PURPOSE: This rule describes certain procedures to be followed in the operation of the Missouri Certified Capital Company Law as contained in sections 135.500 through 135.529, RSMo Supp. 1997.

1. (1) One hundred percent (100%) of the cash being invested in a business by a certified capital company (CAPCO) must be for operations of the business located within the state of Missouri. Such funds cannot be used for capital improvements, working capital, or other costs (with the exception of marketing activities) for operations outside the state of Missouri.
2. (2) Not for profit entities may be certified as CAPCOs. Because such entities may not sell stock in their corporations, investors in a notfor-profit CAPCO (or for-profit CAPCO) may be insurance companies that either make a contribution to the CAPCO or provide a loan to the CAPCO.
3. (3) Being a managing general partner of a CAPCO or controlling the direction of investments of a CAPCO shall not preclude an insurance company from exercising its legal rights and remedies (which may include the interim management of a CAPCO) in the event that a CAPCO is in default of its statutory obligations or its contractual obligations to its investors. In the event an insurance company does assume an interim management capacity of a CAPCO, it must immediately notify the department and provide a plan and timetable for selecting another CAP- CO manager.
4. (4) Notifications to the Department of Economic Development from a CAPCO may be in the form of facsimile, e-mail, regular mail, express mail, or overnight courier. In the case where receipt cannot be verified (facsimile and e-mail), the sending party may telephone the receiving party to verify receipt with a verification code.
5. (5) Certified capital which has not yet been placed in qualified investments may not be invested in an investor of the CAPCO or an affiliate or subsidiary of such investor of the CAPCO. Such funds may also not be invested with a person (or another entity in which the person or an immediate family member has a substantial interest) who is affiliated (employee, agent, or board member) with a principal person of the Missouri Department of Economic Development who is involved in administering the CAPCO program.
6. (6) Distributions or payments to debt holders of a certified capital company may be made without restrictions. The restrictions that apply to liquidating distributions do not apply to such payments, including payments made with respect to debt on which tax credits were earned. However, all such payments are to be included in the internal rate of return calculation.

AUTHORITY: section 135.529, RSMo Supp. 1997.* Emergency rule filed Jan. 2, 1997, effective Feb. 3, 1997, expired July 1, 1997. Original rule filed Dec. 15, 1997, effective June 30, 1998.

*Original authority 1996.