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Texas Insurance Code - Not Codified - Article 4.56. Requirements For Continuance Of Certification

Legal Research Home > Texas Lawyer > Insurance Code - Not Codified > Texas Insurance Code - Not Codified - Article 4.56. Requirements For Continuance Of Certification

Art. 4.56. REQUIREMENTS FOR CONTINUANCE OF 
CERTIFICATION.  (a) To continue to be certified, a certified 
capital company shall make qualified investments according to the 
following schedule:
	(1)  before the third anniversary of its allocation date, a 
company must have made qualified investments in an amount 
cumulatively equal to at least 30 percent of its certified capital;  
and
	(2)  before the fifth anniversary of its allocation date, a 
company must have made qualified investments in an amount 
cumulatively equal to at least 50 percent of its certified capital, 
subject to Subsection (b) of this article.
	(b)  At least 50 percent of the amount of qualified 
investments required by Subsection (a)(2) of this article must be 
placed in early stage businesses.  At least 30 percent of the amount 
of qualified investments required by Subsections (a)(1) and (2) of 
this article must be placed in a strategic investment business.
	(c)  The aggregate cumulative amount of all qualified 
investments made by the certified capital company after its 
allocation date shall be considered in the computation of the 
percentage requirements under this subchapter.  Any proceeds 
received from a qualified investment may be invested in another 
qualified investment and count toward any requirement in this 
subchapter with respect to investments of certified capital.
	(d)  Nothing in this subchapter shall limit an insurance 
company's ownership of nonvoting equity interests in a certified 
capital company.
	(e)  A business that is classified as a qualified business at 
the time of the first investment in the business by a certified 
capital company remains classified as a qualified business and may 
receive follow-on investments from any certified capital company.  
Except as provided by this subsection, a follow-on investment made 
under this subsection is a qualified investment even though the 
business may not meet the definition of a qualified business at the 
time of the follow-on investment.  A follow-on investment does not 
qualify as a qualified investment if, at the time of the follow-on 
investment, the qualified business no longer has its principal 
business operations in this state.
	(f)  A qualified investment may not be made at a cost to a 
certified capital company greater than 15 percent of the total 
certified capital of the company at the time of investment.
	(g)  If, before the 90th day after the date that a certified 
capital company makes an investment in a qualified business, the 
qualified business moves its principal business operations from 
this state, the investment may not be considered a qualified 
investment for purposes of the percentage requirements under this 
subchapter.
	(h)  A certified capital company shall invest any certified 
capital not invested in qualified investments only in the 
following:
	(1)  cash deposited with a federally insured financial 
institution;          
	(2)  certificates of deposit in a federally insured 
financial institution;   
	(3)  investment securities that are obligations of the 
United States or its agencies or instrumentalities or obligations 
that are guaranteed fully as to principal and interest by the United 
States;
	(4)  debt instruments rated at least "A" or its equivalent by 
a nationally recognized credit rating organization, or issued by, 
or guaranteed with respect to payment by, an entity whose unsecured 
indebtedness is rated at least "A" or its equivalent by a nationally 
recognized credit rating organization, and which indebtedness is 
not subordinated to other unsecured indebtedness of the issuer or 
the guarantor;
	(5)  obligations of this state or any municipality or 
political subdivision of this state;  or
	(6)  any other investments approved in advance and in writing 
by the comptroller.

Added by Acts 2001, 77th Leg., ch. 437, Sec. 1, eff. May 28, 2001.            

Last modified: August 11, 2007