[This section is repealed upon certification that remaining investments of private sector limited partners have been liquidated. See Editor's Note at the beginning of this Chapter.]

(A) A corporation must be formed in the manner provided in this chapter and by law to be the general partner of the Palmetto Seed Capital Fund Limited Partnership, and operated pursuant to the laws of this State. The articles of incorporation, bylaws, and any other agreement relating to the organization or operation of the corporation must comply with the provisions set forth in this section.

(B) The Governor shall cause the corporation to be formed, and he shall designate the incorporators. The initial board of directors must consist of three members, one of whom must be appointed by the Governor and two of whom must be appointed by the Secretary of Commerce. Members of the initial board of directors shall serve three-year terms. The initial board of directors must be representative of the State as a whole. The registered agent must be designated by the Governor. The corporation's existence begins upon filing of the articles of incorporation. The corporation's existence is perpetual, unless dissolved as provided herein. The corporation is authorized to issue shares of a number, class, and par or no-par value, as provided in its articles of incorporation. The general nature of the business of the corporation is to serve as general partner of the Palmetto Seed Capital Fund Limited Partnership, to provide financing to high growth oriented businesses, to provide seed capital to South Carolina businesses, and to undertake any acts appropriate or necessary to carry out the foregoing. The bylaws, the organizational minutes, the election of officers, the issuance of any stock of the corporation, and any other actions appropriate or necessary for the organization and operation of the corporation must be of that form and content as determined by the board of directors. Nothing contained in the chapter may prohibit the shareholders or board of directors of the corporation from altering, amending, or otherwise modifying the articles of incorporation, bylaws, or any other agreement governing the corporation as otherwise permitted pursuant to the laws of this State, except that the general nature of the business of the corporation may not be amended, altered, or otherwise modified or restricted, and except that the corporation may be dissolved, merged, or otherwise cease to exist pursuant to the appropriate vote of the board of directors and shareholders. The Governor may expend those discretionary funds as he has available and considers appropriate for the purpose of organizing the corporation and promoting the sale of the qualified investments.

(C) The directors of the Corporation need not be shareholders in the Corporation, and there must be not less than three nor more than seven directors, with the initial three directors selecting any additional directors as provided by the bylaws. After the terms of initial directors expire, successors must be chosen in the manner provided by the bylaws of the Corporation. Members of the initial board are eligible to succeed themselves. Directors shall receive no salary but may receive mileage, subsistence, and per diem provided by law for members of state boards, committees, and commissions. If a director is a full-time state employee, he may not receive per diem.

(D) The Corporation shall cause the Fund to be formed as a limited partnership established pursuant to Chapter 41 of Title 33. The partnership agreement relating to the organization and operation of the Fund must be of that form and content as determined by the board of directors of the Corporation. The Corporation must be the sole general partner of the Fund, and the initial limited partner must be a person or entity designated by the Corporation's board of directors. Additional limited partners may be admitted to the Fund in accordance with the terms of the partnership agreement.

(E) The fund shall raise funds to provide financing to high growth oriented businesses. A "high growth oriented business" for purposes of this chapter means a corporation, general partnership, limited partnership, joint venture, trust, proprietorship, or other similar entity or organization which is expected to experience significant sales growth over the subsequent five-year period. All investments made from investment monies raised by the fund, for which the tax credit provided by this chapter is allowed and for which the tax credit is made available by the fund in the prospectus or offering, must be made to provide seed capital to South Carolina businesses, this seed capital to be used primarily for the purpose of enhancing the production capacity of these businesses or their ability to do business in South Carolina. However, to the extent that the fund directly induces seed capital monies from outside the State to be invested in South Carolina businesses in which it is also investing, the fund may substitute up to two-thirds of these outside monies for its own capital in fulfillment of the requirements of this section. Seventy percent of these investment monies induced into the State or acquired by the fund for which the tax credit is allowed and available must be invested to provide seed capital financing of either start-up businesses or pre-start-up businesses. The remaining thirty percent may be invested as the general partner of the fund determines to provide capital to South Carolina businesses.

(F) No business may be transacted or indebtedness incurred except that as is incidental to the organization of the Corporation or the Fund or to obtaining subscriptions to or payment for either its qualified stock or qualified interests, until consideration for the five million dollars has been paid to the Corporation or to the Fund.

(G) All securities issued by either the Corporation or the Fund before dissolution pursuant to Section 6 of Act 187 of 2004 are considered exempt securities with regard to Section 35-1-201 of the Uniform Securities Act.

HISTORY: 1988 Act No. 643, Section 2, eff June 7, 1988; 1989 Act No. 3, Sections 2 and 3, eff February 15, 1989; 1990 Act No. 505, Section 3, eff May 29, 1990; 1993 Act No. 181, Section 983, eff July 1, 1993; 1994 Act No. 361, Section 8, eff May 3, 1994; 2005 Act No. 110, Section 6, eff January 1, 2006.

Effect of Amendment

The 1989 amendment revised the 9th sentence of subsection (B) by adding "to provide financing to high growth oriented businesses,", and rewrote subsection (E).

The 1990 amendment, in subsection (A), replaced "The" with "A", inserted "in the manner provided in this chapter and by law to be the general partner of the Palmetto Seed Capital Fund Limited Partnership," after "formed", in subsection (B), deleted the reference to the "Palmetto Seed Capital Corporation", and in subsection (E), provided for the use and investing of the outside investment monies acquired by the fund.

The 1993 amendment in subsection (B) substituted "Director of the Department of Commerce" for "State Development Board".

The 1994 amendment in subsection (B), substituted "Secretary of Commerce" for "Director of the Department of Commerce".

The 2005 amendment, in subsection (G), added "before dissolution pursuant to Section 6 of Act 187 of 2004" and substituted "35-1-201" for "35-1-310".