MISSISSIPPI LEGISLATURE
2021 Regular Session
To: Ways and Means
By: Representative Lamar
AN ACT TO AUTHORIZE AN INCOME TAX CREDIT FOR CERTAIN ACCREDITED INVESTORS CALLED ANGEL INVESTORS FOR CASH INVESTMENTS IN THE QUALIFIED SECURITIES OF QUALIFIED BUSINESSES; TO AUTHORIZE MISSISSIPPI BUSINESSES TO APPLY TO INNOVATE MISSISSIPPI FOR DESIGNATION AS A QUALIFIED MISSISSIPPI SMALL BUSINESS; TO PROVIDE THE REQUISITES FOR DESIGNATION AS A QUALIFIED MISSISSIPPI SMALL BUSINESS; TO PROVIDE FOR THE DURATION OF SUCH DESIGNATION; TO REQUIRE INNOVATE MISSISSIPPI TO COMPILE A LIST OF QUALIFIED MISSISSIPPI SMALL BUSINESSES; TO REQUIRE INVESTORS TO APPLY TO INNOVATE MISSISSIPPI FOR CERTIFICATION OF ELIGIBILITY FOR THE TAX CREDIT; TO PROVIDE THAT IF INNOVATE MISSISSIPPI DETERMINES THAT THE INVESTOR IS QUALIFIED, IT SHALL ISSUE TO THE INVESTOR A TAX CREDIT CERTIFICATE RESERVATION; TO LIMIT THE AMOUNT OF TAX CREDIT CERTIFICATIONS THAT MAY BE ISSUED IN FISCAL YEARS 2021, 2022, 2023 AND 2024; TO PROVIDE THE MANNER IN WHICH THE TAX CREDIT MAY BE CLAIMED; TO AUTHORIZE A SINGLE TRANSFER OR SALE TO ANOTHER MISSISSIPPI TAXPAYER OF TAX CREDITS NOT PREVIOUSLY CLAIMED; TO REQUIRE THE DEPARTMENT OF REVENUE, INNOVATE MISSISSIPPI AND THE STATE TREASURER TO EACH PREPARE A REPORT CONCERNING THE EFFECTIVENESS OF THIS ACT IN PROMOTING THE ESTABLISHMENT AND GROWTH OF MISSISSIPPI SMALL BUSINESSES AND TO REQUIRE SUCH REPORTS TO BE SUBMITTED TO THE CHAIRS OF THE SENATE FINANCE COMMITTEE AND THE WAYS AND MEANS COMMITTEE OF THE HOUSE OF REPRESENTATIVES; TO AMEND SECTIONS 57-103-1, 57-103-3, 57-103-5, 57-103-7, 57-103-9 AND 57-103-11, MISSISSIPPI CODE OF 1972, WHICH CREATE THE RESEARCH AND DEVELOPMENT PROGRAM, THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 1, THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 2, THE RURAL INNOVATION PROGRAM-LEVEL 1, THE RURAL INNOVATION PROGRAM-LEVEL 2, AND THE MISSISSIPPI TECHNOLOGY ALLIANCE ADMINISTRATION FUND, FOR THE PURPOSE OF REFLECTING THE CHANGE OF THE NAME OF THE MISSISSIPPI TECHNOLOGY ALLIANCE TO INNOVATE MISSISSIPPI; TO REVISE THE AMOUNT OF ASSISTANCE THAT MAY BE PROVIDED UNDER THE RESEARCH AND DEVELOPMENT PROGRAM, THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 1 AND THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 2; TO REVISE CERTAIN PROVISIONS REGARDING THE REPAYMENT OF ASSISTANCE RECEIVED UNDER THE RURAL INNOVATION PROGRAM-LEVEL 1; TO AUTHORIZE THE ISSUANCE OF STATE GENERAL OBLIGATION BONDS FOR THE PURPOSES OF PROVIDING FUNDS FOR THE RESEARCH AND DEVELOPMENT PROGRAM, THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 1, THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 2, THE RURAL INNOVATION PROGRAM-LEVEL 1, AND THE MISSISSIPPI TECHNOLOGY ALLIANCE ADMINISTRATION FUND; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. As used in Sections 1 through 8 of this act, the following words shall have the meanings ascribed herein unless the context clearly requires otherwise:
(a) "Accredited investor" has the meaning ascribed to such term in 17 CFR Section 230.501, on the effective date of this act.
(b) "Angel investor" means an accredited investor who may seek active involvement, such as consulting and mentoring, in a Mississippi business. The term "angel investor" shall not include:
(i) A person controlling, or whose spouse or relative within the third degree of consanguinity or affinity controls, fifty percent (50%) or more of the Mississippi business invested in by the angel investor.
(ii) Any bank, bank and trust company, insurance company, trust company, national bank, savings association or building and loan association for activities that are a part of its normal course of business.
(c) "Cash investment" means the contribution of cash, at a risk of loss, to a qualified Mississippi business in exchange for qualified securities.
(d) "Qualified securities" means any form of equity, including a general or limited partnership interest, common stock, preferred stock, with or without voting rights, without regard to seniority position that must be convertible into common stock.
(e) "Qualified Mississippi small business" means any business that is designated as a qualified Mississippi business by Innovate Mississippi pursuant to Section 3 of this act.
(f) "Qualified purposes" means use of proceeds from the investment must be used for capital improvements, equipment, research and development, working capital for the business, or other business activity as may be approved by Innovate Mississippi. The proceeds cannot be used to pay dividends, repay shareholder's loans, redeem shares, or repay debt unless approved by Innovate Mississippi.
(g) "Risk of loss" means that the repayment of the investment is entirely dependent on the success of the Mississippi qualified business.
(h) "Trade secrets" shall have meaning ascribed to such term in Section 75-26-3.
SECTION 2. (1) Subject to the requirements of Sections 1 through 8 of this act, there shall be allowed a credit against the tax imposed under this chapter for cash investments for qualified purposes in the qualified securities of a qualified Mississippi small business by an angel investor. For each investment within a tax year of not less than Ten Thousand Dollars ($10,000.00) and not more than One Million Dollars ($1,000,000.00), the credit shall be in an amount equal to thirty-five percent (35%) of such investor's cash investment; however, the total aggregate amount of tax credits allowed to an angel investor in a taxable year shall not exceed Two Hundred Fifty Thousand Dollars ($250,000.00).
(2) If the angel investor is an S corporation or an entity treated as a partnership for federal income tax purposes, the tax credit limits in subsection (1) of this section apply to the individual shareholders or partners of the entity that is the angel investor.
SECTION 3. (1) A Mississippi business may apply to Innovate Mississippi for designation as a qualified Mississippi small business. The application shall include:
(a) The name of the business and a copy of the organizational documents of such business;
(b) A business plan, including a description of the business and the management, product, market and financial plan of the business;
(c) A statement of the potential economic impact of the business, including the number, location and types of jobs expected to be created;
(d) A description of the qualified securities to be issued and the amount of cash investment sought by the qualified Mississippi small business;
(e) A statement of the amount, timing and projected use of the proceeds to be raised from the proposed sale of qualified securities; and
(f) Such other information Innovate Mississippi may require.
(2) To be designated as a qualified Mississippi small business, a business shall be independently owned and operated and:
(a) Have its principal place of business in this state and at least sixty percent (60%) of its employees located in this state;
(b) Have had annual total gross revenues of less than Three Million Dollars ($3,000,000.00) in the most recent income year of such business prior to application;
(c) Have no more than one hundred (100) employees;
(d) Have been operating in this state for less than seven (7) consecutive years;
(e) Have received less than Two Million Dollars ($2,000,000.00) in cash investments eligible for the tax credits authorized by Sections 1 through 8 of this act;
(f) Be involved primarily in research and development or production of new technologies, products, processes, or business models; and
(g) Not be principally engaged in:
(i) Professional services provided by accountants, doctors or lawyers;
(ii) Banking, lending or investment;
(iii) Real estate development;
(iv) Insurance;
(v) Agricultural production or timber growing or production;
(vi) Oil and gas exploration; or
(vii) Gambling activities.
(3) In addition to the requirements of subsection (2) of this section, a Mississippi small business shall only be designated as a qualified Mississippi small business for a period of one (1) year if Innovate Mississippi determines, based upon the application submitted by the business and any additional investigation conducted by Innovate Mississippi for the purpose of this section, that:
(a) The business has a reasonable chance of success;
(b) The business has the reasonable potential to create measurable employment within the state;
(c) The existing owners of the business and other founders have made or are committed to making a substantial financial and time commitment to the business;
(d) The securities to be issued and purchased are qualified securities;
(e) The existing owners of the business and other founders are committed to domicile their business in Mississippi unless a change of domicile is the result of a merger, consolidation, or other acquisition of such business with or by a party not affiliated with the business;
(f) Binding commitments have been made by the business to Innovate Mississippi for adequate reporting of financial data, including the requirement for an annual report, and if requested by Innovate Mississippi, an annual audit of the financial and operational records of the business, the right of access to the financial records of the business, and the right of Innovate Mississippi to record and publish normal and customary data and information related to the issuance of tax credits that are not otherwise determined to be proprietary information or trade secrets; and
(g) Binding commitments have been made by the business to Innovate Mississippi that for a period of five (5) years after the investment, the business will provide basic company information for reporting on an aggregate basis, including employment, additional investment, acquisitions and other basic information that is not otherwise determined to be proprietary information or trade secrets.
(4) A Mississippi small business designated as a qualified Mississippi small business, but whose one-year designation has expired or may soon expire, may reapply for designation as a qualified Mississippi small business at any time.
(5) Innovate Mississippi shall, on or before December 31, 2021, and quarterly thereafter, compile a list of Mississippi businesses that it has determined are qualified Mississippi small businesses, categorized by the cash investments being sought by the qualified Mississippi small business and type of qualified securities offered. The list shall be posted on the Innovate Mississippi website and submitted to the Commissioner of Revenue.
(6) Innovate Mississippi shall remove, as soon as is practicable, a Mississippi business from the list of qualified Mississippi small businesses if the Mississippi business no longer meets the requirements of this section. No investment in a Mississippi business made on or after the date the Mississippi business is removed from the list will be a qualifying investment for tax credit certification.
SECTION 4. Any information submitted to, or issued by, Innovate Mississippi pursuant to Section 3 or Section 5 of this act shall constitute a public record, as defined in the Mississippi Public Records Act of 1983, and shall be open for inspection by any citizen of this state; however, information submitted to Innovate Mississippi that constitutes proprietary information or trade secrets shall be exempt from the Mississippi Public Records Act of 1983.
SECTION 5. (1) An investor, or a designee of the investor on the investor's behalf, shall apply to Innovate Mississippi for a certification of tax credit eligibility during the tax year in which the investments for which the investor seeks a tax credit are made. The investor shall submit, in the manner required by Innovate Mississippi, documentation sufficient to demonstrate:
(a) That the investor is an angel investor; and
(b) The value of the cash investments made by the investor in the qualified securities of a qualified Mississippi small business.
(2) If Innovate Mississippi determines that the investor qualifies to receive a certification of tax credit eligibility, then Innovate Mississippi shall issue to the investor a tax credit certificate reservation in the amount authorized by Section 2 of this act. No reservation shall be issued if the reservation will cause the total value of reservations and credits issued to equal or exceed the applicable limit prescribed in subsection (5) of this section.
(3) Innovate Mississippi shall issue a tax credit certificate to the investor upon submission by the investor of documentation evidencing the occurrence of such investment in the manner required by Innovate Mississippi. Innovate Mississippi shall develop the certificate in consultation with the Department of Revenue. The tax credit certificate shall contain:
(a) The investor's name, address and tax identification number;
(b) The amount of the credit;
(c) The name of the qualifying business;
(d) A unique tax credit certificate number; and
(e) Other information required by the Department of Revenue.
(4) Innovate Mississippi shall transmit to the Department of Revenue a copy of any tax credit certificate issued. In the alternative, Innovate Mississippi and the Department of Revenue are authorized to establish a means of electronically transmitting the information necessary for administration of the tax credit authorized by Sections 1 through 8 of this act.
(5) If at the close of any calendar year in the five-year period beginning with the first year in which a tax credit certificate was issued to an investor, the qualified Mississippi small business is no longer domiciled in Mississippi, unless change of domicile is the result of a merger, consolidation or other acquisition of such business with or by a party not affiliated with the business, the tax credit shall be recaptured from the investor or current owner of the credit.
(6) The aggregate amount of all tax credit certifications under this section shall not exceed Five Million Dollars ($5,000,000.00) for the fiscal year commencing July 1, 2021, Five Million Dollars ($5,000,000.00) for the fiscal year commencing July 1, 2022, Three Million Five Hundred Thousand Dollars ($3,500,000.00) for the fiscal year commencing July 1, 2023, and Three Million Five Hundred Thousand Dollars ($3,500,000.00) for the fiscal year commencing July 1, 2024. Innovate Mississippi shall not issue tax credit certification under this section for any investment made on or after July 1, 2024.
SECTION 6. (1) An angel investor shall attach a copy of any tax credit certificate issued pursuant to Section 5 of this act to the return filed under this chapter for the tax year in which the certificate or certificates were issued.
(2) The amount of the credit allowed to any investor pursuant to Sections 1 through 8 of this act shall not exceed the amount of tax due from such investor under this chapter with respect to such taxable year. Any tax credit that is claimed by the angel investor but not applied against the tax due under this chapter may be carried forward for the five (5) immediately succeeding taxable years until the full credit has been applied.
(3) If the angel investor is an S corporation or an entity treated as a partnership for federal income tax purposes, the tax credit may be claimed by the shareholders or partners of the angel investor. If the angel investor is a single member limited liability company that is disregarded as an entity separate from its owner, the tax credit may be claimed by such limited liability company's owner, provided such owner is a Mississippi taxpayer.
(4) Any tax credits not previously applied by any taxpayer against its tax liability may be transferred or sold to another Mississippi taxpayer, subject to the following conditions:
(a) A single transfer or sale may involve one or more transferees. The transferee of the tax credits may transfer or sell such tax credits subject to the conditions of this subsection.
(b) Transferors and transferees shall submit to the Department of Revenue in writing a notification of any transfer or sale of tax credits within thirty (30) days after the transfer or sale of such tax credits. The notification shall include the transferor's tax credit balance prior to transfer, a copy of any tax credit certificate issued by Innovate Mississippi, the transferor's remaining tax credit balance after transfer, all tax identification numbers for both transferor and transferee, the date of transfer, the amount transferred, the price paid by the transferee to the transferor and any other information required by the Department of Revenue. Any pricing information submitted by a transferor or transferee shall be treated by the Department of Revenue as proprietary to the entity reporting such information and therefore confidential; however, this shall not prevent the publication of summary data that includes no fewer than three (3) transactions.
(c) Failure to comply with this subsection will result in the disallowance of the tax credit until the taxpayers are in full compliance.
(d) The transfer or sale of this credit does not extend the time in which the credit can be used. The carry forward period for credit that is transferred or sold begins on the date on which the credit was earned.
(e) To the extent that the transferor did not have rights to claim or use the credit at the time of the transfer, the Department of Revenue shall either disallow the credit claimed by the transferee or recapture the credit from the transferee through any collection method authorized by law. The transferee's recourse is against the transferor.
SECTION 7. The Department of Revenue, Innovate Mississippi and the State Treasurer shall each prepare a report concerning the effectiveness of Sections 1 through 8 of this act in promoting the establishment and growth of Mississippi small businesses. The reports shall be submitted to the chairs of the Senate Finance Committee and the Ways and Means Committee of the House of Representatives not later than January 1, 2023. The Finance Committee and the Ways and Means Committee shall evaluate the effectiveness of this act based on the reports submitted and any additional information obtained by the committees, and shall make recommendations to their respective houses as to continuation of Sections 1 through 8 of this act.
SECTION 8. (1) Innovate Mississippi and the Department of Revenue shall promulgate rules to effectuate the purposes of Sections 1 through 8 of this act.
(2) Innovate Mississippi and the Department of Revenue shall endeavor to make the procedures authorized by Sections 1 through 8 of this act as uncomplicated and effortless to comply with as possible.
SECTION 9. Section 57-103-1, Mississippi Code of 1972, is amended as follows:
57-103-1. (1) There is
established under the direction of * * *
Innovate Mississippi ("IMS") a program to be known as the
"Research and Development Program" for the
purpose of making assistance available for seed and early stage capital to small
and medium sized Mississippi businesses with high growth potential that are
engaged in research and development activities with a Mississippi university,
college and/or community/junior college.
(2) (a) In order to be eligible for assistance under the program, a business must: (i) have its principal place of business based in Mississippi, (ii) produce or provide a product and/or service that is science or technology related, (iii) have completed its product and/or service development planning, and (iv) develop technology-based business opportunity in partnership with a Mississippi university, college and/or community/junior college.
(b) Any business
desiring to participate in the program must submit an application to * * * IMS. The application
must contain a technical brief and project plan for the commercialization of
the technology developed or proposed for development by the business and any
other information requested by * * * IMS. If * * * IMS staff reviewing the
application determines that an application should be reviewed by the Seed Fund
Investment Board appointed by * * * IMS Board of Directors,
the application shall be forwarded to the Seed Fund Investment Board. If the
Seed Fund Investment Board approves the application, * * * IMS shall negotiate a contract
with the business regarding any assistance provided to the business under the program,
the expenditure of assistance provided to the business, repayment of assistance
by the business, and any other matters to which the parties may agree. Any such
contract must provide for at least the following: (i) that any assistance
provided to the business will be on a reimbursement basis in which the business
will expend funds according to the terms of the contract and submit invoices,
receipts and other applicable documentation and information to * * * IMS for reimbursement; (ii) that
no funds may be expended or used for patent prosecution, reorganization of the
business, or payment of any existing debt of the business outstanding or
otherwise incurred at the time the contract is entered into; (iii) that no
funds may be expended to reimburse expenses for work conducted or services provided
by the business, a university or a third-party consultant if those expenses were
incurred before the term of the contract; (iv) that at least fifty-one percent
(51%) of the funds received by the business must be expended with a Mississippi
university, college and/or community/junior college with which the business has
a contract for research and development or technology development work or
services; (v) that * * * IMS will pay not more than ten percent (10%) of overhead
expenses for the business and/or the university, college and/or community/junior
college; (vi) that the business will provide matching funding of One Dollar ($1.00)
for every One Dollar ($1.00) of assistance, with at least fifty percent (50%)
of the match being in cash and the remaining amount being from in-kind
services, all of which must be documented by time sheets, payroll receipts,
invoices and other documentation or information required by * * * IMS; and (vii) that the business
receiving assistance will retain ownership of any technology developed by the
business before the start of the project for which assistance is received, and
that rights to new intellectual property developed as a result of the project
will be subject to mutually agreed upon terms and conditions of the collaborative
research agreement executed by the business and the university, college and/or
community/junior college before the start of the project. Assistance received
by a business and not expended for purposes required in the contract between
the business and * * *
IMS may be expended for hiring third-party consultants to assist the
business, working capital, marketing, prototype development and equipment. The
amount of assistance that a business may receive under the program shall not
exceed * * * Two Hundred Fifty Thousand Dollars
($250,000.00) in the aggregate.
(c) Except as
otherwise provided in this paragraph, a business receiving assistance under the
program shall be required to repay the assistance in the manner provided in this
paragraph. Repayment shall be made through the use of a convertible note in which
the business will repay one hundred percent (100%) of the amount of assistance
received if such repayment is made within thirty-six (36) months from the date
the assistance is received, with the amount to be repaid by the business
increasing at a rate determined by the parties in the contract up to an amount
not to exceed two hundred percent (200%) of the amount of assistance if such
repayment is made later than thirty-six (36) months from the date the
assistance is received but not later than sixty (60) months from the date the
assistance is received. * * *The MTA IMS shall have the option of converting the
amount of assistance awarded to the business into common stock of the business
or into a royalty in the gross sales of the business. Amounts received as repayments
shall be deposited into the special fund created in subsection (3) of this
section. Notwithstanding the preceding provisions of this paragraph, if the
business receiving assistance fails to meet certain financial performance
levels established in the contract between the business and * * * IMS and the contract does not
activate any repayment provisions, then * * * IMS will deem the assistance
provided to be a loss and the business receiving assistance shall not be
required to repay the assistance received.
(3) There is created in the
State Treasury a special fund, to be designated as the "Research and
Development Program Fund," which shall consist of funds appropriated or otherwise
made available by the Legislature. The fund shall be maintained by the State
Treasurer as a separate and special fund, separate and apart from the General
Fund of the state. Unexpended amounts remaining in the fund at the end of a
fiscal year shall not lapse into the State General Fund, and any interest earned
or investment earnings on amounts in the fund shall be deposited into such
fund. Monies in the fund shall be disbursed, in the discretion of the
Mississippi Development Authority, to provide funds to * * * IMS for the purposes described
in this section, or for the purposes described in Sections 57-103-3, 57-103-5 * * * and 57-103-7 * * * if * * * IMS determines that the funds
are not needed for the purposes described in this section.
SECTION 10. Section 57-103-3, Mississippi Code of 1972, is amended as follows:
57-103-3. (1) There is
established under the direction of * * *
Innovate Mississippi ("IMS") a program to be known as the "Mississippi New Technology Business Program-Level 1"
for the purpose of making assistance available to provide working capital to
support the initial capitalization of technology-based businesses in
Mississippi.
(2) (a) In order to be
eligible for assistance under the program, a business must: (i) have its
principal place of business based in Mississippi, and be a startup business,
(ii) have rights to the intellectual property supporting the venture
opportunity for which assistance is requested, (iii) demonstrate compelling
evidence for rapid growth and high performance potential, (iv) be invited by * * * IMS to apply for assistance
based upon an agreeable scope of work.
(b) Any business
desiring to participate in the program must submit an application to * * * IMS. The application must contain
a description of the purposes for which the assistance is requested, the amount
of assistance requested and any other information requested by * * * IMS. If * * * IMS staff reviewing the
application determines that an application should be reviewed by the Seed Fund
Investment Board appointed by * * * IMS Board of Directors, the application
shall be forwarded to the Seed Fund Investment Board. If the Seed Fund
Investment Board approves the application, * * * IMS shall negotiate a contract
with the business regarding any assistance provided to the business under the
program, the expenditure of the assistance provided to the business, and any
other matters to which the parties may agree. Any such contract must provide
for at least the following: (i) that any assistance provided to the business
will be on a reimbursement basis in which the business will expend funds
according to the terms of the contract and submit invoices, receipts and other
applicable documentation and information to * * * IMS for reimbursement; (ii) that
no funds may be expended or used for patent prosecution, reorganization of the business,
or payment of any existing debt of the business outstanding or otherwise
incurred at the time the contract is entered into; (iii) that no funds may be
expended to reimburse expenses for work conducted or services provided by the
business, a university or a third-party consultant if those expenses were
incurred before the term of the contract; (iv) that the business receiving
assistance will retain ownership of any technology developed by the business
regardless of whether the technology is developed before or after the receipt
of assistance; and (v) that the business will provide matching funding of One
Dollar ($1.00) for every One Dollar ($1.00) of assistance, with at least twenty-five
percent (25%) of the match being in cash and the remaining amount being from in-kind
services, all of which must be documented by time sheets, payroll receipts,
invoices and other documentation or information required by * * * IMS. Assistance received by a
business may be expended for hiring third-party consultants to assist the
business and for equipment. The amount of assistance that a business may
receive under the program shall not exceed * * * Twenty-five
Thousand Dollars ($25,000.00) and any award of assistance shall be made on
a onetime basis.
(c) Except as otherwise
provided in this paragraph, a business receiving assistance under the program
shall be required to repay the assistance in the manner provided in this
paragraph. Repayment shall be made through the use of a nonrecourse loan in
which the business will repay the loan upon the successful commercialization of
the product or service. The business will repay one hundred percent (100%) of
the amount of assistance received if such repayment is made within thirty-six
(36) months from the date the assistance is received, with the amount to be
repaid by the business increasing at a rate determined by the parties in the
contract up to an amount not to exceed two hundred percent (200%) of the amount
of assistance if such repayment is made later than thirty-six (36) months from
the date the assistance is received but not later than sixty (60) months from
the date the assistance is received. Amounts received as repayments shall be
deposited into the special fund created in subsection (3) of this section.
Notwithstanding the preceding provisions of this paragraph, if the business
receiving assistance fails to meet certain financial performance levels established
in the contract between the business and the * * * IMS and the contract does not
activate any repayment provisions, then the * * * IMS will deem the assistance
provided to be a loss and the business receiving assistance shall not be
required to repay the assistance received.
(3) There is created in the
State Treasury a special fund, to be designated as the "Mississippi New
Technology Business Program-Level 1 Fund," which shall consist of funds
appropriated or otherwise made available by the Legislature. The fund shall be
maintained by the State Treasurer as a separate and special fund, separate and
apart from the General Fund of the state. Unexpended amounts remaining in the
fund at the end of a fiscal year shall not lapse into the State General Fund,
and any interest earned or investment earnings on amounts in the fund shall be deposited
into such fund. Monies in the fund shall be disbursed, in the discretion of
the Mississippi Development Authority, to provide funds to * * * IMS for the purposes described
in this section, or for the purposes described in Sections 57-103-1, 57-103-5 * * * and/or 57-103-7 * * * if * * * IMS determines that the funds
are not needed for the purposes described in this section.
SECTION 11. Section 57-103-5, Mississippi Code of 1972, is amended as follows:
57-103-5. (1) There is established
under the direction of * * * Innovate Mississippi
("IMS") a program to be known as the "Mississippi New
Technology Business Program-Level 2" for the purpose of making assistance
available to provide working capital to support the continued capitalization of
technology-based businesses in Mississippi.
(2) (a) In order to be
eligible for assistance under the program, a business must: (i) have its
principal place of business based in Mississippi, and be a startup, seed stage
or early stage business, (ii) have rights to the intellectual property
supporting the venture opportunity for which assistance is requested, (iii)
have a business plan demonstrating economic feasibility; (iv) have an
accredited investor match, (v) have formed or have agreed to form a
collaborative agreement with a Mississippi institution of higher learning, (vi)
be invited by the MTA to apply for assistance based upon an acceptable
commercialization strategy, and (vii) be willing to execute a performance-level-based
agreement with * * *
IMS.
(b) Any business
desiring to participate in the program must submit an application to * * * IMS. The application must
contain a description of the purposes for which the assistance is requested,
the amount of assistance requested and any other information requested by * * * IMS. If * * * IMS staff reviewing the application
determines that an application should be reviewed by the Seed Fund Investment
Board appointed by * * * IMS Board of Directors, the application shall be
forwarded to the Seed Fund Investment Board. If the Seed Fund Investment Board
approves the application, * * *the MTA IMS shall negotiate a contract with the
business regarding any assistance provided to the business under the program,
the expenditure of the assistance provided to the business, and any other
matters to which the parties may agree. Any such contract must provide for at
least the following: (i) that any assistance provided to the business will be
on a reimbursement basis in which the business will expend funds according to
the terms of the contract and submit invoices, receipts and other applicable documentation
and information to * * * IMS for reimbursement; (ii) that no funds may be expended
or used for patent prosecution, reorganization of the business, or payment of
any existing debt of the business outstanding or otherwise incurred at the time
the contract is entered into; (iii) that no funds may be expended to reimburse
expenses for work conducted or services provided by the business, a university
or a third-party consultant if those expenses were incurred before the term of
the contract; (iv) that the business receiving assistance will retain ownership
of any technology developed by the business regardless of whether the technology
is developed before or after the receipt of assistance; and (v) that the
business will provide matching funding of One Dollar ($1.00) for every One
Dollar ($1.00) of assistance, with at least fifty percent (50%) of the match
being from an accredited investor or strategic investment partner, as
determined by * * *
IMS, and the remaining amount being from in-kind services, all of which
must be documented by time sheets, payroll receipts, invoices and other documentation
or information required by * * * IMS. Assistance received by a
business may be expended for hiring third-party consultants to assist the business
and for equipment. The amount of assistance that a business may receive under
the program shall not exceed * * *
Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate.
(c) Except as
otherwise provided in this paragraph, a business receiving assistance under the
program shall be required to repay the assistance in the manner provided in this
paragraph. Repayment shall be made through the use of a convertible note in
which the business will repay one hundred percent (100%) of the amount of
assistance received if such repayment is made within thirty-six (36) months from
the date the assistance is received, with the amount to be repaid by the
business increasing at a rate determined by the parties in the contract up to
an amount not to exceed two hundred percent (200%) of the amount of assistance
if such repayment is made later than thirty-six (36) months from the date the
assistance is received but not later than sixty (60) months from the date the
assistance is received. * * *The MTA IMS shall have the option of converting the
amount of assistance awarded to the business into common stock of the business
or into a royalty in the gross sales of the business. Amounts received as
repayments shall be deposited into the special fund created in subsection (3)
of this section. Notwithstanding the preceding provisions of this paragraph,
if the business receiving assistance fails to meet certain financial
performance levels established in the contract between the business and * * * IMS and the contract does not
activate any repayment provisions, then * * * IMS will deem the assistance provided
to be a loss and the business receiving assistance shall not be required to
repay the assistance received.
(3) There is created in the
State Treasury a special fund, to be designated as the "Mississippi New
Technology Business Program-Level 2 Fund," which shall consist of funds
appropriated or otherwise made available by the Legislature. The fund shall be
maintained by the State Treasurer as a separate and special fund, separate and
apart from the General Fund of the state. Unexpended amounts remaining in the
fund at the end of a fiscal year shall not lapse into the State General Fund,
and any interest earned or investment earnings on amounts in the fund shall be
deposited into such fund. Monies in the fund shall be disbursed, in the
discretion of the Mississippi Development Authority, to provide funds to * * * IMS for the purposes described
in this section, or for the purposes described in Sections 57-103-1, 57-103-3 * * * and/or 57-103-7 * * * if * * * IMS determines that the funds
are not needed for the purposes described in this section.
SECTION 12. Section 57-103-7, Mississippi Code of 1972, is amended as follows:
57-103-7. (1) There is
established under the direction of * * *
Innovate Mississippi ("IMS") a program to be known as the
"Rural Innovation Program-Level 1" for the purpose of making assistance
available to provide working capital to support the initial capitalization of
technology-based businesses in rural Mississippi.
(2) (a) In order to be
eligible for assistance under the program, a business must: (i) have its
principal place of business based in a rural county in Mississippi, (ii) produce
or provide a product and/or service that is science or technology related,
(iii) have fewer than one hundred fifty (150) employees, and (iv) have completed
its product and/or service development planning. For the purposes of this paragraph,
a "rural county" shall be a county designated as such by * * * IMS.
(b) Any business
desiring to participate in the program must submit an application to the * * * IMS. The application must contain a
description of the purposes for which the assistance is requested, the amount
of assistance requested and any other information requested by * * * IMS. If * * * IMS staff reviewing the
application determines that an application should be reviewed by the Seed Fund
Investment Board appointed by * * * IMS Board of Directors, the application
shall be forwarded to the Seed Fund Investment Board. If the Seed Fund
Investment Board approves the application, * * * IMS shall negotiate a contract with
the business regarding any assistance provided to the business under the
program, the expenditure of the assistance provided to the business, and any
other matters to which the parties may agree. Any such contract must provide
for at least the following: (i) that any assistance provided to the business
will be on a reimbursement basis in which the business will expend funds
according to the terms of the contract and submit invoices, receipts and other
applicable documentation and information to * * * IMS for reimbursement; (ii) that
no funds may be expended or used for patent prosecution, reorganization of the
business, or payment of any existing debt of the business outstanding or
otherwise incurred at the time the contract is entered into; (iii) that no
funds may be expended to reimburse expenses for work conducted or services
provided by the business, a university or a third-party consultant if those
expenses were incurred before the term of the contract; (iv) that the business
receiving assistance will retain ownership of any technology developed by the business
regardless of whether the technology is developed before or after the receipt
of assistance; and (v) that the business will provide matching funding of One
Dollar ($1.00) for every One Dollar ($1.00) of assistance, with at least twenty-five
percent (25%) of the match being in cash and the remaining amount being from in-kind
services, all of which must be documented by time sheets, payroll receipts, invoices
and other documentation or information required by * * * IMS. Assistance received by a
business may be expended for hiring third-party consultants to assist the
business and for equipment. The amount of assistance that a business may
receive under the program shall not exceed Ten Thousand Dollars ($10,000.00)
and any award of assistance shall be made on a onetime basis.
(c) Except as
otherwise provided in this paragraph, a business receiving assistance under the
program shall not be required to repay the assistance * * * unless IMS
determines that the business has violated significant terms of their agreement,
presented false information, or misrepresented facts in their application. If
it is determined the business violated terms or submitted false or knowingly
incorrect information, the business will be required to repay one hundred percent
(100%) of the amount of assistance received. * * *
(3) There is created in the
State Treasury a special fund, to be designated as the "Rural Innovation
Program-Level 1 Fund," which shall consist of funds appropriated or
otherwise made available by the Legislature. The fund shall be maintained by
the State Treasurer as a separate and special fund, separate and apart from the
General Fund of the state. Unexpended amounts remaining in the fund at the end
of a fiscal year shall not lapse into the State General Fund, and any interest
earned or investment earnings on amounts in the fund shall be deposited into
such fund. Monies in the fund shall be disbursed, in the discretion of the
Mississippi Development Authority, to provide funds to * * * IMS for the purposes described
in this section, or for the purposes described in Sections 57-103-1, 57-103-3,
57-103-5 and/or 57-103-9 if * * * IMS determines that the funds
are not needed for the purposes described in this section.
SECTION 13. Section 57-103-9, Mississippi Code of 1972, is amended as follows:
57-103-9. (1) There is
established under the direction of * * *
Innovate Mississippi ("IMS") a program to be known as the
"Rural Innovation Program-Level 2" for the purpose of making
assistance available to provide working capital to support the continued
capitalization of technology-based businesses in rural Mississippi.
(2) (a) In order to be
eligible for assistance under the program, a business must: (i) have its
principal place of business based in a rural county in Mississippi, (ii) produce
or provide a product and/or service that is science or technology related,
(iii) have fewer than one hundred fifty (150) employees, and (iv) have
completed its product and/or service development planning. For the purposes of
this paragraph, a "rural county" shall be a county designated as such
by * * * IMS.
(b) Any business
desiring to participate in the program must submit an application to * * * IMS. The application must
contain a description of the purposes for which the assistance is requested, the
amount of assistance requested and any other information requested by * * * IMS. If * * * IMS staff reviewing the application
determines that an application should be reviewed by the Seed Fund Investment
Board appointed by * * * IMS Board of Directors, the application shall be
forwarded to the Seed Fund Investment Board. If the Seed Fund Investment Board
approves the application, * * *the MTA IMS shall negotiate a contract with the business
regarding any assistance provided to the business under the program, the expenditure
of the assistance provided to the business, and any other matters to which the
parties may agree. Any such contract must provide for at least the following:
(i) that any assistance provided to the business will be on a reimbursement
basis in which the business will expend funds according to the terms of the contract
and submit invoices, receipts and other applicable documentation and
information to the MTA for reimbursement; (ii) that no funds may be expended or
used for patent prosecution, reorganization of the business, or payment of any
existing debt of the business outstanding or otherwise incurred at the time the
contract is entered into; (iii) that no funds may be expended to reimburse
expenses for work conducted or services provided by the business, a university
or a third-party consultant if those expenses were incurred before the term of
the contract; (iv) that the business receiving assistance will retain ownership
of any technology developed by the business regardless of whether the technology
is developed before or after the receipt of assistance; and (v) that the
business will provide matching funding of One Dollar ($1.00) for every One
Dollar ($1.00) of assistance, with at least fifty percent (50%) of the match
being from an accredited investor or strategic investment partner, as
determined by * * *
IMS, and the remaining amount being from in-kind services, all of which
must be documented by time sheets, payroll receipts, invoices and other
documentation or information required by the MTA. Assistance received by a
business may be expended for hiring third-party consultants to assist the business
and for equipment. The amount of assistance that a business may receive under
the program shall not exceed One Hundred Thousand Dollars ($100,000.00) in any
one (1) year and shall not exceed Two Hundred Thousand Dollars ($200,000.00) in
the aggregate.
(c) Except as
otherwise provided in this paragraph, a business receiving assistance under the
program shall be required to repay the assistance in the manner provided in
this paragraph. Repayment shall be made through the use of a convertible note in
which the business will repay one hundred percent (100%) of the amount of
assistance received if such repayment is made within thirty-six (36) months
from the date the assistance is received, with the amount to be repaid by the
business increasing at a rate determined by the parties in the contract up to
an amount not to exceed two hundred percent (200%) of the amount of assistance
if such repayment is made later than thirty-six (36) months from the date the
assistance is received but not later than sixty (60) months from the date the
assistance is received. * * *The MTA IMS shall have the option of converting the
amount of assistance awarded to the business into common stock of the business
or into a royalty in the gross sales of the business. Amounts received as
repayments shall be deposited into the special fund created in subsection (3)
of this section. Notwithstanding the preceding provisions of this paragraph,
if the business receiving assistance fails to meet certain financial
performance levels established in the contract between the business and * * * IMS and the contract does not
activate any repayment provisions, then * * * IMS will deem the assistance
provided to be a loss and the business receiving assistance shall not be
required to repay the assistance received.
(3) There is created in the
State Treasury a special fund, to be designated as the "Rural Innovation
Program-Level 2 Fund," which shall consist of funds appropriated or
otherwise made available by the Legislature. The fund shall be maintained by
the State Treasurer as a separate and special fund, separate and apart from the
General Fund of the state. Unexpended amounts remaining in the fund at the end
of a fiscal year shall not lapse into the State General Fund, and any interest
earned or investment earnings on amounts in the fund shall be deposited into such
fund. Monies in the fund shall be disbursed, in the discretion of the Mississippi
Development Authority, to provide funds to * * * IMS for the purposes described
in this section, or for the purposes described in Sections 57-103-1, 57-103-3,
57-103-5 and/or 57-103-7 if * * * IMS determines that the funds
are not needed for the purposes described in this section.
SECTION 14. Section 57-103-11, Mississippi Code of 1972, is amended as follows:
57-103-11. (1) There is
created in the State Treasury a special fund, to be designated as the " * * * Innovate Mississippi
Administration Fund," which shall consist of funds appropriated or otherwise
made available by the Legislature. The fund shall be maintained by the State
Treasurer as a separate and special fund, separate and apart from the General
Fund of the state. Unexpended amounts remaining in the fund at the end of a
fiscal year shall not lapse into the State General Fund, and any interest
earned or investment earnings on amounts in the fund shall be deposited into
such fund. Monies in the fund shall be disbursed, in the discretion of the
Mississippi Development Authority, to provide funds to defray the costs incurred
by the * * * Innovate Mississippi in the implementation and
administration of the programs created in Sections 57-103-1 through 57-103-9.
(2) (a) Before January 1, * * * 2021, * * * Innovate
Mississippi shall devise and implement a performance monitoring system consisting
of the following:
(i) Objectives and benchmarks for each program;
(ii) Performance measures for each program; and
(iii) A definition of the return on investment that is appropriate and accurate for every program.
(b) From and after January
1, * * * 2022, * * * Innovate Mississippi shall report annually to the
Mississippi Development Authority and the Legislature as to its success in
meeting its program objectives and performance measures required by this
subsection (2).
(c) The Mississippi
Development Authority may not disburse any funds to * * * Innovate Mississippi, unless it has met the reporting
requirements of this subsection (2).
SECTION 15. (1) As used in this section, the following words shall have the meanings ascribed herein unless the context clearly requires otherwise:
(a) "Accreted value" of any bonds means, as of any date of computation, an amount equal to the sum of (i) the stated initial value of such bond, plus (ii) the interest accrued thereon from the issue date to the date of computation at the rate, compounded semiannually, that is necessary to produce the approximate yield to maturity shown for bonds of the same maturity.
(b) "State" means the State of Mississippi.
(c) "Commission" means the State Bond Commission.
(2) (a) The commission, at one time, or from time to time, may declare by resolution the necessity for issuance of general obligation bonds of the State of Mississippi to provide funds for the programs authorized in Sections 57-103-1, 57-103-3, 57-103-5, 57-103-7, and the special fund created in Section 57-103-11. Upon the adoption of a resolution by the Mississippi Development Authority declaring the necessity for the issuance of any part or all of the general obligation bonds authorized by this section, the Mississippi Development Authority shall deliver a certified copy of its resolution or resolutions to the commission. Upon receipt of such resolution, the commission, in its discretion, may act as the issuing agent, prescribe the form of the bonds, determine the appropriate method for sale of the bonds, advertise for and accept bids or negotiate the sale of the bonds, issue and sell the bonds so authorized to be sold, and do any and all other things necessary and advisable in connection with the issuance and sale of such bonds. The total amount of bonds issued under this section shall not exceed Five Million Dollars ($5,000,000.00). No bonds authorized under this section shall be issued after July 1, 2025.
(b) The proceeds of bonds issued pursuant to this section shall be deposited into the following special funds in not more than the following amounts:
(i) The Research and Development Program Fund created pursuant to Section 57-103-1...................... $1,500,000.00.
(ii) The Mississippi New Technology Business Program-Level 1 Fund created pursuant to Section 57-103-3
................................................. $ 250,000.00.
(iii) The Mississippi New Technology Business Program-Level 2 Fund created pursuant to Section 57-103-5
................................................. $2,750,000.00.
(iv) The Rural Innovation Program-Level 1 Fund created pursuant to Section 57-103-7...................... $ 200,000.00.
(v) The Innovate Mississippi Administration Fund created pursuant to Section 57-103-111.................... $ 300,000.00.
(c) Any investment earnings on bonds issued pursuant to this section shall be used to pay debt service on bonds issued under this section, in accordance with the proceedings authorizing issuance of such bonds.
(3) The principal of and interest on the bonds authorized under this section shall be payable in the manner provided in this section. Such bonds shall bear such date or dates, be in such denomination or denominations, bear interest at such rate or rates (not to exceed the limits set forth in Section 75-17-101, Mississippi Code of 1972), be payable at such place or places within or without the State of Mississippi, shall mature absolutely at such time or times not to exceed twenty-five (25) years from date of issue, be redeemable before maturity at such time or times and upon such terms, with or without premium, shall bear such registration privileges, and shall be substantially in such form, all as shall be determined by resolution of the commission.
(4) The bonds authorized by this section shall be signed by the chairman of the commission, or by his facsimile signature, and the official seal of the commission shall be affixed thereto, attested by the secretary of the commission. The interest coupons, if any, to be attached to such bonds may be executed by the facsimile signatures of such officers. Whenever any such bonds shall have been signed by the officials designated to sign the bonds who were in office at the time of such signing but who may have ceased to be such officers before the sale and delivery of such bonds, or who may not have been in office on the date such bonds may bear, the signatures of such officers upon such bonds and coupons shall nevertheless be valid and sufficient for all purposes and have the same effect as if the person so officially signing such bonds had remained in office until their delivery to the purchaser, or had been in office on the date such bonds may bear. However, notwithstanding anything herein to the contrary, such bonds may be issued as provided in the Registered Bond Act of the State of Mississippi.
(5) All bonds and interest coupons issued under the provisions of this section have all the qualities and incidents of negotiable instruments under the provisions of the Uniform Commercial Code, and in exercising the powers granted by this section, the commission shall not be required to and need not comply with the provisions of the Uniform Commercial Code.
(6) The commission shall act as issuing agent for the bonds authorized under this section, prescribe the form of the bonds, determine the appropriate method for sale of the bonds, advertise for and accept bids or negotiate sale of the bonds, issue and sell the bonds so authorized to be sold, pay all fees and costs incurred in such issuance and sale, and do any and all other things necessary and advisable in connection with the issuance and sale of such bonds. The commission is authorized and empowered to pay the costs that are incident to the sale, issuance and delivery of the bonds authorized under this section from the proceeds derived from the sale of such bonds. The commission may sell such bonds on sealed bids at public sale or may negotiate the sale of the bonds for such price as it may determine to be for the best interest of the State of Mississippi. All interest accruing on such bonds so issued shall be payable semiannually or annually.
If such bonds are sold by sealed bids at public sale, notice of the sale shall be published at least one time, not less than ten (10) days before the date of sale, and shall be so published in one or more newspapers published or having a general circulation in the City of Jackson, Mississippi, selected by the commission.
The commission, when issuing any bonds under the authority of this section, may provide that bonds, at the option of the State of Mississippi, may be called in for payment and redemption at the call price named therein and accrued interest on such date or dates named therein.
(7) The bonds issued under the provisions of this section are general obligations of the State of Mississippi, and for the payment thereof the full faith and credit of the State of Mississippi is irrevocably pledged. If the funds appropriated by the Legislature are insufficient to pay the principal of and the interest on such bonds as they become due, then the deficiency shall be paid by the State Treasurer from any funds in the State Treasury not otherwise appropriated. All such bonds shall contain recitals on their faces substantially covering the provisions of this section.
(8) Upon the issuance and sale of bonds under the provisions of this section, the commission shall transfer the proceeds of any such sale or sales to the special funds created in Sections 57-103-1, 57-103-3, 57-103-5, 57-103-7 and 57-103-111, in the amounts provided in subsection (2)(b) of this section. The proceeds of such bonds shall be disbursed for the purposes provided in Sections 57-103-1, 57-103-3, 57-103-5, 57-103-7, 57-103-9 and 57-103-111.
(9) The bonds authorized under this section may be issued without any other proceedings or the happening of any other conditions or things other than those proceedings, conditions and things which are specified or required by this section. Any resolution providing for the issuance of bonds under the provisions of this section shall become effective immediately upon its adoption by the commission, and any such resolution may be adopted at any regular or special meeting of the commission by a majority of its members.
(10) The bonds authorized under the authority of this section may be validated in the Chancery Court of the First Judicial District of Hinds County, Mississippi, in the manner and with the force and effect provided by Chapter 13, Title 31, Mississippi Code of 1972, for the validation of county, municipal, school district and other bonds. The notice to taxpayers required by such statutes shall be published in a newspaper published or having a general circulation in the City of Jackson, Mississippi.
(11) Any holder of bonds issued under the provisions of this section or of any of the interest coupons pertaining thereto may, either at law or in equity, by suit, action, mandamus or other proceeding, protect and enforce any and all rights granted under this section, or under such resolution, and may enforce and compel performance of all duties required by this section to be performed, in order to provide for the payment of bonds and interest thereon.
(12) All bonds issued under the provisions of this section shall be legal investments for trustees and other fiduciaries, and for savings banks, trust companies and insurance companies organized under the laws of the State of Mississippi, and such bonds shall be legal securities which may be deposited with and shall be received by all public officers and bodies of this state and all municipalities and political subdivisions for the purpose of securing the deposit of public funds.
(13) Bonds issued under the provisions of this section and income therefrom shall be exempt from all taxation in the State of Mississippi.
(14) The proceeds of the bonds issued under this section shall be used solely for the purposes therein provided, including the costs incident to the issuance and sale of such bonds.
(15) The State Treasurer is authorized, without further process of law, to certify to the Department of Finance and Administration the necessity for warrants, and the Department of Finance and Administration is authorized and directed to issue such warrants, in such amounts as may be necessary to pay when due the principal of, premium, if any, and interest on, or the accreted value of, all bonds issued under this section; and the State Treasurer shall forward the necessary amount to the designated place or places of payment of such bonds in ample time to discharge such bonds, or the interest thereon, on the due dates thereof.
(16) This section shall be deemed to be full and complete authority for the exercise of the powers therein granted, but this section shall not be deemed to repeal or to be in derogation of any existing law of this state.
SECTION 16. Sections 1 through 8 of this act shall be codified as separate code sections in Chapter 7, Title 27, Mississippi Code of 1972.
SECTION 17. This act shall take effect and be in force from and after July 1, 2021.