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Regular Session, 2010
SENATE BILL NO. 500
BY SENATORS MARIONNEAUX, ALARIO, APPEL, CHEEK, DORSEY, B.
GAUTREAUX, N. GAUTREAUX, HEBERT, JACKSON, LONG,
MORRELL, MURRAY, RISER, SHAW AND SMITH
TAX/TAXATION. Authorizes the Department of Economic Development to grant up to $5
million of rebates per calendar year at the rate of 35% of an investor's investment in
"Louisiana Entrepreneurial Business," not to exceed $1 million per year per business and $2
million total per business and requires the Louisiana Mega-Project Development Fund to be
reduced each fiscal year by an amount which equals the rebates granted. (gov sig)
AN ACT1
To enact Chapter 55 of Title 51 of the Louisiana Revised Statutes of 1950, to be comprised2
of R.S. 51:3121 through 3124, relative to the Angel Investor Rebate Program; to3
provide for the purposes; to provide for the amount of the rebate; to provide for the4
qualifications of the rebate; to provide for reductions in a certain fund equal to the5
amount of such rebates; to provide for the implementation and administration of the6
program by the Department of Economic Development; to provide for definitions;7
to provide for rules; to authorize penalties for providing false or fraudulent8
information; to require an annual report to the Department of Economic9
Development by a Louisiana Entrepreneurial Business; and to provide for related10
matters.11
Be it enacted by the Legislature of Louisiana:12
Section 1. Chapter 55 of Title 51 of the Louisiana Revised Statutes of 1950, to be13
comprised of R.S. 51:3121 through 3124, is hereby enacted to read as follows: 14
§3121. Legislative findings and purposes15
A. The legislature finds that the welfare of the state is enhanced by a16
healthy entrepreneurial business environment and that ready sources of capital17 SB NO. 500
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necessary to support this environment are not currently available.1
B. This Act is intended to achieve the following purposes:2
(1) To create the Angel Investor Rebate Program to encourage third3
parties to invest in early-stage, wealth-creating businesses in the state.4
(2) To expand the economy of the state by enlarging its base of wealth5
creating businesses.6
(3) To enlarge the number of quality jobs available to retain the7
presence of young people educated in Louisiana.8
§3122. Angel Investor Rebate Program; establishment; qualifications;9
administration10
A. Qualifying individuals or entities that invest in a Louisiana11
Entrepreneurial Business as defined by R.S. 51:2303(5) may earn, apply for,12
and be granted a rebate. Such rebate shall be earned and granted for a period13
of five tax years as provided in this Chapter. The administration of applications14
for these rebates and the provision of these rebates shall be called the Angel15
Investor Rebate Program. Nothing in this Chapter shall establish a right of an16
investor to receive an angel investor rebate unless approved by the department.17
B.(1) The Angel Investor Rebate Program shall be implemented and18
administered by the Department of Economic Development. In compliance with19
the Administrative Procedure Act and this Chapter, the department shall adopt20
and promulgate such rules as are necessary for the efficient and effective21
administration of this program in keeping with the purposes for which it is22
enacted.23
(2) In providing for the implementation and administration of the24
program, the department shall work closely with the secretary of the25
Department of Revenue in order to promulgate rules. Such rules shall include26
provisions for:27
(a) The Department of Economic Development to certify the eligibility28
of any investor applicant for receipt of the rebate provided for in this Chapter.29 SB NO. 500
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(b) The presentation of a investor's eligibility certification and any other1
documentation required to be applied for to earn a rebate.2
(c) An annual report of the Louisiana Entrepreneurial Business3
regarding the use of proceeds, number of employees, amount of payroll, annual4
revenue, and any other information requested by the Department of Economic5
Development.6
C.(1) To qualify for an angel investor rebate for five tax years, all of the7
following qualifications shall be required by each applicant:8
(a) The investment in the Louisiana Entrepreneurial Business must be9
an investment that is at risk and not secured or guaranteed. "At risk" means10
that the repayment of the investment is entirely dependent on the success of the11
Louisiana Entrepreneurial Business.12
(b) For the purposes of this Angel Investor Rebate Program, an angel13
investor or investors cannot be the principal owner or owners of the business14
who are involved in the operation of the business as a full-time professional15
activity nor can their spouses and relatives within the third degree of16
consanguinity or affinity. A principal owner means one or more persons who17
own an aggregate of fifty percent or more of the Louisiana Entrepreneurial18
Business.19
(c) The use of proceeds from the investment must be used for capital20
improvements, plant equipment, research and development, working capital for21
the business, or other business activity as may be approved by the Department22
of Economic Development. The proceeds cannot be used to pay dividends, repay23
shareholder's loans, redeem shares, or repay debt unless approved by the24
Department of Economic Development.25
(d) The investor shall meet the definition of accredited investor26
established by the Rule 501 in Regulation D of the General Rules and27
Regulations promulgated under the Securities Act of 1933.28
(e) The investment in the Louisiana Entrepreneurial Business by the29 SB NO. 500
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applicant must be maintained for three years unless otherwise approved by the1
Department of Economic Development.2
(2) To qualify for an angel investor rebate the Louisiana3
Entrepreneurial Business shall meet all the following requirements:4
(a) The principal business operations of the business are located in5
Louisiana.6
(b) Prior to the investment by the investor, the business has received7
approval as qualified to entitle investors to receive angel investor rebates by the8
Department of Economic Development.9
(c) The Louisiana Entrepreneurial Business must demonstrate that it10
will be a wealth-creating business for Louisiana by demonstrating in its business11
plan that it will have more than fifty percent of its sales from outside Louisiana.12
(d) The business is not a business engaged primarily in retail sales, real13
estate, professional services, gaming or gambling, a natural resource extraction14
or exploration, a franchisee or financial services, including venture capital15
funds.16
§3123. Angel Investor Tax Rebate; amount; duration; forfeit17
A.(1) Except as provided in Subsection B of this Section, the investor18
may earn and apply for and, if qualified, be granted a rebate in the amount19
approved by the secretary of the Department of Economic Development for the20
amount of money invested by the investor in the Louisiana Entrepreneurial21
Business, which shall not exceed one million dollars per year per business and22
two million dollars total per business. The rebate shall be allowed for23
investments made after January 1, 2010.24
(2)(a) The rebates approved by the Department of Economic25
Development shall be granted at the rate of thirty-five percent of the amount of26
money invested by the investor in the Louisiana Entrepreneurial Business, with27
the rebates approved and awarded shall be allotted in equal portions for five28
years, subject to the limitations provided for in Paragraph (1) of this29 SB NO. 500
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Subsection.1
(b) The total angel investor rebates granted by the Department of2
Economic Development in any calendar year shall not exceed five million3
dollars irrespective of the year in which they are to be used except as provided4
for in this Paragraph. The Department of Economic Development shall by rule5
establish the method of allocating available rebates to investors, including but6
not limited to a first-come, first-served system, reservation of rebates for a7
specified time period, or other method which the department, in its discretion,8
may find beneficial to the program.9
(c) After certifying the eligibility of the Louisiana Entrepreneurial10
Business and the amount of the investment, the Department of Economic11
Development shall issue a rebate certificate. The rebate shall be payable over12
five years with the rebate for the first year payable twenty-four months from13
the date that the Department of Economic Development certifies the amount of14
investment, and the rebate for each subsequent year shall be payable twelve15
months after the prior year's rebate. The rebate certificate shall contain the16
investor's name, address, tax identification number, the amount of credit, the17
name of the qualifying business, and other information required by the18
Department of Revenue. The rebate certificate, unless rescinded by the19
Department of Economic Development, shall be accepted by the Department of20
Revenue as proof of the rebate. The Department of Economic Development21
shall notify the Department of Revenue and shall provide it with a copy of the22
rebate. The Department of Revenue may require the investor to submit such23
additional information as may be necessary to administer the provisions of this24
Chapter.25
(d) The Department of Economic Development shall maintain a list of26
the rebate certificates issued.27
B. A rebate granted pursuant to the Angel Investor Rebate Program28
shall expire and have no value seven years after it was originally granted.29 SB NO. 500
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C. If at the close of any calendar year in the five-year period beginning1
with the first year in which an angel investor rebate is issued to an investor in2
a business, the business is no longer domiciled in Louisiana, the rebate claimed3
under this Section shall be recaptured from the business, unless change of4
domicile is the result of a merger, consolidation or other acquisition of such5
business with or by a party not affiliated with such business.6
D. If at the close of any calendar year in the three-year period beginning7
with the first year in which an angel investor rebate is issued to an investor in8
a business, the investor transfers the equity received in connection with a9
qualified investment, the rebate claimed under this Section shall be recaptured10
from the investor unless the transfer results from the following:11
(1) The liquidation of the qualified business issuing such equity.12
(2)The merger, consolidation or other acquisition of such business with13
or by a party not affiliated with such business.14
(3) The death of the investor.15
§3124. False or fraudulent information in making application, claim for rebate,16
or other instrument; penalties17
A. Any person making an application, claim for an angel investor18
rebate, or any report, return, statement, or other instrument or providing any19
other information pursuant to the provisions of the Angel Investor Rebate20
Program who willfully makes a false or fraudulent application, claim, report,21
return, statement, invoice, or other instrument or who willfully provides any22
false or fraudulent information, any person who willfully aids or abets another23
in making such false or fraudulent application, claim, report, return, statement,24
invoice, or other instrument, or any person who willfully aids or abets another25
in providing any false or fraudulent information, shall be guilty, upon26
conviction, of a felony and shall be punished by the imposition of a fine of not27
less than one thousand dollars and not more than fifty thousand dollars or28
imprisoned for not less than two years and not more than five years, or both.29 SB NO. 500
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B. Any person convicted of a violation of this Section shall be liable for1
the repayment of all rebates which were granted to that person. Interest shall2
be due on such repayments at the rate of fifteen percent per annum.3
Section 2. Notwithstanding any other provision of law to the contrary, the Louisiana4
Mega-Project Development Fund provided for in R.S. 51:2365 shall be reduced each fiscal5
year by an amount which equals the rebate which is awarded pursuant to the provisions of6
this Act.7
Section 3. This Act shall become effective upon signature by the governor or, if not8
signed by the governor, upon expiration of the time for bills to become law without signature9
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If10
vetoed by the governor and subsequently approved by the legislature, this Act shall become11
effective on the day following such approval.12
The original instrument was prepared by Danielle Doiron. The following
digest, which does not constitute a part of the legislative instrument, was
prepared by Ann S. Brown.
DIGEST
Marionneaux (SB 500)
Proposed law establishes the Angel Investor Rebate Program to encourage third party
investors in early-stage, wealth-creating businesses, and to provide quality jobs in Louisiana.
Provides for the implementation and administration of the program by the Dept. of
Economic Development (DED). Requires DED to promulgate rules for the program.
Provides for definitions and requirements of qualifying investments. Requires "at risk" as
meaning that the repayment of the investment is entirely dependent on the success of the
Louisiana Entrepreneurial Business. Requires the use of proceeds from the investment to
certain purposes unless approved by DED.
Provides that qualifying individuals or entities which invest in Louisiana Entrepreneurial
Business as defined by law may apply and be granted a rebate. Authorizes rebates to be
granted for five tax years.
Provides for the qualifications of applicants of the program. Authorizes rebates on
investments made after January 1, 2010, of not more than $1 million per year and $2 million
total per business.
Provides that the rebates are equal to 30% of the amount of money invested, divided in equal
portions over five years, payable over 5 years with the rebate for the first year payable 24
months from the date that DED certifies the amount of investment. Provides that the rebate
for each subsequent year is payable 12 months after the prior year's rebate.
Provides that total credits granted by DED may not exceed $5 million in any calendar year.
Requires the Louisiana Mega-Project Development Fund provided for in R.S. 51:2365 to be SB NO. 500
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reduced each fiscal year by an amount which equals the rebate which is awarded pursuant
to the provisions of the proposed law.
Authorizes DED to issue rebate certificates to approved applicants. Requires DED to
maintain a list of certificates issued. Provides that rebate certificates shall expire seven years
after being granted.
Authorizes penalties for providing false or fraudulent information in application for rebate.
Requires repayment of rebates from applicant under certain conditions.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Adds R.S. 51:3121-3124)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Revenue and Fiscal
Affairs to the original bill.
1. Requires the Louisiana Mega-Project Development Fund provided for in R.S.
51:2365 to be reduced each fiscal year by an amount which equals the rebate
which is awarded pursuant to the provisions of the proposed law.
2. Deletes the provision authorizing DED to carry forward any of the unused
$5,000,000 cap on rebates in a calendar year.
3. Deletes the provision that the $5,000,000 annual cap did not apply to "angel
pools" and authorizes DED to determine the amount of the rebates for the
pools.
4. Provides that the rebates are payable over 5 years with the rebate for the first
year payable 24 months from the date that DED certifies the amount of
investment and the rebate.
Summary of Amendments Adopted by Senate
Senate Floor Amendments to engrossed bill.
1. Technical amendments.