have a substantial ownership interest, which for purposes of this Rule shall be considered a five percent or more ownership interest, in the Fund Manager managing the Fund or Fund Share invested in. Likewise, a Fund Manager shall not have a substantial ownership interest, which for purposes of this Rule shall be considered a five percent or more ownership interest, in any investor of the Fund or Fund Share which the Fund Manager is managing.

5.11.3. Compensation. -- Unless the prior written consent of the applicable Governing Entity is obtained, an investor in a Fund or Fund Share and the Manager of a Fund or Fund Share shall not have a direct or indirect compensation arrangement of any kind for services to be provided by the investor to the Fund Manager or by the Fund Manager to the investor, or any kind of debtor-creditor relationship.

5.12. Rights and Obligations of Investors. -- The rights and responsibilities of the investors in a Fund or Fund Share are those set forth in the Act, this Rule and the applicable Governance Agreement.

W. Va. Code R. § 117-3-5