Section 457-307-3-A - Eligibility - Investments into Funds Prior to January 1, 2012 and Investments through Flow-Through EntitiesInvestments by investors in funds prior to January 1, 2012 and in flow-through entities will be eligible under the Program, provided each of the following criteria is met:
A. The amount invested by the fund or flow-through entity in an eligible business (as defined in Section 3(A)) must be equal to or greater than the amount of the investment in the fund or flow-through entity that is the basis for receiving the tax credit. Except as provided in subparagraph (F) of this Section 3- A, tax credits for investments in funds will not be issued until the fund's investment in such business(es) is (are) made.B. Each investment received by a business from the fund or flow-through entity must be expended by such business for the purposes allowed in Section 3(B)(1), and must be certified as required by Section 3(B)(4).C. Both the investor's investment in the fund or flow-through entity, and the fund's or flow-through entity's investment in an eligible business must be at risk, and neither investment may be secured by a lien on business, flow-through entity or fund assets or a personal guaranty of any principal owner of an eligible business.D. The investor's investment in a fund or flow-through entity must be made under an agreement whereby the investment is subject to loss in its entirety, and may not have unilateral "put" rights during the five-year period beginning on the date the cash is received by the fund or flow-through entity. The investment by the fund or flow-through entity in any eligible business shall be governed by Section 3(B)(2), with the fund or flow-through entity being treated as the investor. Nothing in this paragraph is intended to limit the ability of the applicant to sell or transfer his or her interest in the fund or flow-through entity to another person or entity (other than the fund or flow-through entity itself, a business in which the fund or flow-through entity has invested and sought a credit for, or a principal owner thereof), or to limit the ability of the fund or flow-through entity to transfer its interest in the enterprise to another person or entity (other than a business in which the fund or flow-through entity has invested, which investment was the basis for a credit, or a principal owner thereof), at any time, provided prior written notice is given to the Authority, together with a signed acknowledgement by both the transferor and the transferee that the investment remains subject to the limitations of this Rule, and provided further that the Authority finds that the intent of the transfer is not the avoidance of the limitations of the Program.E. For investments made prior to January 1. 2012, investors applying for a credit under the Program may not own 50% or more (collectively) in any eligible business receiving an investment from the fund, which investment is the subject of an application for a Program tax credit. For investments made on or after January 1, 2012, the investment may not result in the investor who applies for a tax credit owning 50% or more of the business in which the investment is made. For the purposes of this limitation, an investor's ownership interest in an eligible business shall include all interests held in the investor's personal name, and a pro rata share of all interests held jointly with other individuals or entities, or held by another legal entity in which the investor has an interest, including a fund, flow-through entity or private venture capital fund. Nothing in this subsection shall preclude an investor from making a later investment that results in its ownership interest equaling or exceeding 50% of an eligible business, so long as (i) the investor does not apply for a Program tax credit for such later investment, and (ii) there was no intent by the investor to take such additional interests at the time of the original investment for which it received a Program tax credit.F. Notwithstanding the provisions of Section 3- A(A), for money invested in or unconditionally committed (as determined in the discretion of the Chief Executive Officer) to eligible funds after August 11, 2000, but prior to January 1, 2012, where the application is made prior to the investment of funds by the investor into the fund and/or the fund's investment of such sums in an eligible business, the applicable fund investors may receive a tax credit certificate for up to 20% of the investment for which the investor would be eligible had the funds been invested in the fund, and in turn invested by the fund in an eligible business, provided the following conditions are met: 1. The fund is located in Maine;2. The fund is owned and controlled primarily by residents of the State of Maine;3. The fund has demonstrated to the satisfaction of the Authority that it has as a major investment objective, the investment in eligible businesses;4. The investor in fact makes the full Investment in the fund; and5. The fund in fact invests an amount equal to or greater than the amount of the investment in one or more eligible businesses. A certificate for 20% of the investment will be issued after fulfillment of conditions 1, 2 and 3 above, assuming the fund and the prospective investment are otherwise eligible under this rule. A certificate for the remainder of the credit (or so much thereof as the investor is found eligible) will not be issued until fulfillment of conditions 4 and 5 above, so long as the fund and the investment are otherwise eligible under this rule, and provided credits remain available at such time. To the extent the fund or the investor complies with conditions 4 and 5 above, but in an amount less than the full investment as originally described, the second certificate will be issued based on the actual amount of the credit for which the investor is eligible, less the amount of credit listed on the first certificate.
Any credit awarded under this subparagraph F, prior to an investment being made in an eligible fund or in turn invested by such fund in an eligible business, will be automatically revoked by the Authority three (3) years after issued, to the extent that on or before such date the fund or the investor has not provided to the Authority evidence satisfactory to the Authority that conditions 4 and 5 above have been met. Nothing herein shall preclude an investor from receiving a credit, to the extent available, once all eligibility requirements have been met.
94-457 C.M.R. ch. 307, § 3-A