84R1346 TJB/CLG-F
By: Elkins H.B. No. 590
A BILL TO BE ENTITLED
AN ACT
relating to the creation of research technology corporations by
institutions of higher education; providing for tax exemptions;
providing a penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle H, Title 3, Education Code, is amended
by adding Chapter 157 to read as follows:
CHAPTER 157. UNIVERSITY RESEARCH TECHNOLOGY CORPORATIONS
Sec. 157.001. PURPOSE AND FINDINGS. The legislature finds
that the development and commercialization of technology by public
and private institutions of higher education are critical
components of the educational and research missions of those
institutions and key contributors to the economic development and
well-being of this state. The activities authorized by this
chapter directly support those important public purposes.
Sec. 157.002. DEFINITIONS. In this chapter:
(1) "Contribution" has the meaning assigned by Section
1.002, Business Organizations Code.
(2) "Creating institution" means an institution of
higher education or private or independent institution of higher
education that creates a corporation under this chapter.
(3) "Institution of higher education" and "private or
independent institution of higher education" have the meanings
assigned by Section 61.003.
(4) "Technology" means the application of scientific
knowledge for practical purposes and includes inventions,
discoveries, trade secrets, copyrighted materials, tools,
machines, materials, processes to do work, processes to produce
goods, processes to perform services, processes to carry out other
useful activities, trademarks, and computer software.
Sec. 157.003. CREATION OF CORPORATION. (a) An institution
of higher education or private or independent institution of higher
education may create a special-purpose corporation for the
exclusive purpose of developing and commercializing one or more
technologies owned wholly or partly by the institution. A
corporation created under this chapter that engages in other
purposes that are not incidental to that authorized purpose is not
entitled to the benefits of this chapter, including any tax
exemption authorized by Section 157.008.
(b) The certificate of formation of a corporation created
under this chapter must state that the corporation is governed by
this chapter and state the name and purposes of the corporation and
other information required by law. Except as otherwise provided by
this chapter, a corporation created under this chapter is governed
by Chapters 20 and 21, Business Organizations Code, and Title 1 of
that code.
Sec. 157.004. MANAGEMENT OF CORPORATION; RIGHTS OF CREATING
INSTITUTION. (a) The creating institution shall name the persons
constituting the initial board of directors of the corporation.
Directors other than the initial directors shall be determined as
provided by Chapter 21, Business Organizations Code.
(b) The creating institution must at all times be a
shareholder in the corporation. The creating institution shall be
issued shares in the corporation when the corporation is created as
agreed on by the organizers of the corporation according to any
contribution of the institution.
(c) The creating institution may be issued shares in the
corporation in exchange for the contribution of rights in the
technology of the institution or of other contractual obligations,
as agreed on by the board of directors.
Sec. 157.005. TECHNOLOGY LICENSING. The creating
institution may license to the corporation any technology owned by
the institution.
Sec. 157.006. REQUIRED OPERATIONS IN TEXAS. The principal
offices of the corporation must be located in this state, and the
majority of any goods produced or services performed by the
corporation must be produced or performed in this state.
Sec. 157.007. DURATION. (a) A corporation created under
this chapter is limited in duration to 15 years. At the expiration
of that period, the corporation may file a restated and amended
certificate of formation under which the corporation continues in
existence as a for-profit corporation governed by Chapters 20 and
21, Business Organizations Code, and Title 1 of that code. A
corporation that files a restated and amended certificate of
formation as authorized by this subsection is not governed by the
other provisions of this chapter, except that the corporation must
comply with Section 157.008 to obtain a tax exemption authorized by
that section and is subject to the penalty provided by Section
157.009 for noncompliance.
(b) Subsection (a) does not limit the time or manner in
which the corporation may be terminated as otherwise provided by
law.
Sec. 157.008. TAX EXEMPT STATUS OF CORPORATION. (a) This
section applies only to a corporation created under this chapter,
including a corporation that files a restated and amended
certificate of formation as authorized by Section 157.007, that:
(1) is engaged exclusively in developing and
commercializing one or more technologies owned wholly or partly by
the creating institution, including activities that are incidental
to developing and commercializing those technologies; and
(2) complies with Section 157.006.
(b) The corporation is entitled to an exemption from ad
valorem taxation of:
(1) the real and tangible personal property owned by
the corporation that is used for a purpose described by Subsection
(a)(1); and
(2) the real property owned by the corporation that
consists of:
(A) an incomplete improvement that is under
active construction or other physical preparation to make the
property suitable to be used for a purpose described by Subsection
(a)(1); and
(B) the land on which the incomplete improvement
is located that will be reasonably necessary for the corporation's
use of the improvement.
(c) The corporation is exempted from the franchise tax
imposed by Chapter 171, Tax Code.
(d) The sale, storage, use, or other consumption of a
taxable item directly used or consumed by the corporation is
exempted from the sales and use taxes imposed by Chapter 151, Tax
Code.
(e) This section does not limit the eligibility of the
corporation for any other available tax benefit, including a tax
benefit under Chapter 312 or 313, Tax Code.
(f) If the corporation acquires property after January 1 of
a tax year, the corporation may receive an exemption authorized by
Subsection (b) for the applicable portion of that tax year
immediately on qualification for the exemption. Sections 11.43(d)
and 26.113, Tax Code, apply to an exemption authorized by
Subsection (b) of this section in the same manner as those
provisions apply to an exemption covered by Section 11.42(d).
(g) The corporation must maintain a complete record of all
taxes that the corporation would have been liable for if the
corporation had not been entitled to the exemptions authorized by
this section. The corporation shall submit the records to the
comptroller without delay on request of the comptroller when
determining the corporation's liability for any penalty assessed
under Section 157.009.
Sec. 157.009. PENALTY FOR NONCOMPLIANCE WITH CORPORATE
OPERATIONS REQUIREMENTS. (a) A corporation created under this
chapter, including a corporation that files a restated and amended
certificate of formation as authorized by Section 157.007, that
ceases to comply with Section 157.006 is liable to the state for a
penalty in an amount equal to any taxes, including ad valorem taxes,
for which the corporation received an exemption under Section
157.008 for the five calendar years preceding the year in which the
noncompliance began. The comptroller shall determine the
corporation's liability for the penalty and assess the amount owed.
(b) A penalty assessed under this section is due on the date
designated by the comptroller, not later than the 90th day after the
date assessed, and shall be collected in the same manner as a state
tax. A lien exists on any property of the corporation to secure the
payment of any amount assessed under this section. The comptroller
by rule shall establish the methods of payment and shall adopt other
rules necessary to administer and enforce this section.
(c) Amounts received under this section shall be deposited
in the state treasury to the credit of the general revenue fund.
Sec. 157.010. CONFLICT WITH BUSINESS ORGANIZATIONS CODE.
To the extent of any conflict between a provision of this chapter
and a provision of the Business Organizations Code, the provision
of this chapter controls.
SECTION 2. (a) Except as provided by Subsection (b) of this
section, this Act takes effect January 1, 2016.
(b) Sections 157.008(b) and (f), Education Code, as added by
this Act, take effect January 1, 2016, but only if the
constitutional amendment proposed by the 84th Legislature, Regular
Session, 2015, authorizing the legislature to provide for an
exemption from ad valorem taxation of certain property owned by
research technology corporations created by public or private
institutions of higher education to develop and commercialize
technologies owned by the institutions is approved by the voters.
If that amendment is not approved by the voters, Sections
157.008(b) and (f), Education Code, as added by this Act, have no
effect.