AN ACT
RELATING TO ECONOMIC
DEVELOPMENT; ADOPTING INVESTMENT ALLOCATIONS AND DEFINITIONS RELATED TO THE NEW
MEXICO SMALL BUSINESS INVESTMENT COUNCIL.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF NEW MEXICO:
Section
1. Section 7-27-5.15 NMSA 1978 (being
Laws 1990, Chapter 126, Section 5, as amended by Laws 2003, Chapter 399,
Section 2 and by Laws 2003, Chapter 401, Section 1 and also by Laws 2003,
Chapter 406, Section 1) is amended to read:
"7-27-5.15. NEW MEXICO PRIVATE EQUITY FUNDS AND BUSINESS
INVESTMENTS.--
A. No more than six percent of the market value
of the severance tax permanent fund may be invested in New Mexico private
equity funds or New Mexico businesses under this section.
B. In making investments pursuant to Subsection
A of this section, the council shall make investments in New Mexico private
equity funds or New Mexico businesses whose investments or enterprises enhance
the economic development objectives of the state.
C. The state investment officer shall make
investments pursuant to Subsection A of this section only upon approval of the
council, upon review of the recommendation of the private equity investment
advisory committee and within guidelines and policies established by the
council.
D. As used in this section:
(1) "New Mexico business" means, in the
case of a corporation or limited liability company, a business with its
principal office and a majority of its full-time employees located in New
Mexico or, in the case of a limited partnership, a business with its principal
place of business and eighty percent of its assets located in New Mexico; and
(2) "New Mexico private equity fund"
means a limited partnership, limited liability company or corporation organized
and operating in the United States and maintaining an office staffed by a
full-time investment officer in New Mexico that:
(a) has as its primary business activity the
investment of funds in return for equity in or debt of businesses for the
purpose of providing capital for start-up, expansion, product or market
development, recapitalization or similar business purposes;
(b) holds out the prospects for capital
appreciation from such investments;
(c) has at least one full-time manager with at
least three years of professional experience in assessing the growth prospects
of businesses or evaluating business plans and who has established permanent
residency in the state;
(d) is committed to investing or helps secure
investing by others, in an amount at least equal to the total investment made
by the state investment officer in that fund pursuant to this section, in
businesses with a principal place of business in the state and that hold
promise for attracting additional capital from individual or institutional
investors nationwide for businesses in the state; and
(e) accepts investments only from accredited
investors as that term is defined in Section 2 of the federal Securities Act of
1933, as amended (15 USCA Section 77(b)), and rules and regulations promulgated
pursuant to that section.
E. The state investment officer is authorized to
make investments in New Mexico businesses to create new job opportunities and
to support new, emerging or expanding businesses in a manner consistent with
the constitution of New Mexico if:
(1) the investments are made in conjunction with
cooperative investment agreements with parties that have demonstrated abilities
and relationships in making investments in new, emerging or expanding
businesses;
(2) an investment in any one business does not
exceed ten percent of the amount available for investment pursuant to this
section; and
(3) the investments represent no more than
fifty-one percent of the total investment capital in a business; provided,
however, that nothing in this subsection prohibits the ownership of more than
fifty-one percent of the total investment capital in a New Mexico business if
the additional ownership interest:
(a) is due to foreclosure or other action by the
state investment officer pursuant to agreements with the business or other
investors in that business;
(b) is necessary to protect the investment; and
(c) does not require an additional investment of
the severance tax permanent fund.
F. The state investment officer shall make a
commitment to the small business investment corporation pursuant to the Small
Business Investment Act to invest one-half percent of the market value of the
severance tax permanent fund by July 1, 2001 to create new job opportunities by
providing capital for land, buildings or infrastructure for facilities to
support new or expanding businesses and to otherwise make investments to create
new job opportunities to support new or expanding businesses in a manner
consistent with the constitution of New Mexico.
On July 1, 2003 and on each July 1 thereafter, the state investment
officer shall determine whether the invested capital in the small business
investment corporation is less than one-half percent of the market value of the
severance tax permanent fund. If the
invested capital in the small business investment corporation equals less than
one-half percent of the market value of the severance tax permanent fund,
further commitments shall be made until the invested capital is equal to
one-half percent of the market value of the fund.
G. The state investment officer shall report
semiannually on the New Mexico private equity investments made pursuant to this
section. Annually, a report shall be
submitted to the legislature prior to the beginning of each regular legislative
session and a second report no later than October 1 each year to the
legislative finance committee, the revenue stabilization and tax policy
committee and any other appropriate interim committee. Each report shall provide the amounts
invested in each New Mexico private equity fund, as well as information about
the objectives of the funds, the companies in which each fund is invested and
how each investment enhances the economic development objectives of the
state. Each report shall provide the
amounts invested in each New Mexico business."
Section
2. Section 58-29-3 NMSA 1978 (being Laws
2000, Chapter 97, Section 5, as amended) is amended to read:
"58-29-3. DEFINITIONS.--As used in the Small Business
Investment Act:
A. "board" means the corporation's
board;
B. "cooperative agreement" means an
agreement entered into by the corporation with a party that:
(1) has demonstrated the capability to provide
business assistance to new and expanding businesses; and
(2) is primarily engaged or proposes to primarily
engage in the business of providing business services and debt or equity
capital to new and expanding businesses;
C. "corporation" means the small
business investment corporation;
D. "debt investment" means direct or
indirect loans or other debt obligations, the proceeds of which shall be used
to:
(1) support the acquisition or development of
land, buildings or infrastructure;
(2) create job opportunities; or
(3) otherwise enhance the economic development
objectives of the state;
E. "equity investment" means direct or
indirect ownership interests in New Mexico businesses, the proceeds of which
investment shall be used to:
(1) support the acquisition or development of
land, buildings or infrastructure;
(2) create job opportunities; or
(3) otherwise enhance the economic development
objectives of the state;
F. "fund" means the small business
investment corporation fund;
G. "New Mexico business" means a
business with its principal office and a majority of its full-time employees
located in New Mexico, including a sole proprietorship, partnership, limited partnership,
limited liability company or corporation; and
H. "president" means the president of
the corporation."
Section
3. Section 58-29-5.1 NMSA 1978 (being
Laws 2003, Chapter 399, Section 9) is amended to read:
"58-29-5.1. PERMITTED INVESTMENTS.--The corporation may:
A. make equity investments in New Mexico
businesses, provided that:
(1) the investments are made pursuant to
cooperative agreements;
(2) an equity investment in any one business may
not exceed ten percent of the fund; provided, however, that the restrictions of
this paragraph shall not apply to equity investments in entities that are
parties to cooperative agreements, but shall apply to investments made by such
entities pursuant to cooperative agreements; and
(3) the investments represent no more than
forty-nine percent of the total equity capital of a business; provided,
however, that the restrictions of this paragraph shall not apply to equity
investments in entities that are parties to cooperative agreements, but shall
apply to investments made by such entities pursuant to cooperative agreements;
or
B. make debt investments in New Mexico
businesses, provided that:
(1) the investments are made pursuant to
cooperative agreements; and
(2) a debt investment in any one business may not
exceed ten percent of the fund; provided, however, that the restrictions of
this paragraph shall not apply to debt investments in entities that are parties
to cooperative agreements, but shall apply to debt investments made by such entities
pursuant to cooperative agreements."
HB 387
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