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Certified Capital Companies (CAPCO)
PROGRAM
Purpose:
How the Program Works:
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The State Legislature passed
legislation that provides for the creation of Certified Capital Companies
and authorizes premium tax credits up to $100,000,000 for insurance
companies that invest in these venture firms. |
| Interested groups apply to the state to become a certified capital
company and then, once certified, begin to raise money. |
| Insurance companies are pursued to invest in the Certified Capital
Companies, of which there are enticed by returns from those investments
and the premium tax credit utilized at 10% per year over a ten-year
period. |
| The Certified Capital Companies are required, through that same
legislation, to invest in “qualified state technology businesses”. |
| In most cases, each CAPCO reports fund activity, jobs created and
small business progress to the state annually for review. |
| There are six CAPCOs in the state and each CAPCO can invest no more
than $3,000,000 in capital in one particular company. |
Qualified Businesses (state
technology businesses):
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Is headquartered in Alabama or
it intends to relocate its headquarters to Alabama.
 | Headquarters means:
 | The office from which the material investment and administrative
functions of the qualified business physically are conducted. |
| The physical location in which the material books and records of
the qualified business are maintained. |
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| Has its principal business operations located in Alabama.
| Principal Operations means:
| The physical location in which the material operations of the
qualified business are maintained; and |
| That one of the following applies to the business: |
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| A minimum of forty percent (40%) of the annual expenditures of the
qualified business are spent or proposed to be spent in Alabama; |
| A minimum of forty percent (40%) of the assets of the qualified
business are located or held in Alabama; or |
| A minimum of forty percent (40%) of the revenues generated or proposed
to be generated by the qualified business are generated or proposed to be
generated by services performed form or products manufactured or assembled
in Alabama. |
| Has agreed to use the qualified investment primarily to either support
business operations in Alabama, or in the case of a start-up company,
establish and support business operations in Alabama, except in each case,
advertising, sales and promotional operations which may be conducted
outside of Alabama. |
| Does not have more than 100 employees. |
| Either employs at least 80% of its employees1 in Alabama, or pays at
least 80% of its payroll to employees1 in Alabama. |
| Is primarily engaged in the following:
| Manufacturing, processing, or assembling products. |
| Conducting research and development. |
| Providing services. |
| Other Rules |
| Is not primarily engaged in any of the following:
| Retail sales. |
| Real estate development. |
| The business of insurance, banking, lending, lobbying, or
political consulting. |
| The provision of professional services provided by accountants,
attorneys, or physicians. |
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How to Apply
1 Employees
that are residents of Alabama. |
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