N.J. Admin. Code § 19:31X-1.9

Current through Register Vol. 57, No. 1, January 6, 2025

Section 19:31X-1.9 - Qualified venture firm annual report

(a) A qualified venture firm shall submit an annual report to the Authority with respect to a qualified investment within 120 days following the conclusion of the qualified venture firm's tax privilege period. The annual report shall include, but not be limited to, the following:

1. The amount of the qualified investment, if any, uninvested at the end of the preceding calendar year;

2. All qualified investments made during the preceding calendar year;

3. For each qualified business with shares of stock held by an Evergreen special purpose vehicle managed by the qualified venture firm or an affiliate of the qualified venture firm, a list of all full-time employees as of the end of the preceding calendar year, including, but not limited to, employee residency, payroll records, a copy of New Jersey WR-30 and Federal Form 941 for all quarters, and offer letters for any new full-time employee hired after the filing of such forms. For any qualified investment in which the qualified venture firm no longer has a position as of the end of the calendar year, the information must be provided as of the date the investment was terminated;

4. Certification by the chief executive officer, or equivalent officer for North America, of any qualified business with shares of stock held by an Evergreen special purpose vehicle managed by the qualified venture firm or an affiliate of the qualified venture firm, that all factual information provided by the qualified business is true and accurate under the penalty of perjury;

5. Financial statements, audited by a certified public accountant, who is licensed in accordance with the Accountancy Act of 1997, P.L. 1997, c. 259 (N.J.S.A. 45:2B-42 et seq.), or licensed in accordance with the laws of another state, of each qualified venture firm active fund, if any, and each Evergreen special purpose vehicle, if any. For the Evergreen special purpose vehicle, the financial statement shall include a consolidated summary of the performance, specifying the total value to paid-in capital ratio, and distribution to paid-in capital ratio. Any information about the performance of an individual business, including the qualified business, shall be considered confidential and not subject to the requirements at P.L. 1963, c. 73 (N.J.S.A. 47:1A-1 et seq.);

6. Certification by the qualified venture firm managing individual as to the qualified venture firm's reserve policy as it relates to each qualified investment, if any;

7. If applicable, evidence that the qualified venture firm has made best efforts to comply with its commitment to dedicate a greater portion of qualified investments into qualified businesses located within incentive areas;

8. Any updates to the policies or plans submitted pursuant to N.J.A.C. 19:31X-1.7(b)8 and evidence that the qualified venture firm has made best efforts to comply with its current policies or plans;

9. Any update to the information provided as part of the venture firm's application for certification pursuant to N.J.A.C. 19:31X-1.7(b) pertaining to the criteria at N.J.A.C. 19:31X-1.7(d), and a certification by the qualified venture firm managing individual that all other information pertaining to that criteria remains true and accurate under the penalty of perjury;

10. Certification by the qualified venture firm managing individual that all factual information provided to the Authority pertaining to the qualified venture firm is true and accurate under the penalty of perjury, including, but not limited to, information contained in the application for certification, the qualified venture firm agreement, any amendment to that agreement, and any other information submitted by the qualified venture firm to the Authority pursuant to the Act, this subchapter, and the qualified venture firm agreement;

11. Any other information the Authority requires to evaluate compliance with the program by the qualified venture firm and by any qualified business with shares of stock held by an Evergreen special purpose vehicle managed by the qualified venture firm; and

12. Any other information the Authority requires to ascertain the impact of the program on the economy of the State.

(b) With respect to the information required pursuant to (a)1 through 11 above, the report shall include a statement prepared by an independent certified public accountant, who is licensed in accordance with the Accountancy Act of 1997, P.L. 1997, c. 259 (N.J.S.A. 45:2B-42 et seq.), or licensed in accordance with the laws of another state, certifying that the accountant has reviewed the report and that the information and representations contained in the report are accurate.

1. The certification shall be made pursuant to an "agreed upon procedures" letter acceptable to the Authority.

2. The Authority may qualify certified public accountants for certification at (a)3 above. If the Authority qualifies any certified public accountants, the Authority shall provide, to the qualified venture firm, the list of qualified certified public accountants and the information provided pursuant to (a)3 above shall be certified by a qualified certified public accountant. Notwithstanding this paragraph, the qualified venture firm may select an independent certified public accountant that is not on the Authority's list of qualified certified public accountants if the qualified venture firm demonstrates an extenuating circumstance prohibiting the qualified venture firm from retaining a qualified certified public accountant. Such circumstances include, but are not limited to, the unavailability of any of the qualified certified public accountants to timely complete the certification or that none of the qualified certified public accountants are independent to the qualified venture firm.

(c) A qualified venture firm shall, as required at the discretion of the Authority, submit to the Authority satisfactory evidence supporting the information detailed in the annual report.

(d) Absent extenuating circumstances or prior written consent by the Authority, if a qualified venture firm fails to comply with the reporting requirements of this section, the Authority shall withhold the management fees and direct expenses due to such qualified venture firm or an affiliate of the qualified venture firm for any Evergreen special purpose vehicle managed by the qualified venture firm or affiliate. If the qualified venture firm submits the complete annual report within 120 days from the date the annual report was due, the Authority shall pay the management fees and direct expenses withheld and resume payment of management fees and direct expenses. If the qualified venture firm fails to comply with the reporting requirements after the additional 120 days, the qualified venture firm shall forfeit all management fees and direct expenses due for a period of a year.

(e) If a qualified venture firm is not in compliance with the reporting requirements of this section at the time that any distribution is made by a qualified business to the Evergreen special purpose vehicle holding a qualified investment, whether as a result of a sale or public registration of securities of the qualified business or for any other reason, no distribution of cash or equity for carried interest shall be made to the qualified venture firm or affiliate, provided that if the qualified venture firm comes into compliance with such reporting requirements within 120 days of the date of such distribution, the Evergreen special purpose vehicle shall make the distribution for carried interest to the qualified venture firm or affiliate.

N.J. Admin. Code § 19:31X-1.9

Recodified from 19:31-25.9 56 N.J.R. 807(a), effective 5/6/2024