1. (a)

   1. (1) Qualified equity investments certified under Arkansas Code § 15-4-3605 shall not be decertified unless the requirements of Arkansas Code § 15-4-3611(b) are met.

   2. (2) Until all qualified equity investments issued by a QCDE are decertified under Arkansas Code § 15-4-3611, the QCDE shall not distribute to its equity holders or make cash payments on long-term debt securities that have been designated as qualified equity investments in an amount that exceeds the sum of:

      1. (A) The cumulative operating income, as determined under 26 C.F.R. § 1.45D-1, as it existed on January 1, 2013, earned by the QCDE since issuance of the qualified equity investment, before giving effect to any expense from interest on long-term debt securities designated as qualified equity investments; and
      2. (B) Fifty percent (50%) of the purchase price of the qualified equity investments issued by the QCDE.

2. (b) To be decertified, a qualified equity investment shall:

   1. (1) Be beyond its seventh credit allowance date;

   2. (2)

      1. (A) Have been in compliance with Arkansas Code § 15-4-3607 up through its seventh credit allowance date, including any cures under Arkansas Code § 15-4-3608.
      2. (B) This requirement is satisfied if no recapture action has been commenced by the Arkansas Economic Development Commission as of the seventh credit allowance date; and
   3. (3) Have invested its proceeds in qualified active low-income community investments such that the total qualified low-income community investments made, cumulatively including reinvestments, exceeds one hundred fifty percent (150%) of all qualified equity investments issued by the issuer.

3. (c)

   1. (1) A QCDE that seeks to have a qualified equity investment decertified shall send notice to the commission of its request for decertification along with evidence supporting the request.

   2. (2)

      1. (A) A request for decertification shall not be unreasonably denied and shall be responded to within thirty (30) days of receiving the request.
      2. (B) If the request is denied for any reason, the burden of proof shall be on the commission in any administrative or legal proceeding that follows to establish that the request was not unreasonably denied.

Codification Notes: "QCDE" means qualified community development entity.