The proposed amendments will repeal Rule Chapter 69W-7, F.A.C., relating to certified capital companies. The statute authorizing these rules, Section 288.99, F.S., was repealed effective December 31, 2010, by operation of law. See Fla. Stat., ...

DEPARTMENT OF FINANCIAL SERVICES
Securities

RULE NO.: RULE TITLE:
69W-7.001: Definitions
69W-7.002: Certification as a Certified Capital Company
69W-7.003: Capital Requirements for Certified Capital Companies
69W-7.004: Annual Review
69W-7.005: Requirement to Update Information
69W-7.006: Renewal of Certification
69W-7.007: Books and Records Requirements
69W-7.008: Forms, Instructions and Manuals
PURPOSE AND EFFECT: The proposed amendments will repeal Rule Chapter 69W-7, F.A.C., relating to certified capital companies. The statute authorizing these rules, Section 288.99, F.S., was repealed effective December 31, 2010, by operation of law. See Fla. Stat., Section 288.99(17) (2010), which provides: “This section shall stand repealed December 31, 2010.” During the 2011 legislative session, a reviser's bill was passed that removed Section 288.99, F.S., from the Florida Statutes. See s. 5, Ch. 2011-3, Laws of Florida.
SUMMARY: Rule Chapter 69W-7, relating to certified capital companies, is proposed for repeal. The statute authorizing these rules, Section 288.99, F.S., was repealed effective December 31, 2010, by operation of law. See Fla. Stat., Section 288.99(17) (2010), which provides: “This section shall stand repealed December 31, 2010.” During the 2011 legislative session, a reviser's bill was passed that removed Section 288.99, F.S., from the Florida Statutes. See s. 5, Ch. 2011-3, Laws of Florida.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:
The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the agency.
The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: The statute authorizing these rules, Section 288.99, F.S., was repealed effective December 31, 2010, by operation of law. See Fla. Stat., Section 288.99(17) (2010), which provides: “This section shall stand repealed December 31, 2010.” During the 2011 legislative session, a reviser's bill was passed that removed Section 288.99, F.S., from the Florida Statutes. See s. 5, Ch. 2011-3, Laws of Florida. The rules lack statutory authority.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
RULEMAKING AUTHORITY: 288.99(4)(h) FS.
LAW IMPLEMENTED: 288.99(4) FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN THE FAW.
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Rob Vandiver, Chief Counsel, Division of Securities, [phone], [e-mail]

THE FULL TEXT OF THE PROPOSED RULE IS:

69W-7.001 Definitions.

Definitions as used in Rule Chapter 69W-7, F.A.C.

(1) “Application” means all information required by the forms prescribed by the Financial Services Commission and any additional information required by the Financial Services Commission or Office of Financial Regulation together with all required statutory fees.

(2) “Management Company” means a company hired to perform management services for a business.

(3) “Predominantly engaged,” as used in Section 288.99(3)(k), F.S., means any business engaged in retail sales, real estate development, insurance, banking, lending, oil and gas exploration or engaged in professional services provided by accountants, lawyers, or physicians for which: (i) over fifty percent of the revenues of such business, for the preceding fiscal year, are derived from a combination of one or more such activities, or (ii) if a new enterprise, over fifty percent of the projected revenues of such business, for its first fiscal year, are derived from a combination of one or more such activities.

(4) “Principal Office” means the place where the chief or principal affairs and business of the applicant are transacted.

Rulemaking Specific Authority 288.99(4)(h) FS. Law Implemented 288.99(4) FS. History–New 9-15-98, Amended 12-12-02, Formerly 3E-7.001, Repealed_________.

 

69W-7.002 Certification as a Certified Capital Company.

(1) Each applicant seeking certification as a certified capital company shall complete, execute, and file with the Office of Financial Regulation not later than ninety (90) days prior to the scheduled deadline for submission of tax credit allocation requests to the Office of Trade, Tourism, and Economic Development contained in Section 288.99(17), F.S., for the respective Program, Form OFR-C-1-98, Application for Certification as a Certified Capital Company, which is incorporated herein by reference.

(a) An application may be obtained directly from the Office of Financial Regulation in paper copy format, on 3.5'' diskette, by e-mail, or by accessing the Office of Financial Regulation’s website at www.dbf.state.fl.us.

(b) Diskette and e-mail versions of the application are available only in the following format: Microsoft Word for Windows Version 7.0a.

(2) An application shall be deemed filed with the Office of Financial Regulation when the Office of Financial Regulation receives the application, including an originally executed certification page, and the application fee.

(3) Any application filed after the date referenced in subsection (1) of this section shall be denied by the Office of Financial Regulation.

(4) Applications may be filed on paper copy, on diskette or by e-mail.

(5) Applications filed by mail shall be mailed to the Office of Financial Regulation at Office of Financial Regulation, 200 East Gaines Street, Tallahassee, Florida 32399-0375. Applications filed by e-mail shall be sent to the Office of Financial Regulation’s e-mail address at electronic [e-mail].

(6) Applicants who file applications on diskette or by e-mail must also file an originally executed certification page which becomes part of the diskette or e-mail by reference.

(7) Applications filed on diskette or by e-mail shall be submitted in the following format: Microsoft Word for Windows Version 7.0a. No other software will be accepted unless authorized in writing by the Office of Financial Regulation.

(8) Application fees shall be paid by cashier’s check, money order, certified check or wire transfer. Wire transfer instructions are provided on the application.

(9) Whenever an applicant has knowledge that information supplied on or with its application has become inaccurate or obsolete, the applicant shall file an amended application form within 30 days, including an originally executed certification page to the Office of Financial Regulation updating this information. Amended applications may be filed in the same manner as provided for original applications.

(10) The Office of Financial Regulation will make requests for additional information within 30 days, if necessary, after the Office of Financial Regulation receives the application and the full amount of the application fee.

(11) Upon approving an application, the Office of Financial Regulation shall issue a certificate evidencing certification effective through December 31 of that calendar year. No renewal fees shall be required within 6 months after the date of initial certification.

(12) Copies of all offering materials and advertising materials used by the CAPCO must be filed with the Office of Financial Regulation no later than the date on which the Certified Capital Company submits tax credit allocation request to the Office of Trade, Tourism, and Economic Development with respect to the Program for which the requests are being submitted.

Rulemaking Specific Authority 288.99(4)(h) FS. Law Implemented 288.99(4) FS. History–New 9-15-98, Amended 12-12-02, Formerly 3E-7.002, Repealed_________.

 

69W-7.003 Capital Requirements for Certified Capital Companies.

At the time of application and at all times prior to the receipt of an allocation of tax credits, the applicant shall maintain an equity capitalization in the form of cash and cash equivalents in accordance with Section 288.99(4)(b), (5), F.S. A certified capital company shall notify the Office of Financial Regulation within twenty-four hours of a failure to maintain such equity capitalization. Any certified capital company that receives an allocation of tax credits shall immediately be subject to the constraints of Section 288.99(3)(m), F.S., with respect to any distributions or payments.

Rulemaking Specific Authority 288.99(4)(h) FS. Law Implemented 288.99(4) FS. History–New 9-15-98, Amended 12-12-02, Formerly 3E-7.003, Repealed_________.

 

69W-7.004 Annual Review.

(1) After completing an annual review, the Office of Financial Regulation shall notify the certified capital company of the Office of Financial Regulation’s findings regarding the certified capital company’s compliance with the provisions of Section 288.99, F.S.

(2) The Office of Financial Regulation shall charge each certified capital company a fee of $5000 to cover the cost of the Office of Financial Regulation’s annual review. After completing an annual review, the Office of Financial Regulation shall issue the certified capital company an invoice for the cost of the annual review. A certified capital company shall pay the amount of the invoice in full within 30 days from the date of the invoice. Payment shall be made by certified check, money order, cashier’s check or wire transfer.

Rulemaking Specific Authority 288.99(4)(h) FS. Law Implemented 288.99(10) FS. History–New 9-15-98, Formerly 3E-7.004, Repealed_________.

 

69W-7.005 Requirement to Update Information.

Within 30 days after actual knowledge that information supplied on or with its application has become inaccurate or obsolete, a certified capital company shall file an amended application with the Office of Financial Regulation on Form OFR-C-1-98, including an originally executed certification page.

Rulemaking Specific Authority 288.99(4)(h) FS. Law Implemented 288.99(4) FS. History–New 9-15-98, Formerly 3E-7.005, Repealed_________.

 

69W-7.006 Renewal of Certification.

(1) Each certified capital company seeking to renew its certification shall pay all renewal fees as required by Section 288.99(4), F.S.

(2) Renewal fees shall be paid by cashier’s check, money order, certified check or wire transfer.

(3) Renewal fees paid by cashier’s check, money order or certified check shall be mailed to the Office of Financial Regulation, 200 East Gaines Street, Tallahassee, Florida 32399-0375.

(4) Upon receipt of the required renewal fees, the Office of Financial Regulation shall issue a certificate evidencing renewal of the certification through December 31 of that calendar year.

Rulemaking Specific Authority 288.99(4)(h) FS. Law Implemented 288.99(4) FS. History–New 9-15-98, Amended 12-12-02, Formerly 3E-7.006, Repealed_________.

 

69W-7.007 Books and Records Requirements.

(1) Each certified capital company shall prepare and maintain on a current basis the following records:

(a) A complete executed copy of the application, any amendments thereto and the attached schedules.

(b) Files for each Director and Principal containing the following:

1. Evidence that at least two of the Principals meet the requirements of Section 288.99(4)(c)3., F.S.;

2. Full documentation and details pertaining to each affirmative response to the disciplinary questions on Schedule D to Form OFR-C-1-98; and

3. Documentation pertaining to any outstanding or resolved customer complaints, actions, internal reviews or investigations into each Director’s and Principal’s activities while associated with said certified capital company.

(c) Records concerning all securities issued by the certified capital company which include each of the following:

1. The type of security issued;

2. The name, address, and telephone number of the Investor(s);

3. The date of the transaction;

4. The total dollar amount invested;

5. Copies of any prospectus or offering material used in connection with the sale of securities by the certified capital company; and

6. Evidence that the offering security contains the statement required by Section 288.99(4)(g), F.S.

(d) Records relating to each certified investor in the certified capital company which include each of the following:

1. Evidence demonstrating that the certified investor is subject to premium tax liability pursuant to Section 624.509, F.S.;

2. The names of all affiliates and a description of the affiliation; and

3. The investor’s state and federal tax identification numbers and premium tax identification number.

(e) Records relating to each qualified business or early stage technology Business (collectively “business”) invested in by the certified capital company which include each of the following:

1. The name of the business;

2. The location of the headquarters and principal business operations of the business;

3. A description of the type of business engaged in;

4. Evidence that the business meets the definition of a qualified business as defined by Section 288.99(3)(k), F.S.;

5. The affidavit required by Section 288.99(3)(k)3., F.S. Such affidavit shall be duly sworn and notarized, and shall be completed by an authorized representative of such business;

6. A copy of any contractual agreement entered into between the certified capital company and the business;

7. The amount of investment made in the business;

8. The type of investment made along with all supporting documentation;

9. The date of the investment;

10. A description of the procedures used to select the business for investment including the names of all individuals associated with the certified capital company who participated in the decision;

11. A due diligence file on the business;

12. Copies of any prospectus or offering material used in connection with the sale of securities by the business to the certified capital company;

13. All correspondence between the certified capital company and the qualified business; and

14. A summary listing of all investments made in qualified businesses as of the end of each calendar year beginning with December 31, 2000.

15. Copies of annual financial statements and the quarterly and annual unemployment tax filings for each qualified business. For a qualified business that is not required to file quarterly and annual unemployment tax filings, the qualified business shall maintain end-of-quarter and end-of-year payroll records which shall include contracts for the leasing of staff.

(f) Organizational documents, and any amendments to these documents, as are applicable, based upon the type of organizational structure. These documents should include the following, as applicable:

1. Articles of Incorporation;

2. Partnership Agreement;

3. Articles of Organization;

4. Bylaws; and

5. Evidence of Registration with the Department of State.

(g) Records relating to capital of the certified capital company which is not invested in qualified businesses which include each of the following:

1. A ledger or customer statement from the financial institution or broker-dealer holding the assets which includes the details of all purchases, sales, receipts, and deliveries of securities; and

2. Evidence that each investment complies with the requirements of Section 288.99(5)(b)3., F.S.

(h) Records relating to all qualified distributions by the certified capital company which include each of the following:

1. The date of the distribution;

2. The amount of the distribution;

3. To whom the distribution was paid;

4. The purpose of the distribution; and

5. A statement describing how each distribution complies with the definition found in Section 288.99(3)(m), F.S.

(i) Records relating to all distributions by the certified capital company, other than qualified distributions, which include each of the following:

1. The date of the distribution;

2. The amount of the distribution;

3. Who the distribution was paid to;

4. The purpose of the distribution; and

5. A statement describing how each distribution complies with Section 288.99(9), F.S.

(j) Documentation to support the information provided to the Office of Financial Regulation pursuant to Section 288.99(8)(a), F.S.

(k) Financial records, prepared in accordance with generally accepted accounting principles, which include each of the following:

1. A journal or journals, including cash receipts and disbursements records, and any other records of original entry forming the basis of entries in any ledger;

2. General and auxiliary ledgers (or other comparable records) reflecting asset, liability, reserve, capital, income and expense accounts;

3. All check books, bank statements, canceled checks and cash reconciliations; and

4. All bills or statements (or copies thereof), paid or unpaid, relating to the business of the certified capital company.

(2) Records required by subsection (1) of this rule shall be preserved for a period of not less than ten (10) years while effectively registered with the Office of Financial Regulation, nor for less than five (5) years after decertification as a certified capital company.

(3) Records required by subsection (1) of this rule shall be preserved for a period of not less than three (3) years at the office located in this state as designated in Section 288.99(4)(c)3., F.S., and thereafter shall be preserved for the periods of time specified in subsection (2) at the certified capital company’s principal place of business. Such records shall be accessible through the main office of the certified capital company.

Rulemaking Specific Authority 288.99(4)(h) FS. Law Implemented 288.99(3), (4), (5), (8), (9) FS. History–New 9-15-98, Amended 12-12-02, Formerly 3E-7.007, Repealed_________.

 

69W-7.008 Forms, Instructions and Manuals.

(1)(a) The forms set forth below, as well as any instructions accompanying them, are hereby adopted by the Office of Financial Regulation and incorporated by reference into Rule Chapter 69W-7, F.A.C.

(b) Form OFR-C-1-98, Application for Certification as a Certified Capital Company.

(2)(a) In addition to the forms incorporated by subsection (1), the following manuals and forms are hereby adopted by the Office of Financial Regulation and incorporated by reference into Rule Chapter 69W-7, F.A.C.

(b) GAAP Interpretation and Application of Generally Accepted Accounting Principals, copyright John Wiley & Sons, Inc., (1998).

Rulemaking Specific Authority 288.99(4)(h) FS. Law Implemented 288.99(4) FS. History–New 9-15-98, Formerly 3E-7.008, Repealed_________.

NAME OF PERSON ORIGINATING PROPOSED RULE: Pam Epting, Director, Division of Securities
NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Financial Services Commission
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: March 20, 2012