Code of Maine Rules
94 - INDEPENDENT AGENCIES
457 - FINANCE AUTHORITY OF MAINE (FAME)
Chapter 307 - MAINE SEED CAPITAL TAX CREDIT PROGRAM-Amendment 9
Section 457-307-3-B - Eligibility - Investments into Private Venture Capital Funds on or after January 1, 2012

A. The amount invested by the private venture capital fund in an eligible business (as defined in Section 3(A)) must be equal to or greater than the amount of the investment in the private venture capital fund that is receiving the tax credit. Tax credits will not be issued until the private venture capital fund's investment in such business(es) is (are) made.

B. Each investment received by a business from the private venture capital fund 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 private venture capital fund and the private venture capital fund's investment in an eligible business must be at risk, and neither investment may be secured by a lien on business or private venture capital fund assets or a personal guaranty of any principal owner of an eligible business.

D. The investor's investment in a private venture capital fund 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 private venture capital fund. The investment by the private venture capital fund in any eligible business shall be governed by Section 3(B)(2), with the private venture capital fund 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 private venture capital fund to another person or entity (other than the private venture capital fund itself, a business in which the fund has invested and sought a credit for, or a principal owner thereof), or to limit the ability of the private venture capital fund to transfer its interest in the enterprise to another person or entity (other than a business in which the private venture capital fund 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. No investor in a private venture capital fund seeking a tax credit may own 50% or more of any eligible business receiving an investment from the private venture capital fund, which investment is the subject of an application for a Program tax credits. No private venture capital fund seeking a tax credit may own in excess of 50% of any eligible business receiving an investment from the private venture capital fund, which investment is the subject of an application for Program tax credits. 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 the private venture capital fund, and a private venture capital fund's ownership interest shall include those interests held in its name as well as those held by or attributed to (under the language of this subsection) any of its investors. Nothing in this subsection shall preclude an investor or private venture capital fund from making a later investment that results in its ownership interest equaling or exceeding 50% of an eligible business, so long as (i) neither the investor nor the private venture capital fund applies for a Program tax credit for such later investment, and (ii) there was no intent by the investor or the private venture capital fund to take such additional interests at the time of the original investment for which it received a Program tax credit.

F. No member, shareholder, equity owner, beneficiary or partner in the private venture capital fund is a principal owner in any business in which the private venture capital fund invests and seeks a tax credit.

G. The eligible business in which the private venture capital fund invests and seeks a credit must not move substantially all its operations and assets outside the State during the four year period commencing on the date of an investment which is the subject of a tax credit, except in the case of an arm's length, fair value acquisition approved by the Authority, which approval may be contingent on a partial revocation, as determined by the Authority.

H. The private venture capital fund did not receive a partial Program credit under Section 3- A(F) for the investment in question.