View NCGA Bill Details2013-2014 Session
House Bill 680 (Public) Filed Tuesday, April 9, 2013
Intro. by Murry, Moffitt, Shepard, Hastings.

Status: Re-ref Com On Finance (Senate Action) (Jul 17 2014)
H 680

Bill Summaries:

  • Summary date: Jul 17 2014 - More information

    Senate committee substitute makes the following changes to the 3rd edition.

    Amends GS Chapter 105, adding new Article 3L, North Carolina New Markets Jobs Act of 2014, to create a state level reduction of tax that mirrors the federal New Market Tax Credit (NMTC) under Section 45D of the Internal Revenue Code (IRC). Provides a state level below the line reduction of tax (reduction) to investors who commit capital for a seven-year term in the form of loans or quality equity investments to borrowers in low-income communities.

    Defines reductionto mean a subtraction from the total amount of state premium tax liability made (1) after all additions and deductions have been made to the gross premium amount and (2) after the appropriate rates of tax have been applied. Provides that a reduction has the same property and contractual protections as a credit.

    Defines quality equity investmentas a long-term debt security issued by or an equity investment in a qualified community development entity that (1) is acquired at its original issuance for cash after the effective date of this act; (2) has at least 85 percent of its purchase price used by the qualified community development entity to make qualified low-income community investments in qualified state low-income community businesses by the first anniversary of the initial reduction allowance date;and (3) is designated by the qualified community development entity as a qualified equity investment and certified by the Department of Commerce (Department).

    Defines the term reduction allowance dateas the date on which any qualified equity investment is initially made and each of the following six anniversary dates. Provides that the applicable percentage rates for the reduction allowance date are 0 percent for the first two reduction allowance dates, 12 percent for the next three reduction allowance dates, and 11 percent for the following two reduction allowance dates.

    Defines the term qualified community development entityas having the same meaning as provided in section 45D of the IRC of 1986, as amended, provided that the entity meets certain specifications.

    Also defines qualified active low-income community business and additional terms as used in this act.

    Provides that the total statewide investment amount that may qualify for the tax credit is $208,333,333 with a maximum investment in any one business of $7 million. Directs the Department to certify $208,333,333 in qualified equity investment authority under two allocations, one for the Rural Reserve and one for the Statewide Reserve, each as described in new GS 105-129.109(a), as established in this act.

    Provides additional details on the tax credit. Sets out the procedure for a qualified community development entity to apply to the Department for an equity investment or long-term debt security to be designated as a qualified equity investment. Allows disallowance of the reduction under certain circumstances. Requires that applicants pay a refundable performance fee. Requires the Secretaryto issue binding letter rulings in response to applicants requesting an interpretation of the law to a specific set of facts. Provides that an entity claiming a credit for qualified equity investment is not required to pay any additional retaliatory tax as a result of claiming the credit. Prohibits a certified qualified equity investment from being decertified unless the statute's requirements have not been met. Sets out conditions for decertification. Provides that no qualified community development entity is entitled to pay any affiliate of such entity any fees in connection with any activity under this Article prior to decertification of all qualified equity investment issued to the entity. Does not prohibit a qualified community development entity from allocating or distributing income earned by it to the affiliates or paying reasonable interest on amounts lent to the entity by such affiliates.

    Enacts new GS 105-129.109, which provides for the allocation of the $208,333,333 of qualified equity investments eligible for certification by the Department under new GS 105-129.102. Divides the $208,333,333 investment pool into two funds: (1) allocates $156.25 million to the Rural Reserve to credit investments located in rural census tracts in a county designated as Tier 1 or Tier 2 by the NC Department of Commerce and (2) allocates $52,083,333 to the Statewide reserve to credit investments made anywhere within the state.

    Enacts new GS 105-129.110 to prohibit a qualified active low-income community business and any of its affiliates that receive a qualified low-income community investment from a qualified community development entity that issues qualified equity investments under this Article from directly or indirectly (1) owning or acquiring an ownership interest in a qualified community development entity or a member of or affiliate of that entity or (2) making a loan to or investing in a qualified community development entity, or a member of or affiliate of that entity. Provides additional specifications regarding new capital requirements.

    Enacts new GS 105-129.111 to specify the reporting requirements for a qualified community development entity that issues qualified equity investments under this Article.

    The provisions of this Article apply to qualified equity investments made on or after January 2, 2015.

    Clarifies that Part I of this act, Jump-Start Our Business Start-Ups Act, expires on July 1, 2017.

    Amends the short and long title to reflect the changes in the content of the bill.

  • Summary date: Jun 19 2013 - More information

    House committee substitute makes the following changes to the 2nd editiion.

    Amends new GS 78A-17.1, which provides for an exemption from GS 78A-24 and GS 78A-49(d) for an issuer'soffer or sale of a security that meets specified requirements, includingnot exceeding the capon the amount to be received on all sales of securities in reliance on the exemption, to provide that the cap is $1 million if the issuer has not made documentation resulting from a financial audit for its most recent fiscal year available to each prospective investor and the Administrator. Provides that the cap is $2 million if the issuer has made the documentation available resulting from a financial audit for its most recently completed fiscal year to each prospective investor and the Administrator. Makes clarifying changes to the provisions of subdivision (5) of GS 78A-17.1(a), providing specifications regarding notice of an offering of securities in reliance on this exemption, details required pertaining to the description of the company, and and additional details and data regarding the company and its structure. Also clarifies that the issuer must makecertain disclosures to prospective purchasers or investors.

    Provides that the issuer of the securities must require each purchaser to certify in writing that the purchaser acknowledges and understands the parameters of the transaction.

    Requires the web site operator to register with the Administrator by filing a statement that it is a businessentity organized under North Carolina law authorized to do business in this state and being utilized to offer and sell securities under this exemption. Prohibits offers or sales of a security via an Internet web site unless this registration requirement is met. Requires all payments for purchases of securities to be directed to and held by the bank or depository institution subject to the provisions of sub-subdivision (a)(5)c. of GS 78A-17.1 (requires that the notice filed with the Administrator contain an escrow agreement with a bank or other depository institution locatedwithin the state in which the investor funds will be deposited). Requires the issuer to provide a copy of the disclosure document provided to the Administrator to each prospective investor at the time that the offer of securities is made to the potential investor. Prescribes additional information tobe include in the disclosure document. Provides that the caps set in subdivision (a)(3) ofthis section must be cumulatively adjusted every fifth year by the Administrator to reflect the change in the Consumer Price Index for all Urban Consumers published by the Bureau of Labor Statistics. Requires that an issuer must file each quarterly report with the Administrator.

    Clarifies that except as otherwise indicated, this act is effective when it becomes law and expires on July 1, 2017.

  • Summary date: May 9 2013 - More information

    House committee substitute makes the following changes to the 1st edition.

    Amends GS 78-17 to add a new exemption to the list of transactions that are exempt from the registration and filing requirementsto includethe offer or sale of securities conducted in accordance with proposed GS 78A-17.1,the Invest NC exemption.

    Recodifiesthe Invest NC exemptionas new GS 78A-17.1 (was, GS 78A-19). Clarifies that an offer or sale of a security by an issuer is exempt from registration requirements under GS 78-24 andfiling requirements under GS 78A-49(d) providing that the offer or sale is conducted in accordance with specified requirements.

    Requires the issuer to file a notice with the Securities Administrator (Secretary of State) no less than 10 days before beginning to offer securities under the exemption. Requires the notice to include certain specified information including a disclosure statement to be provided to investors and an escrow agreement between the issuer and a North Carolina bank or depository institution. Requires that the funds received from investors be held until the minimum target offering amount is reached and that investors may cancel their purchase if the target is not reached. Directs the issuer to inform all purchasersunder this section that the securities have not been registered under federal or state securities law.Expands the language thatthe issuer must conspicuously display words as specified in this sectionon the cover page of thedocumentdisclosingspecifiedinformationas to making an investment decision.

    Expands the list of requirements that must be met if the offer and sale of securitiesis made through an Internet web site toinclude provisions regarding notice, maintenance of records, and payments for the purchase of securities. Specifies requirements, which if met, exempts the website from the registration provisions of GS 78A-36. Also extends the exemption under GS 78A-36 to an executive officer, director, managing member, or person of similar status performing functions in the name of and on behalf of the issuer providing that such persons do not receive, directly or indirectly, any commission or remuneration for offering and selling the issuer's securities under this exemption.

    Deletes provision that provides fora disqualification for the exemption allowed by this section if any of certain specifications apply to an issuer or a person affiliated with the issuer or offering within five years prior to the offering. Instead provides for disqualification for the exemption if an issuer or person affiliated with the issuer or offering is subject to any qualifications contained in 18 NCAC 06A. 1207(a)(1) through (a)(6) or contained in Rule 262 as promulgated under the Securities Act of 1933 (17 CFR 230.262).

    Directs the Administrator to charge a nonrefundable filing fee of $150 for filing the exemption notice.

    Makes a conforming change to GS 78A-49(d) regarding the informational filing requirement.

    Requiresthe Secretary of State (Administrator) to adopt rules to implement this act within 12 months. Provides for a 15-day notice and comment period and requires the Administrator to hold at least one public hearing on the rules. Provides that the rules become effective on the first day of the month following the date the rules are adopted and sent to the Codifier of Rules for entry into the Administrative Code. Provides that this provision expires 12 months after the effective date of this act.

    Replaces references to the authority and actions of the "Commissioner" with "Administrator" or its equivalent under this act, the "Secretary of State," wherever it occurs. Makes conforming changes.

    Provides that this act is effective when it becomes law and expires on July 1, 2017.

  • Summary date: Apr 10 2013 - More information

    Adds new GS 78A-19,Invest NC Exemption,to Article 3 of GS Chapter 78A. Provides for an exemption from the registration requirements of Article 4 of GS Chapter 78A for an issuer in an offer or sale of a security, and anexemption from the requirements of Article 5 of thisChapter for any seller representing an issuer in an offer or sale,if the offer or sale is conducted in accordance with each ofthe specifiedrequirements. Requires that the cap on the sum of cash and other consideration to be received for all sales of the security in reliance on this exemption be cumulatively adjusted for inflation every fifth year.

    Requires an issuer of security for which the offer of sale is exempt under this sectionto submit a free-of-charge quarterly report to the issuer's shareholders until there are no outstanding securities issued under this section. Permits the reporting requirement to be satisfied by making the information available on an Internet web site if the information is made available within 45 days of the end of each fiscal quarter and remains available for a minimum of 60 days. Requires an issuer to provide a written copy of the report to any shareholder upon request. Specifies content required to be in the report. Provides criteria for offers and sales to controlling persons, defined as an officer, director, partner, trustee, or individuals having similar status or performing similar functions as the issuer, or a person owning10% or more of the outstanding shares of any class or classes of securities of the issuer. Provides for a disqualification for the exemption allowed by this section if any of certain specifications apply to an issuer or a person affiliated with the issuer or offering within five years prior to the offering. However, makes the disqualification provisions inapplicable if there is a (1) showing of good cause and without prejudice to any other action by the Commissioner, the Commissioner determines that itis not necessary that an exemption be deniedand (2) the issuer shows that the issuer made factual inquiry as to the existence of any disqualificationand could not have known that a disqualification existed even with the exercise of reasonable care.

    Authorizes the Commissioner to adopt rules to protect investors who purchase securities under this section.

    Includes introductory "whereas clauses" providing public policy reasons for enacting this legislation.

  • Summary date: Apr 9 2013 - More information

    To be summarized at a later date.

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