Okla. Stat. tit. 68, § 68-2357.63A

business ventures - Recapture of credits - Use of near equity or

subordinated debt - Offering material statement.

A. For purposes of claiming any tax credits authorized by

Sections 2357.62 and 2357.63 of Title 68 of the Oklahoma Statutes,

any funds invested in an Oklahoma small business venture shall be

subject to the following requirements:

1. The Oklahoma small business venture must issue its equity

securities or subordinated debt instruments in exchange for a

qualified investment within thirty (30) days of the date as of which

the investment occurs;

2. The qualified small business capital company or any entity

making an investment in conjunction with investment by a qualified

small business capital company pursuant to Section 2357.63 of this

title must reflect the documented qualified investment in the

Oklahoma small business venture as an asset in its accounting

system;

3. The qualified small business capital company shall not make

a qualified investment in an Oklahoma small business venture in

which it has, at any time, more than fifty percent (50%) ownership,

whether directly or indirectly, of the voting interest entitled to

elect the governing board of any Oklahoma small business venture;

4. The qualified small business capital company cannot enter

into any agreement, whether formal or informal, written or

unwritten, the purpose of which is to control, directly or

indirectly, the return of a specific amount of qualified investment

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by the Oklahoma small business venture to the qualified small

business capital company or the purpose of which is to cause or

require the transfer of such specific amount of qualified investment

to any other entity within five (5) years from the date the

qualified investment is made available to the Oklahoma small

business venture; and

5. The Oklahoma small business venture cannot enter into any

agreement, whether formal or informal, written or unwritten, the

purpose of which is to control, directly or indirectly, the return

of a specific amount of qualified investment to the qualified small

business capital company or the purpose of which is to cause or

require the transfer of such specific amount of qualified investment

to any other entity within five (5) years from the time the

qualified investment is made available to the Oklahoma small

business venture.

B. The Oklahoma Tax Commission shall have the authority to make

an independent determination that any proposed use of monies,

assets, funds or other things of value which are to be used for

purposes of claiming any credits authorized by Sections 2357.62 and

2357.63 of Title 68 of the Oklahoma Statutes are for a legitimate

business purpose of the Oklahoma small business venture and not for

the primary purpose of obtaining the tax credits authorized by such

sections on the basis of activity which does not have substantial

economic profit-based potential.

C. The Tax Commission shall be authorized to recapture the

credits otherwise authorized by the provisions of Sections 2357.62

and 2357.63 of Title 68 of the Oklahoma Statutes according to the

provisions of Section 11 of this act if it finds that the

transaction does not meet the requirements of the Small Business

Capital Formation Incentive Act.

D. The provisions of this section shall not prohibit a

qualified small business capital company from using near equity or

subordinated debt, as those terms are defined by Section 2357.61 of

Title 68 of the Oklahoma Statutes, if the near equity or

subordinated debt is a contractual obligation owed by the Oklahoma

small business venture directly to the qualified small business

capital company and if the agreement governing the obligation

complies with all of the other requirements of this section.

E. The provisions of this section shall not prohibit the

shareholders or partners of a qualified small business capital
f the near equity or

subordinated debt is a contractual obligation owed by the Oklahoma

small business venture directly to the qualified small business

capital company and if the agreement governing the obligation

complies with all of the other requirements of this section.

E. The provisions of this section shall not prohibit the

shareholders or partners of a qualified small business capital

company from using near equity or subordinated debt, as those terms

are defined by Section 2357.61 of Title 68 of the Oklahoma Statutes,

if the near equity or subordinated debt is a contractual obligation

owed by the Oklahoma small business venture directly to a

shareholder or partner of a qualified small business capital company

that has invested funds in an Oklahoma small business venture

pursuant to Section 2357.63 of Title 68 of the Oklahoma Statutes and

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if the agreement governing the obligation complies with all of the

other requirements of this section.

F. Any offering material involving the solicitation of

qualified investments in exchange for equity securities or

subordinated debt instruments of the qualified small business

capital company shall include the following statement:

“Any favorable determination letter obtained from the Oklahoma

Tax Commission does not guarantee the granting of tax credits under

the provisions of the Small Business Capital Formation Incentive

Act. In the event applicable provisions of the Small Business

Capital Formation Incentive Act are violated, the Tax Commission may

require forfeiture of unused tax credits and recapture or repayment

of tax credits as provided by law.”