New York Banking Law
Article 5-D
Small Business Investment Companies
Section
228-a. Establishment.
228-b. Definitions.
228-c. Purposes, powers and operation.
228-d. New York small business investment company; board of
directors.
228-e. New York specialized small business investment company;
board of directors.
228-f. Reports.
S 228-a. Establishment. 1. A small business investment company to be
known as the "New York small business investment company," shall be
organized under the business corporation law and operated so as to
qualify for licensing under Section 301(c) and applicable regulations. A
specialized small business investment company to be known as the "New
York specialized small business investment company," shall be organized
under the business corporation law and operated so as to qualify for
licensing under Section 301(d) and applicable regulations. The corporate
structure, organization, and activities of the NYSBIC and the NYSSBIC
shall be in conformity with the requirements of Title III and 13 C.F.R.
Pt. 107.
2. The business corporation law shall apply to the NYSBIC and the
NYSSBIC, except that in case of a conflict between the business
corporation law and this article, the provisions of this article shall
govern. If there is in this article a provision relating to a matter
embraced in the business corporation law and not in conflict therewith,
both provisions shall apply.
3. The governor, in consultation with the president pro tem of the
senate and the speaker of the assembly, on behalf of the people of the
state of New York, the New York business development corporation, and
the voting shareholders, on or before April thirtieth, nineteen hundred
ninety-four, shall enter into a memorandum of understanding on an agreed
upon plan for establishing the NYSBIC and the NYSSBIC, including the
legal, organizational and financial structure of the NYSBIC and the
NYSSBIC.
S 228-b. Definitions. As used in this article, the following terms and
abbreviations shall have the meanings indicated:
1. "NYSBIC" means the New York small business investment company which
shall be organized and operated in conformity with Section 301(c) and
applicable regulations.
2. "NYSSBIC" means the New York specialized small business investment
company which shall be organized and operated in conformity with Section
301(d) and applicable regulations.
3. "Highly distressed area" means: (a) a census tract or tracts or
block numbering area or areas or such census tract or block numbering
area contiguous thereto which, according to the most recent census data
available, has:
(i) a poverty rate of at least twenty percent for the year to which
the data relates or at least twenty percent of the households receiving
public assistance; and
(ii) an unemployment rate of at least one and twenty-five one
hundredths times the statewide unemployment rate for the year to which
the data relates; or
(b) a city, town, village or county within a city with a population of
one million or more for which: (i) the ratio of the full value property
wealth, as determined by the comptroller for the year nineteen hundred
ninety, per resident to the statewide average full value property wealth
per resident; and (ii) the ratio of the income per resident, as shown in
the nineteen hundred ninety census to the statewide average income per
resident; are each fifty-five percent or less of the statewide average.
4. "Investment companies" means the NYSBIC and the NYSSBIC
collectively.
5. "Section 301(c)" means Section 301(c) of Title III, 15 U.S.C.
681(c).
6. "Section 301(d)" means Section 301(d) of Title III, 15 U.S.C.
681(d).
7. "Title III" means Title III of the Small Business Investment Act of
1958, United States Pub. L. 85-699 (as amended).
8. "Voting shareholders" means those shareholders of the NYSBIC or the
NYSSBIC that contribute to the capitalization and ongoing funding of the
investment companies.
S 228-c. Purposes, powers and operation. 1. (a) The purposes of the
NYSBIC shall be to serve the needs of the small business community in
the state of New York. The NYSBIC shall direct its efforts towards
providing small business with start-up, venture, operating or working
capital, particularly where general economic and historical conditions,
such as recent employment displacement caused by international,
national, state, regional, and local economic developments, have
prevented traditional capital sources from extending credit to such
small businesses.
(b) The purposes of the NYSSBIC shall be to provide financing to
facilitate small business ownership by minorities and persons who reside
in highly distressed areas as defined in section two hundred
twenty-eight-b of this article, neighborhood based alliance communities,
and persons eligible for the earned income tax credit under an act to
amend the internal revenue code of 1954, Pub. L. 94-12, 89 Stat. 30
(1975), as amended, and the regulations promulgated thereunder, whose
participation in the free enterprise system is hampered by an inability
to compete effectively for capital in the marketplace due to prevailing
or past restrictive practices provided, however, in approving
applications for assistance, priority shall be given to minorities
residing in neighborhood based alliance communities, designated empire
zones or highly distressed areas. The NYSSBIC shall direct its efforts
toward providing these businesses with start-up, venture, operating or
working capital. The NYSSBIC will adopt an investment policy consistent
with the policy set forth in Section 301(d).
Article 5-B, Continued . . .
(c) The NYSBIC and the NYSSBIC shall function as licensees and perform
the respective functions set forth in Title III and applicable
regulations.
2. In furtherance of the purposes set forth in subdivision one of this
section, and in addition to the powers conferred on stock corporations
by the business corporation law, the NYSBIC and the NYSSBIC shall,
subject to the restrictions and limitations contained in this article
and without limiting any power otherwise conferred herein, have the
following powers:
(a) To lend money and conduct other financing transactions at such
rate or rates as may be available to banking organizations licensed
under this chapter; and
(b) To enter such business and financing transactions and arrangements
at such rates and under such terms and conditions as may be permitted to
licensees under Sections 301(c), 301(d) and applicable regulations.
S 228-d. New York small business investment company; board of
directors. 1. The corporate powers of the New York small business
investment companies shall be exercised by a board of directors, which
shall consist of thirty persons, all of whom shall be of full age,
citizens of the United States, and residents of this state. Of the
thirty members of the board of directors, twenty shall be selected by
the voting shareholders and ten shall be selected by the governor, two
upon the recommendation of the president pro tem of the New York state
senate, one upon recommendation of the senate minority leader, two upon
the recommendation of the speaker of the New York state assembly and one
upon recommendation of the assembly minority leader.
2. The president of the investment company shall be elected by a
majority of the board of directors.
3. Nothing contained in this section shall prevent a director of the
New York small business investment company from serving as a director of
the New York specialized small business investment company nor prevent
the president of the NYSBIC from serving as the president of the
NYSSBIC.
S 228-e. New York specialized small business investment company; board
of directors. 1. The corporate powers of the New York specialized small
business investment companies shall be exercised by a board of
directors, which shall consist of thirty persons, all of whom shall be
of full age, citizens of the United States, and residents of this state.
Of the thirty members of the board of directors, twenty shall be
selected by the voting shareholders and ten shall be selected by the
governor, two upon the recommendation of the president pro tem of the
New York state senate, one upon recommendation of the senate minority
leader, two upon the recommendation of the speaker of the New York state
assembly and one upon recommendation of the assembly minority leader.
2. The president of the investment company shall be elected by a
majority of the board of directors.
3. Nothing contained in this section shall prevent a director of the
New York specialized small business investment company from serving as a
director of the New York small business investment company nor prevent
the president of the NYSSBIC from serving as the president of the
NYSBIC.
S 228-f. Reports. 1. The investment companies shall make an annual
report of their conditions to the governor, the legislature and the
superintendent of banks, on or before January first of each year.
2. Commencing January first, nineteen hundred ninety-five, such annual
report shall contain but not be limited to the following:
(a) information on the cost and source of funds and capital and the
total allowable amount available from the voting shareholders, and the
maximum amount committed by each individual voting shareholder;
(b) classification of the businesses in the investment companies`
portfolio by standard industrial code;
(c) information on the types of financing provided by the investment
companies, including start-up, venture, operating or working capital
loans, the size and term of loans, and a breakdown of investments by
senior debt, subordinated debt and equity financing;
(d) information on interest rates of loans, including the percentage
of fixed and variable rate loans;
(e) information on how the NYSBIC is fulfilling its mission to provide
small businesses with credit assistance, particularly where general
economic and historical conditions have prevented traditional capital
sources from extending credit to such small business;
(f) information on how the NYSSBIC is fulfilling its mission to
provide credit assistance to facilitate small business ownership by
minorities, persons who reside in highly distressed area and
neighborhood based alliance communities and persons eligible for the
earned income credit as provided by paragraph (b) of subdivision one of
section two hundred twenty-eight-c of this article;
(g) information on resources and actions taken to advance the
investment companies` marketing programs, including their coordination
and efforts to solicit the assistance of local bankers and local
economic development corporations, the state department of economic
development, the job development authority, the urban development
corporation, the science and technology foundation, the state university
of New York small business development centers, the centers for advanced
technology and other New York state agencies and organizations the
investment companies deem appropriate.