Newspaper article THE JOURNAL RECORD

Formation Capitol Bill Passes House

Newspaper article THE JOURNAL RECORD

Formation Capitol Bill Passes House

Article excerpt

A program to supplant Oklahoma's existing Qualified Venture Capital Company Act passed the Oklahoma House of Representatives 72-26 on Monday and now goes to the Senate for consideration.

House Bill 1697, authored by Rep. Don McCorkell, D-Tulsa, is designed "to come up with a strategy to generate business formation capital for Oklahoma at a lower cost than existing programs," he said.

Under House Bill 1697, a tax credit would be offered to investors in Oklahoma, but it would be used to secure the investment and could only be claimed if losses occurred.

The tax credit would be 20 percent of the cash amount invested in qualified venture capital companies, certified by the Oklahoma Capital Investment Board.

The bill, which would create an Oklahoma Capital Formation Act, would give the board the power to give a guarantee to a qualified investor group which invested venture capital.

Guarantees could extend to principal plus interest, over the term of the guarantee, at a rate set by board resolution from time to time. The board could charge a reasonable fee for costs and the fair compensation of risk associated with its guarantee, under the bill.

The board guarantees would not constitute state obligations, because they would be restricted to specific assets of the board. The bill assumes that proceeds fro the sale of any tax credits would be sufficient to meet the board's contractual guarantee obligations.

The board would be required to verify that at least $2 would be invested in Oklahoma business or projects for every $1 of principal guaranteed by the board.

A qualified venture capital company under the bill would be required to be incorporated in line with Oklahoma law, with its principal place of business in the state, and provide for direct investment of debt and equity funds to Oklahoma companies. …

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