| (F) any other investments approved in advance and in writing by the comptroller. (10) If a qualified business moves its principal business operations outside Texas before the 90th day after a CAPCO makes an investment in it, the investment is not considered a qualified investment for the purposes of the percentage requirements in paragraph (4) of this subsection, subsection (i) of this section, and any other applicable provisions in this section. (11) Any transfer, sale, acquisition, purchase, assignment, or merger of a CAPCO ownership interest should be pre-approved by the comptroller. In no event shall an owner or any affiliate, having an ownership interest of 10% or greater, of a CAPCO, acquire an ownership interest of 10% or greater in another CAPCO without the written approval of the comptroller. The comptroller may request any information deemed necessary to evaluate changes in CAPCO ownership. (e) Annual review. Each CAPCO is subject to review as specified in this section to determine compliance with rules and statutes. (1) The comptroller shall conduct an annual review of each CAPCO to: (A) ensure that the CAPCO continues to satisfy the requirements of this section and Insurance Code, Articles 4.51 - 4.73; (B) ensure that the CAPCO has not made any investment in violation of this section and Insurance Code, Articles 4.51 - 4.73; and (C) determine the eligibility status of its qualified investments. (2) Each CAPCO shall pay the reasonable cost for the annual review to be billed by the comptroller or, if the review is conducted by an independent examiner under the authority of the comptroller, the CAPCO shall reimburse the comptroller. (f) Decertification. A CAPCO may be decertified for violations of this section or the Insurance Code, and premium tax credits may be recaptured and forfeited to the extent expressly set forth in this section or in the Insurance Code. (1) A material violation of Insurance Code, Articles 4.56, 4.58, or 4.59 is grounds for decertification of a CAPCO. The comptroller shall notify the officers of the CAPCO in writing of the violations and that the company may be decertified after 120 days from the date on which the notice is mailed, unless the violations are corrected as determined by the comptroller. (A) Violations of Insurance Code, Articles 4.56(a), 4.56(b), 4.56(f) or 4.56(h) shall constitute a material violation of the statutes. (B) Two consecutive violations of the requirements of Insurance Code, Article 4.58 or 4.59 shall constitute a material violation of the statute. (C) Two or more consecutive instances of a CAPCO failing to pay fees or penalties on a timely basis, two or more consecutive omissions of required information, a misstatements of facts in applications or annual reports, shall constitute material violations of the statutes. (2) A hearing is available to a CAPCO that is subject to decertification as provided in Chapter 1, Subchapter A, Division 1, §§1.1 - 1.42 of this title (relating to Central Administration). (3) Decertification is effective on the date on which the company receives notice of decertification from the comptroller. Notices will be sent via certified mail or via an overnight common carrier delivery service, and become effective on receipt by the CAPCO. (4) In the event of decertification of a CAPCO, the comptroller shall notify any appropriate state agency of the decertification including, but not limited to the Secretary of State, the Office of Economic Development and Tourism, and the Office of the Insurance Commissioner. (5) Premium tax credits previously claimed shall be recaptured and future premium tax credits shall be forfeited following decertification of a CAPCO in accordance with the provisions of Insurance Code, Article 4.63. (6) When a CAPCO has invested an amount equal to 100% of its certified capital, with respect to Program One, in qualified investments, any premium tax credit claimed or to be claimed by a certified investor with respect to an investment in Program One is not subject to recapture or forfeiture. When a CAPCO has invested an amount equal to 100% of its certified capital with respect to Program Two in qualified investments, any premium tax credit claimed or to be claimed by a certified investor with respect to an investment in Program Two is not subject to recapture or forfeiture. (7) The comptroller will send a written notice to each certified investor whose premium tax credit is subject to recapture or forfeiture for failure of the CAPCO to maintain certification eligibility. Notification will be sent in accordance with paragraph (3) of this subsection. (8) The comptroller may impose an administrative penalty on any CAPCO that violates the provisions of this section. Each day a violation continues or occurs is a separate violation. The maximum penalty may not exceed $25,000 for each violation. (A) The penalty amounts are based on the following: (i) seriousness of the violations, including the nature, circumstances, extent, and gravity of the violation; (ii) economic harm caused by the violation; (iii) history of previous violations; (iv) amount necessary to deter a future violation; (v) efforts to correct the violation; and (vi) any other matter that justice may require. (B) Each of the following is a separate violation that is subject to a penalty of $5,000. Thereafter, an additional penalty of $5,000 will be imposed for each 30 day period the violation remains uncorrected: (i) failure to file annual reports by January 31; (ii) failure to maintain in the principal office in Texas all financial, administrative, management and investment records, including details of both qualified investments and unqualified investments; (iii) failure to report names and addresses of certified investors, including the date and amount of investments; (iv) failure to file an annual audited financial statement with an unqualified opinion and any Statement of Auditing Standard No. 61 communication by April 1; and (v) failure to provide detailed financial and investment information that supports each annual report. (C) Each of the following is a separate violation that is subject to a penalty of $10,000. Thereafter, an additional penalty of $10,000 will be imposed for each 30 day period the violation remains uncorrected: (i) failure to maintain the primary CAPCO office in Texas; (ii) investment in a business that is found to be unqualified, without first requesting from the comptroller an evaluation of the business as provided under subsection (g) of this section; and (iii) failure to provide information about the CAPCO's operation within 30 days after the comptroller requests the information. (D) If a CAPCO is assessed penalties, a re-determination hearing may be requested as provided in Tax Code, Chapter 111. (9) Indemnity Agreements and Insurance Authorization. A CAPCO may agree to indemnify or purchase insurance for the benefit of a certified investor for losses resulting from the recapture or forfeiture of premium tax credits under Insurance Code, Article 4.63. Any guaranty, indemnity, bond, insurance policy, or other payment undertaking made under this section may not be provided by more than one certified investor of the CAPCO or affiliate of the certified investor. (g) Premium Tax Credits. In the year a certified investor makes an investment of certified capital, the certified investor shall earn a vested premium tax credit that is equal to the amount of the investment, subject to the other provisions in this section. With respect to Program One, beginning with the tax report due March 2, 2009, for the 2008 tax year, a certified investor may take up to 25% of these tax credits each year until all credits have been used. The credit may not be applied to estimated payments due in 2008, but may be applied to estimated payments beginning with those made in 2009. With respect to Program Two, beginning with the tax report due March 1, 2013 for the 2012 tax year, a certified investor may take up to 25% of these credits each year until all credits have been used. The credit may not be applied to estimated payments due in 2012 but may be applied to estimated payments beginning with those made in 2013. (1) The credit to be applied against state premium tax liability in any one year may not exceed the state premium tax liability of the certified investor for the taxable year. Any unused credit against state premium tax liability may be carried forward indefinitely until the premium tax credits are used. (2) A certified investor claiming a credit against state premium tax liability earned through an investment in a Texas CAPCO is not required to pay any additional retaliatory tax levied under Insurance Code, Article 21.46, as a result of claiming that credit. Cont'd... |
