For purposes of this chapter:

(1) "Authority" means the South Carolina Venture Capital Authority created pursuant to this chapter.

(2) "Certificate" means a document executed by the authority pursuant to which a tax credit is available to a person pursuant to this chapter.

(3) "Equity, near-equity, or seed capital" means capital invested in common or preferred stock, debt with equity conversion rights, royalty rights, limited partnership interests, limited liability company interests, and any other securities or rights that evidence ownership in private business.

(4) "Investor" means any corporation, limited liability company, community development corporation, or unincorporated business entity, including a general or limited partnership, that is selected by a designated investor group to receive investments from the designated investor group and then make venture capital investments with these funds that meet the requirements of this chapter. An investor, a senior member of its management team, or a qualified investment professional working closely with the investor's senior management team must be a legal resident of this State and have a minimum of five years experience in venture capital investing. In addition, substantially all of an investor's business activity must be venture capital investing.

(5) "Innovation fund" means the South Carolina Technology Innovation Fund.

(6) "Person" means any individual, corporation, partnership, or other lawfully organized entity.

(7) "Research and development" means laboratory, scientific, or experimental testing and development related to new products, new uses for existing products, or improvements to existing products. Research and development also includes intellectual property, information technology, or technology transfer endeavors. The term does not include efficiency surveys, management studies, consumer surveys, economic surveys, advertising, or promotion, or research in connection with literary, historical, or similar projects.

(8) "Tax credit" means a credit against a person's income tax liability pursuant to Chapter 6, Title 12; bank tax liability pursuant to Chapter 11, Title 12; net income tax liability pursuant to Chapter 13, Title 12; liability for license fees and taxes pursuant to Chapters 20 and 23 of Title 12; or insurance premium tax liability pursuant to Chapter 7, Title 38; or other tax liability under Title 38, as the case may be, or in the case of a repeal or reduction by the State of the tax liability imposed by these sections, any other tax imposed upon the person by this State.

(9) "Venture capital" means equity, near-equity, and seed capital financing including, without limitation, early stage research and development capital for startup enterprises, and other equity, near-equity, or seed capital for growth and expansion of entrepreneurial enterprises.

(10) "Lender" means a banking institution subject to the income tax on banks under Chapter 11, Title 12, an insurance company subject to a state premium tax liability pursuant to Chapter 7, Title 38, a captive insurance company regulated pursuant to Chapter 90, Title 38, a utility regulated pursuant to Title 58, or a financial institution with proven experience in state-based venture capital transactions, pursuant to guidelines established by the authority. Both the guidelines and the lender must be approved by the State Fiscal Accountability Authority.

(11) "Capital commitment" means the amount of money committed by a designated investor group to an investor for a term of up to ten years, which term may be extended to provide for an orderly liquidation of the investor's portfolio investments.

(12) "Community development corporation" is as defined in Section 34-43-20(2).

(13) "Revolving fund" means a bank account:

(a) created by a designated investor group with a financial institution with an office or branch in this State; and

(b) used solely as provided in this chapter or any applicable designated investor contract.

(14) "Designated investor contract" means an agreement entered into between the authority and any person selected as a designated investor group pursuant to Section 11-45-50.

(15) "Designated investor group" means a person who enters into a designated investor contract with the authority pursuant to Section 11-45-50.

(16) "Interest" means interest on the outstanding balance owed or owing to a lender by a designated investor group under such calculations, terms, or conditions as determined by the authority, provided that the method of calculating interest may be included in the tax credit certificates to the extent that the authority considers the information necessary or appropriate.

HISTORY: 2004 Act No. 187, Section 5; 2005 Act No. 125, Section 1; 2007 Act No. 83, Section 8.A; 2007 Act No. 110, Section 4.A; 2007 Act No. 116, Section 2.A; 2014 Act No. 121 (S.22), Pt VII, Section 20.J.1, eff July 1, 2015.

Effect of Amendment

2014 Act No. 121, Section 20.J.1, in subsection (10), substituted "Fiscal Accountability Authority" for "Budget and Control Board", and made other nonsubstantive changes.