DAG

Agency: West Virginia Economic Development Authority

Subject: General Administration of the West Virginia Capital Company Act: Establishment of the Application Procedures to Implement the Act, 117CSR1

Filed for public comment: June 24, 1999

Public comment period ended: July 28, 1999

Filed following public comment period: August 6, 1999

Filed LRMRC: August 6, 1999

Filed as emergency: June 24, 1999

Fiscal Impact: None

The proposed rule amends a current legislative rule. The amendment is in response to SB 1000 which passed during the 1999 First Extraordinary Session. SB 1000 provided for a division of 6 million dollars in available tax credits between small business investment companies and other qualified companies. It provided that not more than $1,750,000 of the credits in any one fiscal year may be allocated to small business investment companies. The following is a synopsis of the substantive amendments.

Section 2 which defines terms has been amended by adding a definition of "SBIC" or "Small Business Investment Company".

Section 3 relates to the procedure to become a qualified West Virginia Capital Company. It has been amended to provide separate provisions for simultaneous receipt of applications based upon whether the application is submitted by an SBIC or another applicant. It has also been amended to provide separate but equal review of simultaneously received applications submitted by applicants which are SBICs and applicants which are not SBICs. It also provides that the director must make a determination on an application submitted by an SBIC within the first 60 days of the fiscal year.

It has also been amended to provide that not more than $1,750,000 of the tax credits may be allocated during the first 90 days of the fiscal year to one or more SBICs.

Section 6 relates to investment requirements, reporting, record keeping, prohibitions, sale or liquidation and SBIC compliance. A new subdivision 6.12 has been added requiring a qualified company with SBIC status to make investments in full compliance with the Act, this rule and the Federal Small Business Investment Act and its regulations. It provides that any SBIC that fails to obtain its license to operate as a small business corporation and to provide evidence of the license to the Authority by January 1, is subject to voluntary decertification and penalties for noncompliance.

Statutory authority: W.Va. Code, ß5E-1-5, which provides as follows:

The authority shall promulgate rules in accordance with article three, chapter twenty-nine-a of this code, to carry out the policy and purposes of this article, to provide any necessary clarification of the provisions of this article, and to efficiently provide for the general administration of this article.

I. HAS THE AGENCY EXCEEDED THE SCOPE OF ITS STATUTORY AUTHORITY IN APPROVING THE PROPOSED LEGISLATIVE RULE?

No.

II. IS THE PROPOSED LEGISLATIVE RULE IN CONFORMITY WITH THE INTENT OF THE STATUTE WHICH THE RULE IS INTENDED TO IMPLEMENT, EXTEND, APPLY, INTERPRET OR MAKE SPECIFIC?

Yes.

III. DOES THE PROPOSED LEGISLATIVE RULE CONFLICT WITH OTHER CODE PROVISIONS OR WITH ANY OTHER RULE ADOPTED BY THE SAME OR A DIFFERENT AGENCY?

No.

IV. IS THE PROPOSED LEGISLATIVE RULE NECESSARY TO FULLY ACCOMPLISH THE OBJECTIVES OF THE STATUTE UNDER WHICH THE PROPOSED RULE WAS PROMULGATED?

Yes.

V. IS THE PROPOSED LEGISLATIVE RULE REASONABLE, ESPECIALLY AS IT AFFECTS THE CONVENIENCE OF THE GENERAL PUBLIC OR OF PERSONS AFFECTED BY IT?

Yes.

VI. CAN THE PROPOSED LEGISLATIVE RULE BE MADE LESS COMPLEX OR MORE READILY UNDERSTANDABLE BY THE GENERAL PUBLIC?

No.

VII. WAS THE PROPOSED LEGISLATIVE RULE PROMULGATED IN COMPLIANCE WITH THE REQUIREMENTS OF CHAPTER 29A, ARTICLE 3 AND WITH ANY REQUIREMENTS IMPOSED BY ANY OTHER PROVISION OF THE CODE?

No. It did not contain a summary of the proposed rule or a statement of the circumstances requiring the proposed rule as required by statute.

VIII. OTHER.

Counsel has technical modifications to suggest.