Okla. Stat. tit. 68, § 68-2357.74A

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 2357.73 and 2357.74 of Title 68 of the Oklahoma Statutes,

any funds invested in an Oklahoma rural small business venture shall

be subject to the following requirements:

1. The Oklahoma rural 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 rural small business capital company or any

entity making an investment in conjunction with investment by a

qualified rural small business capital company pursuant to Section

2357.74 of Title 68 of the Oklahoma Statutes must reflect the

documented qualified investment in the Oklahoma rural small business

venture as an asset in its accounting system;

3. The qualified rural 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 rural small business

Oklahoma Statutes - Title 68. Revenue and Taxation Page 855

venture in which a qualified investment is to be made by the

qualified rural small business capital company;

4. The qualified rural 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

by the Oklahoma rural small business venture to the qualified rural

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 of the date the

qualified investment is made available to the Oklahoma rural small

business venture; and

5. The Oklahoma rural 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 rural

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 of the date the

qualified investment is made available to the Oklahoma rural 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 2357.73 and

2357.74 of Title 68 of the Oklahoma Statutes are for a legitimate

business purpose of the Oklahoma rural 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 2357.73

and 2357.74 of Title 68 of the Oklahoma Statutes according to the

provisions of Section 22 of this act if it finds that the

transaction does not meet the requirements of the Rural Venture

Capital Formation Incentive Act.

D. The provisions of this section shall not prohibit a

qualified rural small business capital company from using near

equity or subordinated debt, as those terms are defined by Section

2357.72 of Title 68 of the Oklahoma Statutes, if the near equity or

subordinated debt is a contractual obligation owed by the Oklahoma

rural small business venture directly to the qualified rural small
ve Act.

D. The provisions of this section shall not prohibit a

qualified rural small business capital company from using near

equity or subordinated debt, as those terms are defined by Section

2357.72 of Title 68 of the Oklahoma Statutes, if the near equity or

subordinated debt is a contractual obligation owed by the Oklahoma

rural small business venture directly to the qualified rural 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 rural small business capital

Oklahoma Statutes - Title 68. Revenue and Taxation Page 856

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

are defined by Section 2357.72 of Title 68 of the Oklahoma Statutes,

if the near equity or subordinated debt is a contractual obligation

owed by the Oklahoma rural small business venture directly to a

shareholder or partner of a qualified rural small business capital

company that has invested funds in an Oklahoma rural small business

venture pursuant to Section 2357.74 of Title 68 of the Oklahoma

Statutes and 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 Rural Venture Capital Formation Incentive Act.

In the event applicable provisions of the Rural Venture 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.”