90-3-519. Venture capital companies. The board may make up to $2 million of its funds available under 17-6-308 for seed capital project loans to venture capital companies in order to further the development of seed capital resources available for investment in technology-oriented business development and expansion activities if the venture capital companies meet the criteria in subsections (1) and (2):
     (1) Venture capital companies must be selected for loans by the board on the basis of the demonstrated ability of the companies' principals to make sound investments and the principals' business development experience.
     (2) The company has raised or is in the process of raising its investment capital under the terms of a prospectus or other offering document that gives the board assurance that the company:
     (a) is in compliance with the United States securities and exchange commission and Montana securities laws and regulations applicable to venture capital companies;
     (b) will use equity or quasi-equity investment mechanisms for at least three-fourths of its investments and will not use conventional secured debt mechanisms for more than one-fourth of its investments;
     (c) will otherwise conduct its investment strategy and investment management practices in a manner that conforms to standard venture capital industry practices; and
     (d) has a management team that will dedicate the equivalent of at least one full-time manager to the operation of the company.
     (3) The board may adopt rules governing loans to venture capital companies to implement the terms of this section and to ensure that the loans meet the requirements of 90-3-501 through 90-3-504.

     History: En. Sec. 5, Ch. 566, L. 1991.