84R10938 KLA-D
By: Capriglione H.B. No. 3617
A BILL TO BE ENTITLED
AN ACT
relating to the establishment of a business investment fund in this
state.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle F, Title 4, Government Code, is amended
by adding Chapter 486 to read as follows:
CHAPTER 486. BUSINESS INVESTMENT FUND
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 486.001. DEFINITIONS. In this chapter:
(1) "Fund" means the business investment fund
established under Subchapter C.
(2) "Investment manager" means the private equity fund
manager with which the comptroller contracts under Subchapter B.
(3) "Investor" means a person, including this state,
who makes an investment in the fund.
(4) "Qualified business" means a business entity that
meets the requirements of Section 486.002.
Sec. 486.002. REQUIREMENTS OF QUALIFIED BUSINESS. For
purposes of this chapter, a business entity is a qualified business
if the entity:
(1) engages in business in this state at the time the
investment manager makes an investment of fund money in the entity;
(2) intends to continue engaging in business in this
state following the investment described by Subdivision (1); and
(3) agrees to use money from the investment described
by Subdivision (1) only to support the entity's business operations
in this state.
Sec. 486.003. RULES. The comptroller shall adopt rules to
implement this chapter, including rules regarding the selection of
an investment manager.
SUBCHAPTER B. INVESTMENT MANAGER
Sec. 486.051. SELECTION OF INVESTMENT MANAGER. The
comptroller shall select a private equity fund manager to act as an
investment manager to administer the fund.
Sec. 486.052. REQUEST FOR PROPOSALS; NOTICE. (a) The
comptroller shall select a private equity fund manager to act as the
fund's administrator only after soliciting and evaluating requests
for proposals as prescribed by this section.
(b) The comptroller shall publish a notice of a request for
proposals in newspapers of general circulation in this state once
each week for two consecutive weeks before a date specified by the
comptroller as the date by which the comptroller will begin
accepting proposals. The notice must contain:
(1) a general description of the subject of the
proposed contract; and
(2) the location where the request for proposals may
be obtained.
(c) The request for proposals must include:
(1) instructions and information to a respondent
concerning the submission of a proposal, including the name and
address of the office where a proposal is to be submitted;
(2) instructions regarding the manner in which a
respondent may communicate with the comptroller, including the
names, titles, and telephone numbers of the individuals to whom the
communications shall be directed;
(3) a description of the factors and criteria the
comptroller will consider in evaluating proposals and the relative
importance of each factor or criterion;
(4) a description of the comptroller's evaluation
procedure; and
(5) a description of any documents that may be
incorporated by reference into the request for proposals, if the
request specifies where to obtain the documents and the documents
are readily available to all interested parties.
Sec. 486.053. EVALUATION OF SUBMITTED PROPOSALS. (a)
After the date specified for receiving requests for proposals, the
comptroller shall evaluate submitted proposals. The comptroller
may discuss a respondent's proposal with the respondent to clarify
or revise the proposal or the terms of the proposed contract.
(b) The comptroller may cancel a request for proposals at
any time before entering into a contract with a respondent.
Sec. 486.054. CONTRACT. (a) The comptroller shall select a
respondent to the request for proposals to act as the investment
manager for the fund and enter into a contract with the selected
respondent.
(b) The contract must specify:
(1) any standards or general limitations applicable to
investments of fund money; and
(2) the terms under which the comptroller or
investment manager may terminate the contract.
SUBCHAPTER C. ESTABLISHMENT AND OPERATION OF BUSINESS INVESTMENT
FUND
Sec. 486.101. FUND AS TRUST FUND. (a) In this section,
"financial institution" has the meaning assigned by Section
201.101, Finance Code.
(b) The business investment fund is a trust fund outside the
state treasury that is:
(1) held in a financial institution by the comptroller
as trustee on behalf of the investors; and
(2) administered by the comptroller through a contract
with the investment manager.
(c) The fund consists of:
(1) money of this state that is appropriated to the
comptroller for deposit in the fund and subsequent investment;
(2) money provided by other investors for deposit in
the fund and subsequent investment; and
(3) earnings on investments of fund money.
Sec. 486.102. PURPOSE OF FUND. The fund is established to
facilitate job creation and retention by businesses in this state.
Sec. 486.103. USES OF FUND MONEY. The investment manager
may use fund money only to:
(1) make investments in one or more qualified
businesses based on market terms;
(2) make other investments described by Section
486.153(b); and
(3) repay the principal of and pay interest on
investments made in the fund.
SUBCHAPTER D. INVESTMENTS IN FUND AND INVESTMENTS OF FUND MONEY
Sec. 486.151. INVESTMENTS. The investment manager shall
seek private equity funds to be investors in the fund.
Sec. 486.152. REPAYMENT OF INVESTMENT; RETURN. The
investment manager shall use fund money to repay an investor's
investment in the fund, including this state's investment, and pay
any interest on that investment.
Sec. 486.153. INVESTMENT REQUIREMENTS. (a) The investment
manager may invest fund money only in qualified businesses that the
investment manager anticipates will assist in achieving the purpose
of the fund specified by Section 486.102.
(b) The investment manager also may invest fund money for
limited periods in:
(1) cash deposited with a federally insured financial
institution;
(2) certificates of deposit in a federally insured
financial institution;
(3) investment securities that are:
(A) obligations of the United States or agencies
or instrumentalities of the United States; or
(B) obligations that are guaranteed fully as to
principal and interest by the United States;
(4) debt instruments that are:
(A) rated at least "A" or the equivalent by a
nationally recognized credit rating organization; or
(B) issued or guaranteed by an entity the
unsecured indebtedness of which is rated at least "A" or the
equivalent by a nationally recognized credit rating organization,
provided that the debt instruments in which the manager invests are
not subordinated to other unsecured indebtedness of the issuer or
guarantor; and
(5) obligations of this state or a municipality or
political subdivision of this state.
SECTION 2. Not later than January 1, 2016, the comptroller
of public accounts shall enter into a contract with the investment
manager selected to administer the business investment fund as
required by Chapter 486, Government Code, as added by this Act.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2015.