SECOND REGULAR SESSION
94TH GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVES FLOOK (Sponsor), STORCH, ERVIN, GRISAMORE, CUNNINGHAM (86), HUGHES, KRAUS AND BRUNS (Co-sponsors).
Read 1st time March 10, 2008 and copies ordered printed.
D. ADAM CRUMBLISS, Chief Clerk
AN ACT
To repeal section 620.014, RSMo, and to enact in lieu thereof three new sections relating to business finance programs.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Section 620.014, RSMo, is repealed and three new sections enacted in lieu thereof, to be known as sections 348.267, 348.268, and 620.014, to read as follows:
348.267. 1. This section shall be known and may be cited as the "Seed Capital Technology Business Finance Program Act".
2. There is hereby created within the Missouri technology investment fund established under section 348.264 an account to be known as the "Seed Capital Technology Business Finance Program Account". The account shall consist of all moneys which may be appropriated to it by the general assembly, and also any gifts, contributions, grants or bequests received from federal, private, or other sources. The account shall also consist of payments on loans made from the account dividends paid on shares of stock purchased with moneys from the account, royalty proceeds, or any other form of return on authorized investments made by the Missouri technology corporation under the seed capital technology business finance program with moneys from the account. Moneys for the seed capital technology business finance program established under this section shall be available from appropriations made by the general assembly from the seed capital technology business finance program account of the Missouri technology investment fund. Any moneys remaining in the seed capital technology business finance program account at the end of any fiscal year shall not lapse to the general revenue fund, as provided in section 33.080, RSMo, but shall remain in the seed capital technology business finance program account.
3. (1) The Missouri technology corporation may use moneys in the seed capital technology business finance program account, as appropriated, to make investments in an advanced technology company that is at the early development stage of commercializing advanced technology.
(2) Investments shall be loans convertible to equity, equity, or loans with stock subscription or similar warrants that are beneficially owned by the Missouri technology corporation.
(3) Eligible advanced technology industries shall include animal health, biotechnology, information technology, communications technology, aerospace, electronics, robotics, medical devices and instruments, telecommunications, plant sciences, and energy. Ineligible industries include banking and lending, development, management, and investment companies, finance, insurance, mining, oil and gas exploration, real estate, wholesale, and retail.
(4) An eligible company shall have fifty percent or more of its employees and assets in Missouri.
(5) An eligible company shall be at the seed or start-up stage.
(6) An eligible company shall have innovative products and services.
4. The Missouri technology corporation shall contract with professional equity fund managers for professional review of applications, performance of due diligence, and other related advisory services prior to any investments being made under this section. Such contracts shall be paid for out of appropriations from the seed capital technology business finance program account.
5. The Missouri technology corporation may make authorized investments in eligible advanced technology companies engaged in new product or process innovations only after:
(1) Receipt of an application from the company that contains:
(a) A business plan including a description of the company and its management, product, and market;
(b) A statement of the amount, timing, and projected use of the capital required;
(c) A statement of the potential economic impact of the enterprise, including the number, location, and types of jobs expected to be created; and
(d) Such other information as the Missouri technology corporation shall request;
(2) Approval of the investment by the Missouri technology corporation, which may only be made based upon a recommendation for investment by the professional equity fund managers contracted with by the Missouri technology corporation and a finding by the board of directors that:
(a) The proceeds of the investment will be used only to cover the seed capital needs of the company;
(b) The company has a reasonable chance of success;
(c) The Missouri technology corporation's participation is instrumental to the success of the company and will assist in its retention within the state;
(d) The Missouri technology corporation's investment is leveraged by at least one additional equity investment in the company in an amount equal to or greater than the Missouri technology corporation's investment;
(e) The company has the reasonable potential to enhance employment opportunities within the state;
(f) The entrepreneur and other founders of the company have already made or are contractually committed to make an appropriate financial and time commitment to the enterprise;
(g) Any securities to be purchased are registered if required by law;
(h) There is a reasonable possibility that the Missouri technology corporation will recoup at least its initial investment or financial commitment; and
(i) Binding commitments have been made to the Missouri technology corporation by the company for adequate reporting of financial data to the Missouri technology corporation, which shall include a requirement for an annual report, or if required by the board, an annual audit of the financial and operational records of the company, and for such control on the part of the Missouri technology corporation as the board of directors shall consider prudent over the management of the company, so as to protect the investment or financial commitment of the Missouri technology corporation, including in the discretion of the board and without limitation, right of access to financial and other records of the company, and membership or representation on the board of directors of the company.
6. The Missouri technology corporation shall not make investments in amounts greater than the lesser of seven hundred fifty thousand dollars or an amount that gives the Missouri technology corporation forty-nine percent ownership interest in any one advanced technology company at the time of investment.
7. Use of the investment in the eligible advanced technology company includes intellectual property development, business prototypes, market studies, and business operations.
8. The Missouri technology corporation may adopt such rules, statements of policy, procedures, forms, and guidelines as may be necessary to carry out the provisions of this section. Any rule or portion of a rule, as that term is defined in section 536.010, RSMo, that is created under the authority delegated in this section shall become effective only if it complies with and is subject to all of the provisions of chapter 536, RSMo, and, if applicable, section 536.028, RSMo. This section and chapter 536, RSMo, are nonseverable and if any of the powers vested with the general assembly under chapter 536, RSMo, to review, to delay the effective date, or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2008, shall be invalid and void.
348.268. 1. This section shall be known and may be cited as the "Proof of Concept Technology Business Finance Program Act".
2. There is hereby created within the Missouri technology investment fund established under section 348.264 an account to be known as the "Proof of Concept Technology Business Finance Program Account". The account shall consist of all moneys which may be appropriated to it by the general assembly, and also any gifts, contributions, grants, or bequests received from federal, private or other sources. The account shall also consist of payments on loans made from the account by the Missouri technology corporation under the proof of concept technology business finance program. Moneys for the proof of concept technology business finance program established under this section shall be available from appropriations made by the general assembly from the proof of concept technology business finance program account of the Missouri technology investment fund. Any moneys remaining in the proof of concept technology business finance program account at the end of any fiscal year shall not lapse to the general revenue fund, as provided in section 33.080, RSMo, but shall remain in the proof of concept technology business finance program account.
3. (1) The Missouri technology corporation may use moneys in the proof of concept technology business finance program account, as appropriated, to make one-time loans to a company that is at the early development stage of commercializing advanced technology.
(2) The loan amount to any single advanced technology company shall not exceed seventy-five thousand dollars.
(3) Loans shall be repaid to the Missouri technology corporation in an amount equal to two times the amount loaned. Repayment shall take place no later than five years from the date of the loan. Early repayment will result in prorating of the repayment amount.
(4) The Missouri technology corporation's loan shall be leveraged dollar-for-dollar by at least one additional equity investment in the company.
(5) Eligible advanced technology industries shall include animal health, biotechnology, information technology, communications technology, aerospace, electronics, robotics, medical devices and instruments, telecommunications, plant sciences, and energy. Ineligible company industries include banking and lending, development, management and investment companies, finance, insurance, mining, oil and gas exploration, real estate, wholesale, and retail.
(6) Eligible companies shall be technology-based, sufficiently innovative to provide a competitive advantage in the marketplace, and have the potential for significant, high performance growth.
(7) An eligible company shall have fifty percent or more of its employees and assets in Missouri.
(8) An eligible company shall have average wage levels at least thirty-five percent higher than the average county wage level as determined by the department of economic development for the most recently completed full calendar year.
(9) An eligible company shall be at the early development stage of commercializing an advanced technology.
(10) An eligible company, at the time a proof of concept loan is made to that company, shall be a small business concern that meets the requirements of the United States Small Business Administration's qualification size standards for its business loan program, as defined in 13 CFR 121.301(a) of the Small Business Investment Act of 1958, as amended.
4. Eligible use of the proceeds of a proof of concept program loan include intellectual property development, building prototypes, market studies, identifying and securing a management team, and business operations.
5. The Missouri technology corporation may make proof of concept loans to eligible advanced technology companies only after:
(1) Receipt of an application from the company that contains:
(a) A business plan including a description of the company and its management, product, and market;
(b) A statement of the amount, timing, and projected use of the capital required;
(c) A statement of the potential economic impact of the advanced technology company, including the number, location, and types of jobs expected to be created; and
(d) Such other information as the Missouri technology corporation board of directors shall request;
(2) Approval of the loan by the Missouri technology corporation, which may be made after the board of directors finds, based upon the application submitted by the company and such additional investigation as the staff of the Missouri technology corporation shall make that:
(a) The proceeds of the loan will be used only to cover the proof of concept capital needs of the company;
(b) The company has a reasonable chance of success;
(c) The Missouri technology corporation's participation is instrumental to the success of the company and will assist in its retention within the state;
(d) The Missouri technology corporation's loan is leveraged by at least one additional equity investment in the company;
(e) The company has the reasonable potential to enhance employment opportunities within the state;
(f) The entrepreneur and other founders of the company have already made or are contractually committed to make an appropriate financial and time commitment to the enterprise;
(g) There is a reasonable possibility that the Missouri technology corporation will be repaid the loan as provided for in this section; and
(h) Binding commitments have been made to the Missouri technology corporation by the company for adequate reporting of financial data to the Missouri technology corporation, which shall include a requirement for an annual report, or if required by the board, an annual audit of the financial and operational records of the company.
6. The Missouri technology corporation may adopt such rules, statements of policy, procedures, forms, and guidelines as may be necessary to carry out the provisions of this section. Any rule or portion of a rule, as that term is defined in section 536.010, RSMo, that is created under the authority delegated in this section shall become effective only if it complies with and is subject to all of the provisions of chapter 536, RSMo, and, if applicable, section 536.028, RSMo. This section and chapter 536, RSMo, are nonseverable and if any of the powers vested with the general assembly under chapter 536, RSMo, to review, to delay the effective date, or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2008, shall be invalid and void.
620.014. Records and documents submitted to the department of economic development, to the Missouri [economic development, export and infrastructure] development finance board, the Missouri technology corporation, or to a regional planning commission formed pursuant to chapter 251, RSMo, relating to financial investments in a business, or sales projections or other business plan information which may endanger the competitiveness of a business may be deemed a "closed record" as such term is defined in section 610.010, RSMo.
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