SB-0525, As Passed Senate, May 25, 2005

SUBSTITUTE FOR

SENATE BILL NO. 525

     A bill to amend 2003 PA 296, entitled

"Michigan early stage venture investment act of 2003,"

by amending sections 5 and 15 (MCL 125.2235 and 125.2245).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 5. (1) A Michigan early stage venture investment

corporation is a nonprofit corporation incorporated under the

nonprofit corporation act, 1982 PA 162, MCL 450.2101 to 450.3192,

that meets the registration requirements of this act.

     (2) A Michigan early stage venture investment corporation

shall be incorporated as a nonprofit corporation that has received,

on or before  September 1, 2004  August 1, 2005, a favorable

determination from the internal revenue service that the

corporation is exempt from taxation under section 501(c)(3) or

501(c)(4) of the internal revenue code. The department of treasury

may allow up to 3, 30-day extensions of the date under this section

for purposes of reviewing and approving an application for

registration under section 11.

     (3) Except as otherwise provided in this act to the contrary,

a Michigan early stage venture investment corporation is subject to

the laws of this state that are applicable to nonprofit

corporations.

     (4) A Michigan early stage venture investment corporation is a

charitable and benevolent institution, and its funds, income, and

property are exempt from taxation by this state or any political

subdivision of this state.

     (5) A corporation shall not act as a Michigan early stage

venture investment corporation except as authorized under this act.

     Sec. 15. (1) Except as otherwise provided in this act, in the

nonprofit corporation act, 1982 PA 162, MCL 450.2101 to 450.3192,

by law, or in its articles of incorporation, a Michigan early stage

venture investment corporation may do or delegate any act

consistent with this act and the purposes of the nonprofit

corporation, including, but not limited to, the following:

     (a) Enter into contracts and all necessary activities in the

regular course of business of the Michigan early stage venture

investment corporation.

     (b) Charge reasonable fees for the implementation of this act

and the ongoing operation of the Michigan early stage venture

investment corporation.

     (c) Perform acts or enter into financial or other transactions

Senate Bill No 525 as amended May 25, 2005

necessary to carry out its powers and duties under this act.

     (d) Invest in venture capital funds through equity securities.

     (e) Employ  a fund manager  fund managers and other persons it

considers necessary to implement this act. <<The Michigan early stage

venture investment corporation shall employ only 1 fund manager at

any 1 time.>>

     (2) The fund manager shall exercise the duties of a fiduciary

toward the corporation and shall discharge his or her duties with

the degree of diligence, care, and skill that an ordinarily prudent

person would exercise under the same or similar circumstances in a

like position.

     (3) The fund manager shall solicit investors pursuant to

section 17.

     (4) The Michigan early stage venture investment corporation

shall require the fund manager to develop procedures to evaluate

types of business and industry for investment purposes and to set

priorities as to which businesses are most likely to meet the

desired outcomes of the investment plan established under section

19 and which businesses conduct activities that are consistent with

the purposes of this act and of the fund. This evaluation shall

include, but not be limited to, the location of the firm and the

direct and indirect impact of the business on the economic

development of this state.