Session of 2000
HOUSE BILL No. 2742
By Representative Helgerson
1-27
9 AN ACT
establishing the Kansas certified capital company act.
10
11 Be it enacted by the Legislature of the
State of Kansas:
12 Section
1. This act shall be known and may be cited as the "Kansas
13 certified capital company act." The purpose
of this act is to enhance the
14 development of seed and venture capital in
Kansas and to support the
15 modernization and expansion of the state's
rural economy. As used in this
16 act, unless the context clearly requires
otherwise, the following terms
17 mean:
18 (a) "Affiliate of
a certified capital company" means:
19 (1) Any person
that directly or indirectly, owns, controls or possesses
20 the power or ability to vote 10% or more of
the outstanding voting se-
21 curities or other beneficial ownership
interests of the Kansas certified
22 capital company;
23 (2) any person
10% or more of whose outstanding voting securities
24 or other beneficial ownership interests are
directly or indirectly owned,
25 controlled or possessed of the power to be
voted by the Kansas certified
26 capital company;
27 (3) any person
directly or indirectly controlling, controlled by or un-
28 der common control of the Kansas certified
capital company;
29 (4) any
partnership in which the Kansas certified capital company is
30 a general partner; or
31 (5) any person
who is an officer, director, general partner, managing
32 member, manager director or agent of the
Kansas certified capital com-
33 pany or an immediate family member of such
person.
34 (b) "Affiliate of
an investor" means:
35 (1) Any person
that directly or indirectly, owns, controls or possesses
36 the power or ability to vote 10% or more of
the outstanding voting se-
37 curities or other beneficial ownership
interests of the investor;
38 (2) any person
10% or more of whose outstanding voting securities
39 or other beneficial ownership interests are
directly or indirectly owned,
40 controlled or possessed with the power to
be voted by the investor;
41 (3) any person
directly or indirectly controlling, controlled by or un-
42 der common control with the investor;
43 (4) a partnership
in which the investor is a general partner; or
2
1 (5) any
person who is an officer, director or agent of the investor or
2 an immediate family member of such
officer, director or agent.
3
(c) "Applicable percentage" means 100%.
4 (d) "Capco"
means any certified capital company.
5
(e) "Capital in a qualified Kansas business" means any note,
stock,
6 partnership or membership interest or
other form of equity investment
7 or hybrid security, of any nature and
description whatsoever, including a
8 debt instrument or security which has
the characteristics of indebtedness
9 but which provides for conversion
into equity or equity participation in-
10 struments such as options or warrants which
are acquired by a Kansas
11 certified capital company as a result of a
transfer of cash to a business.
12 Capital in a qualified Kansas business
shall not include secured debt
13 instruments.
14 (f) "Certified
capital" means cash, marketable securities and other
15 assets held by a certified capital company
equal to the amount of certified
16 capital investment made by investors in the
certified capital company.
17 (g) "Certified
capital company" means any partnership, corporation,
18 trust or limited liability company, whether
organized on a profit or not
19 for profit basis, that is domiciled in and
qualified to conduct business in
20 Kansas and that has as its primary business
activity, the investment of cash
21 in qualified Kansas businesses, and which
is certified by the secretary as
22 satisfying the criteria of this act.
23 (h) "Certified
capital investment" means an investment of cash by an
24 investor made in such manner as to acquire
a beneficial ownership inter-
25 est in a Kansas certified capital
company.
26
(i) "Commissioner" means the securities commissioner of Kansas
or
27 persons acting under the supervision of the
commissioner.
28 (j) "In
existence" means the date of the first sale of goods or
services
29 by a qualified Kansas business or a
business seeking to be so qualified.
30 (k) "Investor"
means any person that invests cash. If the investor is
31 a natural person, the investor shall have a
net worth of at least $1,000,000
32 and such net worth shall be at least 10
times the amount of the investor's
33 certified investment in a capco. The
investor's net worth shall not include
34 the value of any equity in the investor's
primary residence.
35 (l) "Liquidating
distribution" means any distribution other than a
36 qualified distribution.
37 (m) "Person"
means any natural person or any business association,
38 including but not limited to, a
corporation, limited liability company, gen-
39 eral or limited partnership or trust.
40 (n) "Qualified
distribution" means any distribution or payment re-
41 mitted to equity holders of a certified
capital company for costs and ex-
42 penses of forming, syndicating, managing or
operating the certified capital
43 company, including an annual management fee
and reasonable and nec-
3
1 essary fees in accordance with
industry custom for professional fees in-
2 cluding, but not limited to, legal
and accounting fees, relating to operating
3 the certified capital company.
4
(o) "Qualified Kansas business" means:
5 (1) A
business that satisfies the requirements of subparagraphs (A)
6 through (F) of this subsection.
7 (A) Such
business is independently owned and operated and has its
8 principal business office located in
Kansas or, in the case of a company
9 domiciled outside the state of
Kansas, which certifies that the company's
10 principal business office will be located
in Kansas within six months fol-
11 lowing the date of the initial
investment.
12 (B) At least 50%
of the employees of the business shall reside in
13 Kansas or, in the case of a company
domiciled outside the state of Kansas,
14 certifies that at least 50% of its
employees will reside in Kansas within six
15 months following the date of the initial
qualified venture capital
16 investment.
17 (C) Such business
is in need of venture capital and cannot obtain
18 conventional financing to fund its further
development and future
19 operations.
20 (D) Such business
shall be engaged in commerce for the purpose of
21 manufacturing, processing, assembling or
distributing products, conduct-
22 ing research and development or providing
services in interstate
23 commerce.
24 (E) For
businesses involved in commerce for the purpose of provid-
25 ing services in interstate commerce, that
business must demonstrate that
26 more than 50% of its gross revenues are
derived from sales outside the
27 state of Kansas, or in the case of an early
stage business, provide reason-
28 able documentation that the company will
derive at least 50% of its gross
29 sales outside the state within a three-year
period.
30 (F) Such
business, at the time of the initial qualified venture capital
31 investment, shall have been in existence
less than five years and shall not
32 have had gross sales in excess of
$1,000,000 in any single fiscal year.
33 (2) Any business
which, subject to paragraph (a)(6) of section 5 and
34 amendments thereto, is approved as a
qualified Kansas business at the
35 time of the first qualified venture capital
investment in such business by
36 a Kansas certified capital company, for a
period of seven years following
37 the date of such first investment, shall
continue to be classified as a qual-
38 ified Kansas business and may receive
follow-on investments from any
39 Kansas certified capital company, and such
follow-on investments shall
40 constitute qualified venture capital
investments even though such busi-
41 ness may not meet other qualifications of
this subsection at the time of
42 such follow-on investments.
43 (3) A qualified
Kansas business shall not include:
4
1 (A) Any
commercial enterprise primarily engaged in the sale at retail
2 of goods or services taxable under
the Kansas retailer's sales tax act; any
3 service provider set forth in K.S.A.
17-2707, and amendments thereto;
4 any bank, savings and loan or lending
institution; any real estate, real
5 estate development or insurance
company; or any commercial enterprise
6 deriving its revenues directly from
noncommercial customers in exchange
7 for personal services;
8 (B) a
business engaged primarily as a passive business, irregular or
9 noncontinuous operations, or which
derives substantially all of its income
10 from passive investments that generate
interest, dividends, royalties or
11 capital gains;
12 (C) a business
engaged in oil and gas exploration and development;
13 (D) a business
engaged in agricultural activity as defined by K.S.A.
14 2-3203 and amendments thereto;
15 (E) a subsidiary
of a certified capital company;
16 (F) another
certified capital company;
17 (G) an affiliate
of the certified capital company; or
18 (H) an investor
of the certified capital company or an affiliate or sub-
19 sidiary of an investor of the certified
capital company unless approved in
20 writing by the secretary.
21 (4) At the time
of the initial qualified venture capital investment, the
22 qualified Kansas business shall certify
that the business shall remain dom-
23 iciled in Kansas for the next 10 years and
any new manufacturing facility
24 financed directly by a qualified investment
shall be located in and shall
25 remain in Kansas for the 10 years
following.
26 (p) "Qualified
venture capital investment" means the investment of
27 cash by a Kansas certified capital company
in such a manner as to acquire
28 capital in a qualified Kansas business.
29 (q) "Secretary"
means the secretary of commerce and housing or per-
30 sons under the secretary's direction.
31 (r) "Tax credit"
means a transferable, nonrefundable credit against
32 the tax imposed by the Kansas income tax
act, the premium tax or priv-
33 ilege fee imposed pursuant to K.S.A.
40-252, and amendments thereto,
34 or the privilege tax as measured by net
income of financial institutions
35 imposed pursuant to chapter 79, article 11
of the Kansas Statutes
36 Annotated.
37 Sec. 2. (a)
Any investor that makes a certified capital investment shall
38 earn a vested tax credit against state tax
liability equal to 100% of the
39 amount of such investor's certified capital
investment. The investor, or a
40 person to whom the credits were duly
transferred, shall be entitled to use
41 not more than 10% of the vested credit per
taxable year for taxable years
42 commencing after taxable year 2001. If the
amount of the tax credit al-
43 lowed under subsection (a) exceeds the tax
liability of the taxpayer for
5
1 any taxable year, such excess amount
shall be refunded to the taxpayer.
2 (b) No
certified capital investment in a capco by any one person shall
3 be less than $25,000.
4 (c) The
total amount of tax credits which may be allowed shall not
5 exceed $50,000,000. The total amount
of tax credits which may be allowed
6 under this act shall not exceed
$5,000,000 per fiscal year.
7 Sec.
3. (a) The secretary may certify profit or not-for-profit
entities
8 which submit an application to be
designated as a capco. The secretary
9 shall compile a list of every capco,
including the address and telephone
10 number of the capco's principal place of
business. The secretary shall
11 publicize the list in order to inform
Kansas companies of the availability
12 of potential investment capital.
13 (b) The secretary
shall review the organizational documents for each
14 applicant for certification and the
business history of the applicant to
15 determine:
16 (1) That at the
time of application, the applicant owns cash, market-
17 able securities and other liquid assets
valued at no less than $500,000;
18 that prior to January 1, 2000, the
applicant was designated as an inno-
19 vation and commercialization corporation or
an affiliate of an innovation
20 and commercialization corporation created
under the Kansas technology
21 enterprise corporation innovation and
commercialization corporation
22 program; and
23 (2) that the
officers and the board of directors, general partners, trus-
24 tees, managing members or managers, as the
case may be, are thoroughly
25 acquainted with the requirements of this
act and acknowledge such by a
26 signed certification.
27 (c) To continue
to be certified, the capco must own and periodically
28 shall demonstrate to the secretary, as the
secretary may require, that the
29 liquid asset base for the certified capital
company is at least $500,000 at
30 all times during the capco's participation
in the program authorized by
31 this act and that such moneys have been
used for making qualified venture
32 capital investments.
33 (d) With respect
to any person who submits or has submitted an
34 application to become a capco, the
commissioner shall investigate to de-
35 termine and shall report annually to the
secretary whether any of the
36 directors, trustees, managers, officers,
general partners, beneficial owners
37 of 10% or more of any class of equity
securities, or any promoters em-
38 ployed or otherwise associated with that
person at the time of such
39 application:
40 (1) Has been
affiliated with any company that has filed a registration
41 statement which is subject to a currently
effective stop order entered
42 pursuant to any state law;
43 (2) has been
convicted of any felony or misdemeanor in connection
6
1 with the purchase or sale of any
security or any felony involving fraud or
2 deceit including, but not limited to,
forgery, embezzlement of money
3 under false pretenses, larceny or
conspiracy to defraud;
4 (3) is
currently subject to any state administrative order or judgment
5 entered by a state securities
administrator or is subject to any state ad-
6 ministrative order or judgment in
which fraud or deceit was found and
7 an order or judgment was entered;
8 (4) is
currently subject to any state administrative order or judgment
9 which prohibits the use of any
exemption from registration in connection
10 with the purchase or sale of
securities;
11 (5) is subject to
any order, judgment or decree of any court of com-
12 petent jurisdiction temporarily or
preliminarily restraining or enjoining,
13 or is subject to any order, judgment or
decree of any court of competent
14 jurisdiction permanently restraining or
enjoining that person from engag-
15 ing in or continuing any conduct or
practice in connection with the pur-
16 chase or sale of any security, rendering
investment advice or involving the
17 making or any false filing with any state;
and
18 (6) has been
convicted of or plead nolo contendere to any criminal
19 offense other than a misdemeanor involving
motor vehicle violations.
20 (e) The secretary
shall review documentation regarding the qualifi-
21 cations of the persons who will actively
manage the capco and make a
22 determination as to whether such persons
possessed sufficient knowledge
23 and professional experience in the areas of
investment, venture capital,
24 business management and evaluation,
portfolio management and such
25 other area of expertise to the degree that
a reasonable person would be
26 confident in such manager's ability to
manage the capco. No certification
27 shall be issued when it is the finding of
the secretary that such persons
28 do not possess this requisite degree of
knowledge and expertise. If the
29 secretary makes such a finding, the
secretary shall communicate the basis
30 for the finding to the applicant within 30
days of making the finding.
31 (f) No investor
shall individually, or collectively with or through one
32 or more affiliates, by means of ownership,
agreement or otherwise, own,
33 control or possess the power or ability to
cause or direct the making of
34 any qualified venture capital investments
by a capco.
35 (g) Within 75
days of application, the secretary shall either issue the
36 certification and notify the secretary of
the department of revenue of such
37 certification or shall refuse the
certification and communicate in detail to
38 the applicant the grounds for the refusal,
including any suggestions for
39 the removal of those grounds.
40 Sec. 4. (a)
A capco shall have a period of 365 days from the date of
41 receiving certification from the secretary
in which to procure the amount
42 of certified capital investment required by
subsection (b). All certified
43 capital investments in the capco shall be
received within such 365 day
7
1 funding period, notwithstanding the
provisions of subsection (c).
2 (b) Before
closing its fund of certified capital investment, and pur-
3 suant to subsection (b) of section 3,
and amendments thereto, a capco
4 shall raise a minimum aggregate
certified capital investment of no less
5 than $5,000,000. In the case of a
capco designated prior to January 1,
6 2000, as an innovation and
commercialization corporation or an affiliate
7 of an innovation and
commercialization corporation created under the
8 Kansas technology enterprise
corporation innovation and commerciali-
9 zation corporation program, such
minimum certified capital investment
10 shall be no less than $1,000,000. No
capital investments shall be certified
11 by the secretary until such time when the
minimum cumulative invest-
12 ments are met. Failure of a capco to raise
the minimum cumulative in-
13 vestments may result in the revocation of
the certification by the
14 secretary.
15 (c) Once fully
capitalized pursuant to the provisions of subsection (b),
16 a capco may make application to the
secretary for authorization to seek
17 additional certified capital
investment.
18 Sec. 5. (a)
To continue to be certified, a capco shall make qualified
19 venture capital investments according to
the following schedule:
20 (1) Within three
years after the date on which a capco is certified as
21 a capco, at least 25% of its certified
capital shall be, or have been, used
22 for making qualified venture capital
investments;
23 (2) within four
years after the date on which a capco is certified as a
24 capco, at least 40% of its certified
capital shall be, or have been, used for
25 making qualified venture capital
investments;
26 (3) within five
years after the date on which a capco is certified as a
27 capco, at least 50% of its total certified
capital shall be, or have been,
28 used for making qualified venture capital
investments;
29 (4) within seven
years after the date on which a capco is certified as
30 a capco, at least 70% of its total
certified capital shall be, or have been,
31 used for making qualified venture capital
investments;
32 (5) a capco shall
not make an investment in an affiliate of the capco
33 or an affiliate of an investor. For the
purposes of this subsection, if a
34 company is not an affiliate before a capco
initially invests in the company,
35 it shall not be deemed to be an affiliate
if such capco provides additional
36 qualified venture capital investment to
such company subsequent to its
37 initial investment. No corporate officer,
employee or shareholder, no lim-
38 ited or general partner or other person
personally affiliated with any capco
39 shall personally invest in any portfolio
company regardless of whether the
40 portfolio company is affiliated with the
capco;
41 (6) a capco, at
least 15 working days prior to making what it deter-
42 mines to be any initial qualified venture
capital investment, shall first
43 certify to the secretary that the company
in which it proposes to invest
8
1 meets the definition of a qualified
Kansas business pursuant to section 1,
2 and amendments thereto. The capco
shall state the amount of capital it
3 intends to invest and identify the
business in which it intends to make
4 the investment. The capco shall also
provide to the secretary a written
5 explanation of the basis for its
determination that the business meets the
6 definition of a qualified Kansas
business, if the secretary determines that
7 the business does not meet the
definition of a qualified Kansas business,
8 the secretary, within the 15
working-day period prior to the making of
9 the proposed investment, shall notify
the capco of the determination and
10 provide the capco an explanation thereof.
If the secretary fails to notify
11 the capco of the determination within the
15 working-day period pre-
12 scribed herein, the business in which the
capco proposes to invest shall
13 be deemed to be a qualified Kansas
business. If a capco fails to notify the
14 secretary prior to making an initial
investment in a business, the business
15 in which the capco invested shall be deemed
not to be a qualified Kansas
16 business even though the business, at the
time of the investment, met
17 the requirements of section 1, and
amendments thereto; and
18 (7) all certified
capital which is not then required to be invested in
19 qualified venture capital investments or
which has been previously in-
20 vested in qualified venture capital
investments and returned by the com-
21 pany, may be held or invested in such
manner as the capco, in its discre-
22 tion, deems appropriate. The proceeds of
all certified capital which is
23 returned by a capco after it was originally
invested in qualified venture
24 capital investments, may be invested in
other qualified venture capital
25 investments and shall be credited toward
any requirement in this act with
26 respect to placing certified capital in
qualified venture capital
27 investments.
28 (b) A capco may
make qualified distributions at any time. In order to
29 lawfully make liquidating distributions, a
capco must have invested an
30 aggregate amount equal to 100% of its
certified capital in qualified ven-
31 ture capital investments.
32 (c) Cumulative
liquidating distributions to equity holders in excess of
33 the certified capital company's original
certified capital and any additional
34 capital contributions to the certified
capital company shall be subject to
35 audit by a certified public accounting firm
acceptable to the secretary, at
36 the expense of the certified capital
company.
37 (d) If at the
time any liquidating distribution is made by a capco, the
38 aggregate sum of all liquidating
distributions of the capco exceeds the
39 aggregate sum of the capco's original
certified capital and any subsequent
40 qualified venture capital contributions to
the capco, as determined by
41 audit, the capco, prior to any additional
distributions, shall pay to the state
42 treasurer's office 10% of the proportion of
the distribution in excess of
43 such amount.
9
1
(e) Documents and other materials submitted by capcos or by
busi-
2 nesses for purposes of original
certification or the continuance of certi-
3 fication as a capco shall not be
public records if it is determined by the
4 secretary that disclosure of such
information would compromise trade
5 secrets of qualified Kansas
businesses unless otherwise specified in this
6 act.
7 (f) Each
capco shall report the following to the secretary:
8 (1) As soon
as practicable, but in any case no later than 15 days, after
9 the receipt of a certified capital
investment, the name of each investor
10 from whom the certified capital investment
was received, the amount of
11 each investor's certified capital
investment and the date when the certi-
12 fied capital investment was received;
13 (2) within 90
days of the close of the capco's fiscal year, annual au-
14 dited financial statements. The audit shall
address the methods of oper-
15 ation and conduct of business of the capco
to determine if the capco is
16 complying with the statutes and program
rules and that the funds received
17 by the capco have been invested in
accordance with the time limits pro-
18 vided by this act; and
19 (3) at the end of
each quarter, that no more than 20% of the assets
20 of a capco shall be invested in a single
qualified Kansas business at any
21 one time unless the capco can demonstrate
that a greater percentage in
22 a single qualified Kansas business at any
one time is the result of losses
23 suffered by the capco in other qualified
venture capital investments.
24 (g) Any material
related to the sale of ownership in a capco or solic-
25 iting investment in a capco shall include
the following statement: "By
26 authorizing the formation of a certified
capital company, the State of
27 Kansas does not endorse the quality of
management or the potential for
28 earnings of a particular company. the use
of the word "certified" in an
29 offering does not constitute a
recommendation or endorsement of an
30 investment by the Kansas Securities
Commission or any other State
31 Official."
32 (h) The secretary
may establish reasonable initial filing fees for ap-
33 plications for certification pursuant to
this act and may also establish an
34 annual nonrefundable fee for capcos seeking
continued certification.
35 Sec. 6. (a)
To ensure that no qualified venture capital investment or
36 investor's certified capital investment has
been made in violation of this
37 act, the secretary shall conduct an annual
review of each capco to deter-
38 mine if the capco is complying with the
requirements of certification. The
39 costs of the annual review shall be paid by
each capco according to a
40 reasonable fee schedule adopted by the
secretary.
41 (b) Any material
violation of this act shall be grounds for decertifi-
42 cation under this section. If the secretary
determines that a capco is not
43 in compliance with the requirements for
continuing certification, the sec-
10
1 retary, by written notice, shall
inform the officers of the capco and the
2 board of directors, managers,
trustees or general partners that they may
3 be decertified within 120 days from
the date of mailing of the notice,
4 unless they correct the deficiencies
detailed in the notice and demon-
5 strate to the secretary's
satisfaction that the capco is again in compliance
6 with the requirements for
certification as determined by the secretary.
7 (c) At the
end of the 120-day grace period, if the capco is still not in
8 compliance, the secretary may send a
notice of decertification to the
9 capco and to the secretary of revenue
including a list of the decertified
10 capitol investment by investor and
transferee.
11
(d) Decertification of a capco prior to the capco meeting all
require-
12 ments of paragraphs (1) through (4) of
subsection (a) of section 5, and
13 amendments thereto, shall cause the
recapture of all tax credits previously
14 allowed to an investor or transferee and
the forfeiture of all future tax
15 credits to otherwise be claimed by an
investor or transferee with respect
16 to any certified capital investment in the
decertified capco.
17
(e) Decertification of a capco after it has met all
requirements of
18 paragraphs (1) through (4) of subsection
(a) of section 5, and amendments
19 thereto, shall cause the forfeiture of tax
credits commencing with the
20 taxable year of the investor or transferee
in which the decertification arose
21 and for all future taxable years with no
recapture of tax credits allowed
22 to an investor or transferee with respect
to the taxable years which ended
23 before the decertification occurred. Once a
capco has invested 100% of
24 its certified capital in qualified Kansas
businesses, all future tax credits to
25 be claimed by investors with respect to the
capco pursuant to this act
26 shall not be subject to recapture.
27 Sec. 7. The
secretary shall prepare and submit an annual report to
28 the governor and the legislature no later
than October 1 of each year.
29 Such report shall be presented to the
standing committee on commerce
30 in the senate, standing committee on
economic development in the house
31 of representatives and the joint committee
on economic development.
32 Such report shall include but not be
limited to:
33 (a) The total
dollar amount each capco received from all investors
34 allowed tax credits and any other investors
and the identity of all investors
35 allowed tax credits;
36 (b) the total
amount invested by each capco in qualified Kansas busi-
37 nesses, the identity and location of those
businesses, the amount invested
38 in each qualified Kansas business and the
total number of permanent full-
39 time jobs created or retained by each
qualified Kansas business as a result
40 of the investment; and
41 (c) the
cumulative amount of any liquidating disbursements received
42 by the state from the capcos.
43 Sec. 8. The
secretary may revoke the certification of a capco if any
11
1 material representation to the
secretary in connection with the application
2 process proves to have been falsely
made or if the application materially
3 violates any requirement established
by the secretary.
4 Sec.
9. (a) Any investor that is not subject to taxation under the
pro-
5 visions of the Kansas income,
privilege or premium tax that makes a cer-
6 tified capital investment shall be
deemed to acquire an interest in the
7 nature of a transferable tax credit
limited to 100% of such investment.
8 The credit established pursuant to
this act may be sold or transferred
9 subject to approval by the secretary.
An investor as described in this sec-
10 tion shall not be allowed a refund for the
interest herein created. Only
11 the full amount of the credit for any one
investment may be transferred
12 and the credit may be transferred only one
time. Documentation of any
13 credit transfer shall be provided to the
secretary. The secretary shall trans-
14 mit a copy of such documentation to the
secretary of revenue.
15 (b) The
secretary, after consulting with the secretary of revenue,
shall
16 develop such rules and regulations as are
necessary to facilitate the op-
17 eration of the transfer program consistent
with the interest of the state
18 in tracking the transfer of ownership and
the use of tax credits earned by
19 the transferee, but which shall not be
overly burdensome to the transfer
20 process.
21 (c) Any such sale
or transfer shall not affect the time schedule for
22 taking the tax credit, as provided in this
act. Any tax credits recaptured
23 pursuant to section 6 and amendments
thereto shall be the liability of the
24 taxpayer which actually claimed the tax
credit. In approving the sale or
25 transfer of the tax credit pursuant to this
section, the secretary may re-
26 quire the transferor or the transferee or
both to execute guarantees or
27 post bonds with respect to any potential
tax credit recapture.
28 (d) Any payment
received for tax credits pursuant to this section is
29 taxable income of the transferor of the
credit and the amount equal to
30 the difference the dollar value of the tax
credit transferred minus the
31 sales price of the tax credit shall be
taxable income of the transferee.
32 (e) The secretary
shall make and promulgate rules and regulations
33 consistent with the provisions of this act
as are necessary or useful to carry
34 out the provisions of this act.
35 (f) Every final
order, decision, license or other official act of the sec-
36 retary pursuant to this act is subject to
review in accordance with the act
37 for judicial review and civil enforcement
of agency actions, K.S.A. 77-601
38 et seq. and amendments thereto.
39 (g) In view of
the objectives of these requirements and the underlying
40 policies of the act, the act is not
available with respect to any transaction
41 or series of transactions that, although in
technical compliance with these
42 rules, is part of a plan or scheme to evade
the requirements of this act or
43 to distort the benefits entitled to be
realized under the act. In such cases,
12
1 no investor in any capco shall be
entitled to the benefit of any tax credits
2 provided for hereunder.
3 (h) The
offer or sale of a security by a capco pursuant to this act
shall
4 be subject to the registration
requirements of K.S.A. 17-1254, 17-1255,
5 17-1257, 17-1258, 17-1259 and 17-1260
and amendments thereto.
6 Sec. 10. This act
shall take effect and be in force from and after its
7 publication in the statute book.