Current through Register Vol. XLI, No. 50, December 13, 2024
Section 117-3-7 - Investment Requirements7.1. Investments. -- Each Fund Manager shall invest the assets of the Fund or Fund Share to which the Fund Manager is assigned or which it receives by making debt or equity investments in West Virginia Businesses in accordance with this Section.7.2. Investments Pursuant to Investment Guidelines. -- The Fund Manager shall invest the assets of each Fund or Fund Share according to the investment guidelines agreed upon between the Fund Manager and the Fund or Governing Entity and set forth in a participation or other agreement entered into by the Fund Manager and the applicable Fund or Governing Entity in accordance with Subdivision 7.6.4 of this Rule.7.3. Limitation of Qualified Investment. -- No more than thirty percent (30%) of the equity of a Fund or Fund Share raised in accordance with the Act and this Rule may be invested in any one West Virginia Business without the consent of the applicable Fund or Governing Entity.7.4. Investment Restrictions 7.4.1. Unless the prior written consent of the applicable Fund or Governing Entity is obtained, a Fund Manager may not invest any portion of a Fund or Fund Share in any West Virginia Business where there is a direct or indirect economic relationship, in the form of ownership, compensation or otherwise, between the Fund Manager, inclusive of the Fund Manager's relatives, affiliates or members of its Managing Body, and the West Virginia Business, inclusive of relatives, affiliates and members of the Managing Body. The investment restrictions in this Subdivision are not applicable where the Fund Manager's economic relationship is solely the result of the fact that the Fund Manager has made a previous investment in the West Virginia Business pursuant to the Act or this Rule.7.4.2. Unless the prior written consent of the applicable Fund or Governing Entity is obtained, a Fund Manager may not invest any portion of or contribution from a Fund or Fund Share in any West Virginia Business where there is a direct or indirect economic relationship, in the form of ownership, compensation or otherwise, between the West Virginia Business, including the relatives, affiliates and members of the Managing Body of the West Virginia Business, and an investor in the Fund or Fund Share, including relatives, affiliates and members of the Managing Body of the investor. The investment restrictions in this Subdivision are not applicable where the investor's economic relationship is solely the result of the fact that the Fund Manager has made a previous investment in the West Virginia Business pursuant to the Act or this Rule.7.5. Conflict of Interest. -- No officer, member, or employee of the Authority may be financially interested, directly or indirectly, in any Fund Manager or West Virginia Business invested in by a Fund Manager.7.6. Purchase of Ownership Interest in a Fund Manager.7.6.1. Structure. -- At the discretion of the Authority or applicable Governing Entity, a Fund or Fund Share may invest its assets by purchasing an ownership interest in a Federal Program Participant or other Entity serving as the Fund Manager. Such purchase of an ownership interest in the Fund Manager may be by original issue from the Fund Manager or purchased on the secondary market from an owner of the Fund Manager.7.6.2. Pooling of Assets. -- The assets of the Fund or Fund Share used to purchase an ownership interest in its Fund Manager may be pooled with that of other private or public investors holding ownership interests in the Fund Manager so that the assets of the Fund or Fund Share contributed to the Fund Manager may become indistinguishable from those of the other owners of the Fund Manager.7.6.3. Investments. -- In situations where the Fund or Fund Share purchases an ownership interest in its Fund Manager, the Fund Manager may invest its assets, including those of the Fund or Fund Share, in businesses located in various states: Provided, That the Fund Manager must invest an amount equal to or exceeding the amount contributed by the Fund or Fund Share, net of reasonable management fees and operational expenses allocable to the Fund under the applicable Participation Agreement, in the form of debt or equity investments in West Virginia Businesses in accordance with this section.7.6.4. Investment Guidelines. -- In the Participation Agreement or other agreement executed by the applicable Fund or Governing Entity and the Fund Manager, the Fund or Governing Entity and the Fund Manager shall contractually agree on the investment guidelines to be followed by the Fund Manager when investing in West Virginia Businesses.7.7. Where the Fund or Fund Share Does Not Purchase an Ownership Interest In Its Fund Manager. -- In situations where the Fund or Fund Share does not purchase an ownership interest in its Fund Manager: 7.7.1. Unless the prior written consent of the Governing Entity is obtained, the Fund Manager shall not obtain ownership of assets of the Fund or Fund Share. Rather, the Fund Manager, at least fifteen (15) days before the closing of an investment in a West Virginia Business, shall advise the applicable Governing Entity in writing of the funds to be invested to allow the applicable Governing Entity to make the funds available for investment by the Fund Manager at closing;7.7.2. Unless the prior written consent of the Governing Entity is obtained, the Fund Manager shall make, and at all times maintain, all investments on the name of the applicable Fund; and7.7.3. The Fund Manager shall have discretion as to the selection of West Virginia Businesses for investment and the terms upon which such investments are made; however, the applicable Fund or Governing Entity may at all times revoke or restrict such discretion of the Fund Manager and submit investment guidelines to be followed by the Fund Manager.