Showing 4 posts in Miscellaneous.
A friend recently asked if the Georgia Angel Investor Tax Credit program would cover an angel investor’s investment in a start-up’s convertible promissory note. It was a good question because start-ups often raise funds through convertible notes. The short answer to his question was, “it depends.”
The Georgia Angel Investor Tax Credit program gives angel investors who are Georgia residents a tax credit for making qualified investments in Georgia start-ups. The program was amended in 2015 to cover qualified investments made in 2016, 2017 and 2018. (See Georgia Angel Investment Tax Credit (May 24, 2016))
The program allows the angel a tax credit of up to 35% for a qualified investment, capped at a credit of not more than $50,000 in any tax year, with the tax credit to be issued in the second year after the investment is made. (For example, a qualified investment made in 2015 would result in a tax credit for the 2017 tax year.) The state permits not more than $5 million in tax credits each year and start-ups need to apply for allocations of the tax credits if they have investors who want to take advantage of the program.
The Georgia Department of Revenue has issued rules to guide tax payers through the requirements of the program. (See Georgia Rule 560-7-8-.52)
To obtain a tax credit a “qualified investor” must make a “qualified investment” in a “qualified business” (tracking the definitions from the Georgia Rule). Answering the question originally posed, therefore, requires the taxpayer to walk through each of these definitions. An investment in a convertible promissory note, can be a “qualified investment” (assuming all of the other definitions are met) if the convertible promissory note satisfies the requirements of “qualified subordinated debt” (the only debt category within the definition of “qualified investment”). Qualified subordinated debt is “indebtedness that is not secured, that may or may not be convertible into common or preferred stock or other equity interest, and that is subordinated in payment to all other indebtedness of the qualified business issued or to be issued for money borrowed and no party of which has a maturity date less than five years after the date such indebtedness was purchased.”
It is this last requirement for “qualified subordinated debt” that most start-up convertible note deals may have difficulty satisfying. Most convertible notes issued by start-ups are not subordinated, but rather represent senior indebtedness that may not be subordinated. So, if a start-up wants to ensure that its convertible note offering will be eligible for the Georgia Angel Investment Tax Credit program, counsel for the start-up should carefully draft the subordination provisions of the note with a view towards the requirements of Georgia Rule 560-7-8-.52(2)(g).
Data security is a multi-part process for most organizations. Today's installment of cyber hygiene habits for 2015 reminds us that updating software is a critical step in securing our networks.
This fourth installment in our cyber hygiene series will discuss the importance of hardware upgrades in maintaining corporate data security. As with all the best practices we recommend in this series, the idea behind protection is to avoid incidents where possible, mitigate damage if they occur, and have a defensible position or "storyline" if you suffer a dispute or investigation.
For 2015, we are addressing data security and privacy by discussion of topics relating to information security and hygiene. Parts one and two covered knowledge of what laws cover your business and of what data you have in your networks. This installment covers the human side of data handling: which employees have access to your data, and why.
- Product Liability
- Data Privacy
- Data Security
- Government Investigations
- Limited Government
- FAST Act
- JOBS Act
- Public Policy
- Employment Issues
- Intellectual Property
- Social Media
- Non-Profit Organizations
- Due Process
- Political Philosophy
- Risk Avoidance
- Risk Management
- Regulation A+
- Renewable Energy Around the Web
- In-House Counsel
- Mergers and Acquisitions
- Real Estate