§ 6-501. Definitions

   (a) In general. -- In this subtitle the following words have the meanings indicated.

(b) Affiliate. --

   (1) "Affiliate" means:

      (i) a person who, directly or indirectly, beneficially owns, controls, or holds power to vote 15% or more of the outstanding voting securities or other voting ownership interests of a venture firm or an insurance company; or

      (ii) a person, 15% or more of whose outstanding voting securities or other voting ownership interests is directly or indirectly beneficially owned, controlled, or held with power to vote by a venture firm or an insurance company.

   (2) "Affiliate" does not include an insurance company that becomes a purchaser in accordance with an allocation of investment tax credits under the Program solely by reason of the allocation.

(c) Allocation amount. -- "Allocation amount" means the total amount of tax credits allocated to a purchaser.

(d) Allocation date. -- "Allocation date" means the date on which tax credits are allocated to a purchaser under § 6-513 of this subtitle.

(e) Authority. -- "Authority" means the Maryland Venture Fund Authority established under § 6-504 of this subtitle.

(f) Designated capital. -- "Designated capital" means the amount of money that a purchaser invests under the Program.

(g) Enterprise Fund. -- "Enterprise Fund" means the Enterprise Fund under Title 5, Subtitle 6 of this article.

(h) Financing Authority. -- "Financing Authority" means the Maryland Small Business Development Financing Authority under Title 5, Subtitle 5 of this article.

(i) Insurance premium tax liability. -- "Insurance premium tax liability" means:

   (1) any liability incurred by an insurance company under Title 6, Subtitle 1 of the Insurance Article as of October 1, 2011; or

   (2) if the liability referred to in item (1) of this subsection is eliminated or reduced, any other tax liability that has been imposed by the State on the insurance company as of October 1, 2011, not to exceed the amount of the liability eliminated or reduced.

(j) Premium tax credit. -- "Premium tax credit" means a credit against insurance premium tax liability offered to a purchaser under the Program.

(k) Program. -- "Program" means the Invest Maryland Program under this subtitle.

(l) Purchaser. -- "Purchaser" means:

   (1) an insurance company that:

      (i) is authorized to do business in the State;

      (ii) has insurance premium tax liability; and

      (iii) contributes designated capital to purchase an allocation of premium tax credits under the Program; or

   (2) a holding company that:

      (i) has at least one insurance company subsidiary authorized to do business in the State; and

      (ii) is contributing designated capital on behalf of one or more of these subsidiaries.

(m) Qualified business. -- "Qualified business" means a business that, at the time of the first investment in the business under the Program:

   (1) has its principal business operations located in the State and intends to maintain its principal business operations in the State after receiving an investment under the Program;

   (2) has agreed to use the qualified investment primarily to:

      (i) support business operations in the State; or

      (ii) in the case of a start-up company, establish and support business operations in the State;

   (3) has not more than 250 employees; and

   (4) is not primarily engaged in:

      (i) retail sales;

      (ii) real estate development;

      (iii) the business of insurance, banking, or lending; or

      (iv) the provision of professional services by accountants, attorneys, or physicians.

(n) Qualified distribution. --

   (1) "Qualified distribution" means a distribution or payment by a venture firm of the State's proportionate allocation of costs in connection with:

      (i) the reasonable costs and expenses of organizing and syndicating the venture firm, including fees paid for professional services, up to a maximum aggregate amount of $ 125,000;

      (ii) reasonable and necessary fees paid for ongoing professional services, including legal and accounting services, related to the operation of the venture firm, up to a maximum aggregate amount of $ 50,000 in a single year; and

      (iii) a yearly management fee in an amount that does not exceed 2.5% of the designated capital allocated to the venture firm.

   (2) "Qualified distribution" does not include any costs and expenses related to lobbying or government relations.

(o) Qualified investment. --

   (1) "Qualified investment" means the direct or indirect investment of cash by the Enterprise Fund or the Financing Authority in a qualified business for the purchase of any of the following:

      (i) a share of stock or other equity interest;

      (ii) a debt instrument that is convertible into equity; or

      (iii) an equity participation instrument such as an option or warrant.

   (2) A qualified investment includes the direct or indirect investment of cash by a venture firm based on the investment criteria set forth in this subtitle.

(p) Side car affiliate. -- "Side car affiliate" means an entity controlled by or under common control with a venture firm that is formed solely for the purpose of investing alongside the venture firm.

(q) Venture firm. -- "Venture firm" means a partnership, corporation, trust, or limited liability company, whether organized on a profit or a not-for-profit basis, that is certified by the Department as meeting the criteria established under § 6-518 of this subtitle.

HISTORY: 2011, ch. 409; 2013, ch. 175.