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D.C. Municipal Regulations (Last Updated: September 13, 2017) |
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Title 26. INSURANCE, SECURITIES, AND BANKING |
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SubTilte 26-C. BANKING AND FINANCIAL INSTITUTONS |
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Chapter 26-C29. STATE SMALL BUSINESS CREDIT INITIATIVE |
Section 26-C2920. INNOVATION FINANCE PROGRAM
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2920.1The Innovation Finance Program shall provide capital to Eligible Recipients either (1) through a co-investment with an Innovation Finance Company into an Eligible Recipient; or (2) by investing as a Limited Partner in an Innovation Finance Company that shall then make an investment into an Eligible Recipient.
2920.2A co-investment with an Innovation Finance Company shall not exceed fifty percent (50%) of the total investment in the Eligible Recipient and no more than five hundred thousand dollars ($500,000).
2920.3The District may fully or partially subordinate its investment to the co-investment by the Innovation Finance Company.
2920.4An investment as a Limited Partner in a Limited Partnership managed by an Innovation Finance Company shall not exceed the amount allocated to the Innovation Finance Program by the U.S. Department of the Treasury, and the resulting total investment in the Eligible Recipient shall be comprised of fifty percent (50%) or less in capital from the Innovation Finance Program and no more than five hundred thousand dollars ($500,000).
2920.5The District may fully or partially subordinate its investment to the investment of the other Limited Partners in the Limited Partnership managed by the Innovation Finance Company.
2920.6Where applicable, principal and interest repayments on an investment in an Innovation Finance Company and an Eligible Recipient may be deferred until the occurrence of a liquidity event, as described in §§ 2920.7 – 2920.9.
2920.7A liquidity event shall occur in any transaction in which the Innovation Finance Company receives: cash or equity securities having a “readily determinable fair value,” as defined by the Financial Accounting Standards Board Accounting Standards Codification, as amended (“marketable securities”), in exchange for securities of the Eligible Recipient (or any securities into which the securities are converted or for which the securities are exchanged).
2920.8Any payment to an Innovation Finance Company, including dividends and payments of principal or interest, shall be considered a liquidity event.
2920.9Share exchanges and other similar transactions shall not be considered liquidity events to the extent that DISB’s interest in the Eligible Recipient is not tendered for cash or a marketable security. The liquidity horizon shall not exceed ten (10) years.
2920.10An Innovation Finance Company’s failure to liquidate its investment in an Eligible Recipient and to pay the District its pro-rata share of the initial investment and return on investment shall be included in the loan documents or limited partnership agreement between DISB and the Innovation Finance Company as an event of default. The investment documents shall set forth the remedy or penalty for the default. The remedy or penalty for a default may include, without limitation, payment of additional interest by the Innovation Finance Company to the District. Where the failure continues for more than thirty (30) days beyond the date that the payment was to be made, forfeiture or recoupment of all or a portion of the amount allowed to the Innovation Finance Company may be required pursuant to § 2922.6 or § 2922.12.