<enum>I</enum><header>Small business early-stage investment program</header> <section id="H392D2B53C5DB485AB7D359666B0F610A"><enum>101.</enum><header>Small business early-stage investment program</header><text display-inline="no-display-inline">Title III of the Small Business Investment Act of 1958 (15 U.S.C. 681 et seq.) is amended by adding at the end the following:</text> <quoted-block display-inline="no-display-inline" id="HC4D885D72F6B4B60AFC9E441AD8AB2F7" style="OLC"> <part id="H159846284FBF4BB995DE15F43504CDA6"><enum>D</enum><header>Small business early-stage investment program</header> <section id="HA4CF3EB4FB9A4BC992001B0EF5C4DC84"><enum>399A.</enum><header>Establishment of program</header><text display-inline="no-display-inline">The Administrator shall establish and carry out an early-stage investment program (hereinafter referred to in this part as the <term>program</term>) to provide equity investment financing to support early-stage small businesses in accordance with this part.</text> </section><section id="H539B1BB2E53B4F4B828B849B39445DAA"><enum>399B.</enum><header>Administration of program</header><text display-inline="no-display-inline">The program shall be administered by the Administrator acting through the Associate Administrator described under section 201.</text> </section><section id="H48CB95C7738B4925944512D0C5F5D3F8"><enum>399C.</enum><header>Applications</header> <subsection id="H5D1985240D4344688655ABE1D04ACC20"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Any existing or newly formed incorporated body, limited liability company, or limited partnership organized and chartered or otherwise existing under Federal or State law for the purpose of performing the functions and conducting the activities contemplated under the program and any manager of any small business investment company may submit to the Administrator an application to participate in the program.</text> </subsection><subsection id="H4119C6B8CA8B46DCBD1857562774F151"><enum>(b)</enum><header>Requirements for application</header><text>An application to participate in the program shall include the following:</text> <paragraph id="H65FED12CC15A4FA5976AABB7BBB9886D"><enum>(1)</enum><text display-inline="yes-display-inline">A business plan describing how the applicant intends to make successful venture capital investments in early-stage small businesses and direct capital to small business concerns in targeted industries or other business sectors.</text> </paragraph><paragraph id="H170EEA18C21A42ADB01168715772D694"><enum>(2)</enum><text>Information regarding the relevant venture capital investment qualifications and backgrounds of the individuals responsible for the management of the applicant.</text> </paragraph><paragraph id="HFCF615242A6A47EB826DBAEFCACF4299"><enum>(3)</enum><text>A description of the extent to which the applicant meets the selection criteria under section 399D.</text> </paragraph></subsection><subsection id="H72EECF72D619420B8F6C934FC7988D25"><enum>(c)</enum><header>Applications from managers of small business investment companies</header><text display-inline="yes-display-inline">The Administrator shall establish an abbreviated application process for applicants that are managers of small business investment companies that are licensed under section 301 and that are applying to participate in the program. Such abbreviated process shall incorporate a presumption that such managers satisfactorily meet the selection criteria under paragraphs (3) and (5) of section 399D(b).</text> </subsection></section><section id="H8C4C932A865F48A19C564308466A8B34"><enum>399D.</enum><header>Selection of participating investment companies</header> <subsection id="H5C65F5D16FCC42D9840236E95D706F85"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Not later than 90 days after the date on which the Administrator receives an application from an applicant under section 399C, the Administrator shall make a determination to conditionally approve or disapprove such applicant to participate in the program and shall transmit such determination to the applicant in writing. A determination to conditionally approve an applicant shall identify all conditions necessary for a final approval and shall provide a period of not less than one year for satisfying such conditions.</text> </subsection><subsection id="HB59C483C879D43CF99487BBCA8A21DC0"><enum>(b)</enum><header>Selection criteria</header><text>In making a determination under subsection (a), the Administrator shall consider each of the following:</text> <paragraph id="H0D993D7DF1954C53BC9561F0DD34DA49"><enum>(1)</enum><text display-inline="yes-display-inline">The likelihood that the applicant will meet the goals specified in the business plan of the applicant.</text> </paragraph><paragraph id="H37484B3A0ADE48D3BDBAB066D7850813"><enum>(2)</enum><text>The likelihood that the investments of the applicant will create or preserve jobs, both directly and indirectly.</text> </paragraph><paragraph id="H5320D9033AF944EDBA4DF6AB3877704F"><enum>(3)</enum><text>The character and fitness of the management of the applicant.</text> </paragraph><paragraph id="H301AE34EADC34BBE84A8C3BFBDBC57E7"><enum>(4)</enum><text>The experience and background of the management of the applicant.</text> </paragraph><paragraph id="H4DD2D613527047B5AF6B0CAA1DDA503F"><enum>(5)</enum><text>The extent to which the applicant will concentrate investment activities on early-stage small businesses.</text> </paragraph><paragraph id="H26E6800783E14F389293751C80D58513"><enum>(6)</enum><text>The likelihood that the applicant will achieve profitability.</text> </paragraph><paragraph id="HA19D154CDB7A426C87DD7FC9F637E45B"><enum>(7)</enum><text>The experience of the management of the applicant with respect to establishing a profitable investment track record.</text> </paragraph><paragraph id="HC4BA527815014D579E0303ECFA291B79"><enum>(8)</enum><text display-inline="yes-display-inline">The extent to which the applicant will concentrate investment activities on small business concerns in targeted industries.</text> </paragraph></subsection><subsection id="HE5E8B6E33F1946C488705D9A31370A61"><enum>(c)</enum><header>Final approval</header><text display-inline="yes-display-inline">For each applicant provided a conditional approval under subsection (a), the Administrator shall provide final approval to participate in the program not later than 90 days after the date the applicant satisfies the conditions specified by the Administrator under such subsection or, in the case of applicants whose partnership or management agreements conform to models approved by the Administrator, the Administrator shall provide final approval to participate in the program not later than 30 days after the date the applicant satisfies the conditions specified under such subsection. If an applicant provided conditional approval under subsection (a) fails to satisfy the conditions specified by the Administrator in the time period designated under such subsection, the Administrator shall revoke the conditional approval.</text> </subsection></section><section id="H02A2B8785CF141DF98CDFDD8EA8C4F97"><enum>399E.</enum><header>Equity financings</header> <subsection id="HE48F4B7908FF4CB48B7AAF896A87C2B0"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">The Administrator may make one or more equity financings to a participating investment company.</text> </subsection><subsection id="HA7131CF775A44B448C31123F7644DEE6"><enum>(b)</enum><header>Equity financing amounts</header> <paragraph id="HA852FA953DD84C278F343ADCB5BAA328"><enum>(1)</enum><header>Non-Federal capital</header><text display-inline="yes-display-inline">An equity financing made to a participating investment company under the program may not be in an amount that exceeds the amount of the capital of such company that is not from a Federal source and that is available for investment on or before the date on which an equity financing is drawn upon. Such capital may include legally binding commitments with respect to capital for investment.</text> </paragraph><paragraph id="H0596619AF403408995EA47E9790CA351"><enum>(2)</enum><header>Limitation on aggregate amount</header><text>The aggregate amount of all equity financings made to a participating investment company under the program may not exceed $100,000,000.</text> </paragraph></subsection><subsection id="H6ECDC495CCC84A85B35563FA62104F60"><enum>(c)</enum><header>Equity financing process</header><text display-inline="yes-display-inline">In making an equity financing under the program, the Administrator shall commit an equity financing amount to a participating investment company and the amount of each such commitment shall remain available to be drawn upon by such company—</text> <paragraph id="HFBB565BE2BBF4FECB7FC641B2A78CACB"><enum>(1)</enum><text>for new-named investments during the 5-year period beginning on the date on which each such commitment is first drawn upon; and</text> </paragraph><paragraph id="H1A23DA77D2FC450282CA4678FC88FAD8"><enum>(2)</enum><text display-inline="yes-display-inline">for follow-on investments and management fees during the 10-year period beginning on the date on which each such commitment is first drawn upon, with not more than 2 additional 1-year periods available at the discretion of the Administrator.</text> </paragraph></subsection><subsection id="H14DA163496C748A9BBD1FD7B23495F77"><enum>(d)</enum><header>Commitment of funds</header><text display-inline="yes-display-inline">The Administrator shall make commitments for equity financings not later than 2 years after the date funds are appropriated for the program.</text> </subsection></section><section id="H654BB83883BF4F13B17EC3170DE124AC"><enum>399F.</enum><header>Investments in early-stage small businesses</header> <subsection id="H96843E40491B45F89AB92CDFA44ECD83"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">As a condition of receiving an equity financing under the program, a participating investment company shall make all of the investments of such company in small business concerns, of which at least 50 percent shall be early-stage small businesses.</text> </subsection><subsection id="HD83348972AF2431CAD5A62A817D41228"><enum>(b)</enum><header>Evaluation of compliance</header><text>With respect to an equity financing amount committed to a participating investment company under section 399E, the Administrator shall evaluate the compliance of such company with the requirements under this section if such company has drawn upon 50 percent of such commitment.</text> </subsection></section><section id="HF140AE2981914C4D91850D308E250335"><enum>399G.</enum><header>Pro rata investment shares</header><text display-inline="no-display-inline">Each investment made by a participating investment company under the program shall be treated as comprised of capital from equity financings under the program according to the ratio that capital from equity financings under the program bears to all capital available to such company for investment.</text> </section><section id="HAC426228950B4B1A853C5E6A740D5804"><enum>399H.</enum><header>Equity financing interest</header> <subsection id="HC8B1825CD9964A128FA859577C61CB63"><enum>(a)</enum><header>Equity financing Interest</header> <paragraph id="HF890076CB1424BB4A540C0644D334216"><enum>(1)</enum><header>In general</header><text>As a condition of receiving an equity financing under the program, a participating investment company shall convey an equity financing interest to the Administrator in accordance with paragraph (2).</text> </paragraph><paragraph id="H6528421194274ABE83CF04E7DE29A582"><enum>(2)</enum><header>Effect of conveyance</header><text>The equity financing interest conveyed under paragraph (1) shall have all the rights and attributes of other investors attributable to their interests in the participating investment company, but shall not denote control or voting rights to the Administrator. The equity financing interest shall entitle the Administrator to a pro rata portion of any distributions made by the participating investment company equal to the percentage of capital in the participating investment company that the equity financing comprises. The Administrator shall receive distributions from the participating investment company at the same times and in the same amounts as any other investor in the company with a similar interest. The investment company shall make allocations of income, gain, loss, deduction, and credit to the Administrator with respect to the equity financing interest as if the Administrator were an investor.</text> </paragraph></subsection><subsection id="HE2948D96DBED417A9BDA3BB813C5EBBC"><enum>(b)</enum><header>Manager profits</header><text display-inline="yes-display-inline">As a condition of receiving an equity financing under the program, the manager profits interest payable to the managers of a participating investment company under the program shall not exceed 20 percent of profits, exclusive of any profits that may accrue as a result of the capital contributions of any such managers with respect to such company. Any excess of this amount, less taxes payable thereon, shall be returned by the managers and paid to the investors and the Administrator in proportion to the capital contributions and equity financings paid in. No manager profits interest (other than a tax distribution) shall be paid prior to the repayment to the investors and the Administrator of all contributed capital and equity financings made.</text> </subsection><subsection id="H38D21B9CA70A455A970BA8009AC2E6F8"><enum>(c)</enum><header>Distribution requirements</header><text>As a condition of receiving an equity financing under the program, a participating investment company shall make all distributions to all investors in cash and shall make distributions within a reasonable time after exiting investments, including following a public offering or market sale of underlying investments.</text> </subsection></section><section id="H8360E9D8E638452395E774F08A4DBA9B"><enum>399I.</enum><header>Fund</header><text display-inline="no-display-inline">There is hereby created within the Treasury a separate fund for equity financings which shall be available to the Administrator subject to annual appropriations as a revolving fund to be used for the purposes of the program. All amounts received by the Administrator, including any moneys, property, or assets derived by the Administrator from operations in connection with the program, shall be deposited in the fund. All expenses and payments, excluding administrative expenses, pursuant to the operations of the Administrator under the program shall be paid from the fund.</text> </section><section id="HBE611C1303444CD9BF94B70FE7597B67"><enum>399J.</enum><header>Application of other sections</header><text display-inline="no-display-inline">To the extent not inconsistent with requirements under this part, the Administrator may apply sections 309, 311, 312, 313, and 314 to activities under this part and an officer, director, employee, agent, or other participant in a participating investment company shall be subject to the requirements under such sections.</text> </section><section id="H9A0A8560F7CE4C01A572B2F06119F6F6"><enum>399K.</enum><header>Annual reporting</header><text display-inline="no-display-inline">The Administrator shall report on the performance of the program in the annual performance report of the Administration.</text> </section><section id="H146F11594F2844768CE20C8FBAB410DD"><enum>399L.</enum><header>Definitions</header><text display-inline="no-display-inline">In this part, the following definitions apply:</text> <paragraph id="H8352F51E821F4561A5A655693BFA1390"><enum>(1)</enum><header>Early-stage small business</header><text>The term <term>early-stage small business</term> means a small business concern that—</text> <subparagraph id="H2C96015258634742B819B6CD5DA026EB"><enum>(A)</enum><text>is domiciled in a State; and</text> </subparagraph><subparagraph id="H6A9D26106CCD483D89C7B3ED3A740CEB"><enum>(B)</enum><text display-inline="yes-display-inline">has not generated gross annual sales revenues exceeding $15,000,000 in any of the previous 3 years.</text> </subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H2F8E11EAC6CC416288D8A5DD7231B58E"><enum>(2)</enum><header>Participating investment company</header><text display-inline="yes-display-inline">The term <term>participating investment company</term> means an applicant approved under section 399D to participate in the program.</text> </paragraph><paragraph id="H0034AA26D1B344D18DDF173EFA968D9D"><enum>(3)</enum><header>Targeted industries</header><text>The term <term>targeted industries</term> means any of the following business sectors:</text> <subparagraph id="HA1F3E8D79C5242EBBE486114202DDB56"><enum>(A)</enum><text>Agricultural technology.</text> </subparagraph><subparagraph id="H870E9CFC9FA149CD934CE9D1DFEB8E01"><enum>(B)</enum><text>Energy technology.</text> </subparagraph><subparagraph id="H0E725613DA91467AAF03F199F110DCA8"><enum>(C)</enum><text>Environmental technology.</text> </subparagraph><subparagraph id="H48DE7F1A1D404EECA319FD8E41692B8A"><enum>(D)</enum><text>Life science.</text> </subparagraph><subparagraph id="H59693660E4894648AE8881E6741AE83C"><enum>(E)</enum><text>Information technology.</text> </subparagraph><subparagraph id="HA264BE93927D475887AEE656AA36FB2D"><enum>(F)</enum><text>Digital media.</text> </subparagraph><subparagraph id="HE93E2B1D6D3944F5843158B890739519"><enum>(G)</enum><text>Clean technology.</text> </subparagraph><subparagraph id="H87CA589B03ED4FF5BAFB773CB02DA995"><enum>(H)</enum><text>Defense technology.</text> </subparagraph></paragraph></section></part><after-quoted-block>.</after-quoted-block></quoted-block> </section>

113 HR 30 IH: Small Business Investment Enhancement and Tax Relief Act U.S. House of Representatives 2013-01-03 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

Short title

This Act may be cited as the

Small Business Investment Enhancement and Tax Relief Act

<enum>I</enum><header>Small business early-stage investment program</header> <section id="H392D2B53C5DB485AB7D359666B0F610A"><enum>101.</enum><header>Small business early-stage investment program</header><text display-inline="no-display-inline">Title III of the Small Business Investment Act of 1958 (15 U.S.C. 681 et seq.) is amended by adding at the end the following:</text> <quoted-block display-inline="no-display-inline" id="HC4D885D72F6B4B60AFC9E441AD8AB2F7" style="OLC"> <part id="H159846284FBF4BB995DE15F43504CDA6"><enum>D</enum><header>Small business early-stage investment program</header> <section id="HA4CF3EB4FB9A4BC992001B0EF5C4DC84"><enum>399A.</enum><header>Establishment of program</header><text display-inline="no-display-inline">The Administrator shall establish and carry out an early-stage investment program (hereinafter referred to in this part as the <term>program</term>) to provide equity investment financing to support early-stage small businesses in accordance with this part.</text> </section><section id="H539B1BB2E53B4F4B828B849B39445DAA"><enum>399B.</enum><header>Administration of program</header><text display-inline="no-display-inline">The program shall be administered by the Administrator acting through the Associate Administrator described under section 201.</text> </section><section id="H48CB95C7738B4925944512D0C5F5D3F8"><enum>399C.</enum><header>Applications</header> <subsection id="H5D1985240D4344688655ABE1D04ACC20"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Any existing or newly formed incorporated body, limited liability company, or limited partnership organized and chartered or otherwise existing under Federal or State law for the purpose of performing the functions and conducting the activities contemplated under the program and any manager of any small business investment company may submit to the Administrator an application to participate in the program.</text> </subsection><subsection id="H4119C6B8CA8B46DCBD1857562774F151"><enum>(b)</enum><header>Requirements for application</header><text>An application to participate in the program shall include the following:</text> <paragraph id="H65FED12CC15A4FA5976AABB7BBB9886D"><enum>(1)</enum><text display-inline="yes-display-inline">A business plan describing how the applicant intends to make successful venture capital investments in early-stage small businesses and direct capital to small business concerns in targeted industries or other business sectors.</text> </paragraph><paragraph id="H170EEA18C21A42ADB01168715772D694"><enum>(2)</enum><text>Information regarding the relevant venture capital investment qualifications and backgrounds of the individuals responsible for the management of the applicant.</text> </paragraph><paragraph id="HFCF615242A6A47EB826DBAEFCACF4299"><enum>(3)</enum><text>A description of the extent to which the applicant meets the selection criteria under section 399D.</text> </paragraph></subsection><subsection id="H72EECF72D619420B8F6C934FC7988D25"><enum>(c)</enum><header>Applications from managers of small business investment companies</header><text display-inline="yes-display-inline">The Administrator shall establish an abbreviated application process for applicants that are managers of small business investment companies that are licensed under section 301 and that are applying to participate in the program. Such abbreviated process shall incorporate a presumption that such managers satisfactorily meet the selection criteria under paragraphs (3) and (5) of section 399D(b).</text> </subsection></section><section id="H8C4C932A865F48A19C564308466A8B34"><enum>399D.</enum><header>Selection of participating investment companies</header> <subsection id="H5C65F5D16FCC42D9840236E95D706F85"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Not later than 90 days after the date on which the Administrator receives an application from an applicant under section 399C, the Administrator shall make a determination to conditionally approve or disapprove such applicant to participate in the program and shall transmit such determination to the applicant in writing. A determination to conditionally approve an applicant shall identify all conditions necessary for a final approval and shall provide a period of not less than one year for satisfying such conditions.</text> </subsection><subsection id="HB59C483C879D43CF99487BBCA8A21DC0"><enum>(b)</enum><header>Selection criteria</header><text>In making a determination under subsection (a), the Administrator shall consider each of the following:</text> <paragraph id="H0D993D7DF1954C53BC9561F0DD34DA49"><enum>(1)</enum><text display-inline="yes-display-inline">The likelihood that the applicant will meet the goals specified in the business plan of the applicant.</text> </paragraph><paragraph id="H37484B3A0ADE48D3BDBAB066D7850813"><enum>(2)</enum><text>The likelihood that the investments of the applicant will create or preserve jobs, both directly and indirectly.</text> </paragraph><paragraph id="H5320D9033AF944EDBA4DF6AB3877704F"><enum>(3)</enum><text>The character and fitness of the management of the applicant.</text> </paragraph><paragraph id="H301AE34EADC34BBE84A8C3BFBDBC57E7"><enum>(4)</enum><text>The experience and background of the management of the applicant.</text> </paragraph><paragraph id="H4DD2D613527047B5AF6B0CAA1DDA503F"><enum>(5)</enum><text>The extent to which the applicant will concentrate investment activities on early-stage small businesses.</text> </paragraph><paragraph id="H26E6800783E14F389293751C80D58513"><enum>(6)</enum><text>The likelihood that the applicant will achieve profitability.</text> </paragraph><paragraph id="HA19D154CDB7A426C87DD7FC9F637E45B"><enum>(7)</enum><text>The experience of the management of the applicant with respect to establishing a profitable investment track record.</text> </paragraph><paragraph id="HC4BA527815014D579E0303ECFA291B79"><enum>(8)</enum><text display-inline="yes-display-inline">The extent to which the applicant will concentrate investment activities on small business concerns in targeted industries.</text> </paragraph></subsection><subsection id="HE5E8B6E33F1946C488705D9A31370A61"><enum>(c)</enum><header>Final approval</header><text display-inline="yes-display-inline">For each applicant provided a conditional approval under subsection (a), the Administrator shall provide final approval to participate in the program not later than 90 days after the date the applicant satisfies the conditions specified by the Administrator under such subsection or, in the case of applicants whose partnership or management agreements conform to models approved by the Administrator, the Administrator shall provide final approval to participate in the program not later than 30 days after the date the applicant satisfies the conditions specified under such subsection. If an applicant provided conditional approval under subsection (a) fails to satisfy the conditions specified by the Administrator in the time period designated under such subsection, the Administrator shall revoke the conditional approval.</text> </subsection></section><section id="H02A2B8785CF141DF98CDFDD8EA8C4F97"><enum>399E.</enum><header>Equity financings</header> <subsection id="HE48F4B7908FF4CB48B7AAF896A87C2B0"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">The Administrator may make one or more equity financings to a participating investment company.</text> </subsection><subsection id="HA7131CF775A44B448C31123F7644DEE6"><enum>(b)</enum><header>Equity financing amounts</header> <paragraph id="HA852FA953DD84C278F343ADCB5BAA328"><enum>(1)</enum><header>Non-Federal capital</header><text display-inline="yes-display-inline">An equity financing made to a participating investment company under the program may not be in an amount that exceeds the amount of the capital of such company that is not from a Federal source and that is available for investment on or before the date on which an equity financing is drawn upon. Such capital may include legally binding commitments with respect to capital for investment.</text> </paragraph><paragraph id="H0596619AF403408995EA47E9790CA351"><enum>(2)</enum><header>Limitation on aggregate amount</header><text>The aggregate amount of all equity financings made to a participating investment company under the program may not exceed $100,000,000.</text> </paragraph></subsection><subsection id="H6ECDC495CCC84A85B35563FA62104F60"><enum>(c)</enum><header>Equity financing process</header><text display-inline="yes-display-inline">In making an equity financing under the program, the Administrator shall commit an equity financing amount to a participating investment company and the amount of each such commitment shall remain available to be drawn upon by such company—</text> <paragraph id="HFBB565BE2BBF4FECB7FC641B2A78CACB"><enum>(1)</enum><text>for new-named investments during the 5-year period beginning on the date on which each such commitment is first drawn upon; and</text> </paragraph><paragraph id="H1A23DA77D2FC450282CA4678FC88FAD8"><enum>(2)</enum><text display-inline="yes-display-inline">for follow-on investments and management fees during the 10-year period beginning on the date on which each such commitment is first drawn upon, with not more than 2 additional 1-year periods available at the discretion of the Administrator.</text> </paragraph></subsection><subsection id="H14DA163496C748A9BBD1FD7B23495F77"><enum>(d)</enum><header>Commitment of funds</header><text display-inline="yes-display-inline">The Administrator shall make commitments for equity financings not later than 2 years after the date funds are appropriated for the program.</text> </subsection></section><section id="H654BB83883BF4F13B17EC3170DE124AC"><enum>399F.</enum><header>Investments in early-stage small businesses</header> <subsection id="H96843E40491B45F89AB92CDFA44ECD83"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">As a condition of receiving an equity financing under the program, a participating investment company shall make all of the investments of such company in small business concerns, of which at least 50 percent shall be early-stage small businesses.</text> </subsection><subsection id="HD83348972AF2431CAD5A62A817D41228"><enum>(b)</enum><header>Evaluation of compliance</header><text>With respect to an equity financing amount committed to a participating investment company under section 399E, the Administrator shall evaluate the compliance of such company with the requirements under this section if such company has drawn upon 50 percent of such commitment.</text> </subsection></section><section id="HF140AE2981914C4D91850D308E250335"><enum>399G.</enum><header>Pro rata investment shares</header><text display-inline="no-display-inline">Each investment made by a participating investment company under the program shall be treated as comprised of capital from equity financings under the program according to the ratio that capital from equity financings under the program bears to all capital available to such company for investment.</text> </section><section id="HAC426228950B4B1A853C5E6A740D5804"><enum>399H.</enum><header>Equity financing interest</header> <subsection id="HC8B1825CD9964A128FA859577C61CB63"><enum>(a)</enum><header>Equity financing Interest</header> <paragraph id="HF890076CB1424BB4A540C0644D334216"><enum>(1)</enum><header>In general</header><text>As a condition of receiving an equity financing under the program, a participating investment company shall convey an equity financing interest to the Administrator in accordance with paragraph (2).</text> </paragraph><paragraph id="H6528421194274ABE83CF04E7DE29A582"><enum>(2)</enum><header>Effect of conveyance</header><text>The equity financing interest conveyed under paragraph (1) shall have all the rights and attributes of other investors attributable to their interests in the participating investment company, but shall not denote control or voting rights to the Administrator. The equity financing interest shall entitle the Administrator to a pro rata portion of any distributions made by the participating investment company equal to the percentage of capital in the participating investment company that the equity financing comprises. The Administrator shall receive distributions from the participating investment company at the same times and in the same amounts as any other investor in the company with a similar interest. The investment company shall make allocations of income, gain, loss, deduction, and credit to the Administrator with respect to the equity financing interest as if the Administrator were an investor.</text> </paragraph></subsection><subsection id="HE2948D96DBED417A9BDA3BB813C5EBBC"><enum>(b)</enum><header>Manager profits</header><text display-inline="yes-display-inline">As a condition of receiving an equity financing under the program, the manager profits interest payable to the managers of a participating investment company under the program shall not exceed 20 percent of profits, exclusive of any profits that may accrue as a result of the capital contributions of any such managers with respect to such company. Any excess of this amount, less taxes payable thereon, shall be returned by the managers and paid to the investors and the Administrator in proportion to the capital contributions and equity financings paid in. No manager profits interest (other than a tax distribution) shall be paid prior to the repayment to the investors and the Administrator of all contributed capital and equity financings made.</text> </subsection><subsection id="H38D21B9CA70A455A970BA8009AC2E6F8"><enum>(c)</enum><header>Distribution requirements</header><text>As a condition of receiving an equity financing under the program, a participating investment company shall make all distributions to all investors in cash and shall make distributions within a reasonable time after exiting investments, including following a public offering or market sale of underlying investments.</text> </subsection></section><section id="H8360E9D8E638452395E774F08A4DBA9B"><enum>399I.</enum><header>Fund</header><text display-inline="no-display-inline">There is hereby created within the Treasury a separate fund for equity financings which shall be available to the Administrator subject to annual appropriations as a revolving fund to be used for the purposes of the program. All amounts received by the Administrator, including any moneys, property, or assets derived by the Administrator from operations in connection with the program, shall be deposited in the fund. All expenses and payments, excluding administrative expenses, pursuant to the operations of the Administrator under the program shall be paid from the fund.</text> </section><section id="HBE611C1303444CD9BF94B70FE7597B67"><enum>399J.</enum><header>Application of other sections</header><text display-inline="no-display-inline">To the extent not inconsistent with requirements under this part, the Administrator may apply sections 309, 311, 312, 313, and 314 to activities under this part and an officer, director, employee, agent, or other participant in a participating investment company shall be subject to the requirements under such sections.</text> </section><section id="H9A0A8560F7CE4C01A572B2F06119F6F6"><enum>399K.</enum><header>Annual reporting</header><text display-inline="no-display-inline">The Administrator shall report on the performance of the program in the annual performance report of the Administration.</text> </section><section id="H146F11594F2844768CE20C8FBAB410DD"><enum>399L.</enum><header>Definitions</header><text display-inline="no-display-inline">In this part, the following definitions apply:</text> <paragraph id="H8352F51E821F4561A5A655693BFA1390"><enum>(1)</enum><header>Early-stage small business</header><text>The term <term>early-stage small business</term> means a small business concern that—</text> <subparagraph id="H2C96015258634742B819B6CD5DA026EB"><enum>(A)</enum><text>is domiciled in a State; and</text> </subparagraph><subparagraph id="H6A9D26106CCD483D89C7B3ED3A740CEB"><enum>(B)</enum><text display-inline="yes-display-inline">has not generated gross annual sales revenues exceeding $15,000,000 in any of the previous 3 years.</text> </subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H2F8E11EAC6CC416288D8A5DD7231B58E"><enum>(2)</enum><header>Participating investment company</header><text display-inline="yes-display-inline">The term <term>participating investment company</term> means an applicant approved under section 399D to participate in the program.</text> </paragraph><paragraph id="H0034AA26D1B344D18DDF173EFA968D9D"><enum>(3)</enum><header>Targeted industries</header><text>The term <term>targeted industries</term> means any of the following business sectors:</text> <subparagraph id="HA1F3E8D79C5242EBBE486114202DDB56"><enum>(A)</enum><text>Agricultural technology.</text> </subparagraph><subparagraph id="H870E9CFC9FA149CD934CE9D1DFEB8E01"><enum>(B)</enum><text>Energy technology.</text> </subparagraph><subparagraph id="H0E725613DA91467AAF03F199F110DCA8"><enum>(C)</enum><text>Environmental technology.</text> </subparagraph><subparagraph id="H48DE7F1A1D404EECA319FD8E41692B8A"><enum>(D)</enum><text>Life science.</text> </subparagraph><subparagraph id="H59693660E4894648AE8881E6741AE83C"><enum>(E)</enum><text>Information technology.</text> </subparagraph><subparagraph id="HA264BE93927D475887AEE656AA36FB2D"><enum>(F)</enum><text>Digital media.</text> </subparagraph><subparagraph id="HE93E2B1D6D3944F5843158B890739519"><enum>(G)</enum><text>Clean technology.</text> </subparagraph><subparagraph id="H87CA589B03ED4FF5BAFB773CB02DA995"><enum>(H)</enum><text>Defense technology.</text> </subparagraph></paragraph></section></part><after-quoted-block>.</after-quoted-block></quoted-block> </section><enum>II</enum><header>Small business investment</header> <section display-inline="no-display-inline" id="HE31C614FCC174C629B8B65D0BD2308C6" section-type="subsequent-section"><enum>201.</enum><header>Tax credit for small business investment</header> <subsection id="H96C15A6CFBB4453CAEDEEBFE9FAF5CFF"><enum>(a)</enum><header>In general</header><text>Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25D the following new section:</text> <quoted-block display-inline="no-display-inline" id="H574409788F8A450E8E9097CD22116637" style="OLC"> <section id="H61A11785A2A643A680070B32349A433C"><enum>25E.</enum><header>Small business investment</header> <subsection id="H8A9247C89B2C42DCA1E9292BAD8BF710"><enum>(a)</enum><header>In general</header><text>In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter an amount equal to 20 percent of the amount paid or incurred for qualified small business investments during the taxable year.</text> </subsection><subsection id="HE2F91FCBCAA94DB98B0F155A5F8AF30E"><enum>(b)</enum><header>Limitation</header><text>With respect to any qualified small business investment in any corporation or partnership, the amount paid or incurred by any taxpayer which is taken into account under subsection (a) shall not exceed $250,000 ($500,000 in the case of a joint return), reduced by the amount taken into account under such subsection with respect to investments by the taxpayer in such corporation or partnership for all prior taxable years.</text> </subsection><subsection id="HE3644777866749139E2080ABFAE65F93"><enum>(c)</enum><header>Qualified small business investment</header><text>For purposes of this section—</text> <paragraph id="HF4D594FFD92448008B675B30D546176F"><enum>(1)</enum><header>In general</header><text>The term <term>qualified small business investment</term> means any small business stock and any small business partnership interest.</text> </paragraph><paragraph id="H4DBA778F3899488390BAB210C0600C13"><enum>(2)</enum><header>Small business stock</header><text>The term <term>small business stock</term> means any stock in a domestic corporation acquired by the taxpayer at its original issue (directly or through an underwriter) solely in exchange for cash, if—</text> <subparagraph commented="no" id="HA5D32D1C99624C3F8EEA672568642F85"><enum>(A)</enum><text display-inline="yes-display-inline">such corporation is an eligible small business (as defined in section 41(b)(3)(D)(ii));</text> </subparagraph><subparagraph id="H126B6D8809A742938991BD9B7D8B5C5D"><enum>(B)</enum><text>such corporation is engaged primarily in the trade or business of manufacturing, processing, assembling, or researching and developing products or in the trade or business of agriculture, technology, or life science;</text> </subparagraph><subparagraph id="H7D53D0941EFC4F77A2B2BBA8A6AC1014"><enum>(C)</enum><text>such corporation has been in existence for less than 5 years as of such acquisition;</text> </subparagraph><subparagraph id="H93C28DEBA76448D4A479F9FBBDB69957"><enum>(D)</enum><text>such corporation has fewer than 75 employees as of such acquisition;</text> </subparagraph><subparagraph id="HA12B7AB3852E45F1B2EB96447A3C8919"><enum>(E)</enum><text>more than 50 percent of the corporation’s employees perform substantially all of their services in the United States as of such acquisition; and</text> </subparagraph><subparagraph id="HA52F5E36078D48539CCC3029ED94877F"><enum>(F)</enum><text>such stock is designated by the corporation for purposes of this paragraph.</text> </subparagraph><continuation-text continuation-text-level="paragraph">For purposes of subparagraph (E), stock shall not be treated as designated if such designation would result in the aggregate amount which may be taken into account under this section with respect to stock issued by such corporation to exceed $750,000, taking into account all taxpayers for all taxable years.</continuation-text></paragraph><paragraph id="H7E453037F801426FA7DB10F5D593280D"><enum>(3)</enum><header>Small business partnership interest</header><text>The term <term>small business partnership interest</term> means any capital or profits interest in a domestic partnership acquired by the taxpayer from the partnership solely in exchange for cash, if—</text> <subparagraph id="H75B30B277689479F98B5FC94E39F3975"><enum>(A)</enum><text display-inline="yes-display-inline">such partnership is an eligible small business (as defined in section 41(b)(3)(D)(ii));</text> </subparagraph><subparagraph id="H73F451D96E754745BC420A864C620F66"><enum>(B)</enum><text>such partnership is engaged primarily in the trade or business of manufacturing, processing, assembling, or researching and developing products or in the trade or business of agriculture, technology, or life science;</text> </subparagraph><subparagraph id="H3DFD6EE10F284928B13FD9F835D3103F"><enum>(C)</enum><text>such partnership has been in existence for less than 5 years as of such acquisition;</text> </subparagraph><subparagraph id="H36B90509992F406B80423677D1FFEE9E"><enum>(D)</enum><text>such partnership has fewer than 75 employees as of such acquisition;</text> </subparagraph><subparagraph id="H5AA538A817EB4CC4BDB4B9FC935FE9C6"><enum>(E)</enum><text display-inline="yes-display-inline">more than 50 percent of the partnership’s employees perform substantially all of their services in the United States as of such acquisition; and</text> </subparagraph><subparagraph id="H4425B86A064D4863BD46B1A393F57C44"><enum>(F)</enum><text>such capital or profits interest is designated by partnership for purposes of this paragraph.</text> </subparagraph><continuation-text continuation-text-level="paragraph">For purposes of subparagraph (E), a capital or profits interest shall not be treated as designated if such designation would result in the aggregate amount which may be taken into account under this section with respect to interests in such partnership to exceed $750,000, taking into account all taxpayers for all taxable years.</continuation-text></paragraph></subsection><subsection id="HB53856E07B324F9EB5126E318AB1690D"><enum>(d)</enum><header>Carryforward of unused credit</header><text>If the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under this section. Such excess shall not be taken into account under this subsection for such succeeding taxable year or any taxable year succeeding such year.</text> </subsection></section><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H03017797C01E404B8688FE6A57E8D59A"><enum>(b)</enum><header>Clerical amendment</header><text>The table of sections of such subpart is amended by inserting after the item relating to section 25D the following new item:</text> <quoted-block display-inline="no-display-inline" id="HD0CA5668F4124B06B9410D5918A5419E" style="OLC"> <toc container-level="quoted-block-container" idref="H574409788F8A450E8E9097CD22116637" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration"> <toc-entry idref="H61A11785A2A643A680070B32349A433C" level="section">Sec. 25E. Small business investment.</toc-entry> </toc> <after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H6F95C09FC3B746D8ACA7F853DE8C81A2"><enum>(c)</enum><header>Report to Congress</header><text>The Secretary of the Treasury shall conduct a study and report to Congress on the effectiveness of the credit allowed under section 25E of the Internal Revenue Code of 1986 (as added by this section), and similar State tax credits, in providing incentives for investment in qualified small businesses. There are authorized to be appropriated $500,000 to carry out the purposes of this subsection.</text> </subsection><subsection commented="no" id="H01CED88A23A242E7A12B15931437DAC2"><enum>(d)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text> </subsection></section>