RS 2395 - Transaction of business
A.(1) A licensee providing financing assistance outside of this state shall maintain its headquarters in this state. A licensee that provides financing assistance in this state only shall maintain not less than one office in this state.
(2) Each office of a licensee shall be located in a place which is reasonably accessible to the public.
(3) A licensee shall post in a conspicuous place at each of its offices a sign which bears the corporate or limited liability company name of the licensee.
(4) A licensee shall maintain at each of its offices personnel who are competent to conduct the business of such an office.
(5) Upon thirty days' prior written notice to the commissioner, a licensee may establish, relocate, or close an office.
(6) If the licensee elects to provide financing assistance outside of this state, then regardless of the states in which a licensee provides financing assistance, the licensee shall conduct substantially all of its accounting, payment, underwriting, and other back-office operations in one or more offices located in this state. With approval of the commissioner, the requirement of this Subsection shall not apply to licensees that have provided financing assistance outside this state prior to January 1, 2003.
(7) Unless approved by the commissioner, the total amount of financing assistance provided by a licensee outside of this state shall not exceed fifty percent of the total financing assistance provided by such licensee on a cumulative basis. The limitation of this Subsection shall not apply to a licensee that has complied with both of the following:
(a) Provided financing assistance in this state in excess of one hundred million dollars. A licensee may count financing assistance provided by a licensed affiliate or licensed affiliates in this state towards the satisfaction of the requirements of this Subparagraph.
(b) Held a license for at least ten years.
B.(1) The business of a licensee shall be the business of providing financing assistance and management assistance to business firms. A licensee shall not engage in a business other than the business of providing financing assistance and management assistance to business firms.
(2) In addition to the powers and privileges provided to a licensee by this Chapter, a licensee has all powers and privileges conferred by its incorporating statute which are not inconsistent with or limited by this Chapter. The powers of a licensee include but are not limited to all of the following:
(a) To borrow money and otherwise incur indebtedness for its purposes, including issuance of bonds, debentures, notes, or other evidence of indebtedness. A licensee's indebtedness may be secured or unsecured and may involve equity features including but not limited to provisions for conversion to stock and warrants to purchase stock.
(b) To make contracts.
(c) To incur and pay necessary and incidental operating expenses.
(d) To purchase, receive, hold, lease, or otherwise acquire, or to sell, convey, mortgage, lease, pledge, or otherwise dispose of, real or personal property, together with rights and privileges that are incidental and appurtenant to these transactions of real or personal property, if the real or personal property is for the licensee's use in operating its business or if the real or personal property is acquired by the licensee from time to time in satisfaction of debts or enforcement of obligations.
(e) To make donations for charitable, educational, research, or similar purposes.
(f) To implement a reasonable and prudent policy for conserving and investing its money before the money is used to provide financing assistance to business firms or to pay the expenses of the licensee.
C.(1) A licensee may determine the form and the terms and conditions for financing assistance provided by that licensee to a business firm including but not limited to forms such as loans for the purchase of debt instruments, straight equity investments such as purchase of common stock or preferred stock, debt with equity features such as warrants to purchase stock, convertible debentures, or receipt of a percent of net income or sales, royalty-based financing, guaranteeing of debt, or leasing of property. A licensee may purchase securities of a business firm either directly or indirectly through an underwriter. A licensee may participate in the program of the Small Business Administration pursuant to Part 7(a) of the Small Business Act of Public Law 85-536, 15 U.S.C. §636(a), or any other government program for which the licensee is eligible and which has as its function the provision or facilitation of financing assistance or management assistance to business firms. If a licensee participates in a program referred to in this Subsection, the licensee shall comply with the requirements of that program.
(2) Management assistance provided by a licensee to a business firm may encompass both management or technical advice and management or technical services.
(3) Financing assistance or management assistance provided by a licensee to a business firm shall be for the business purposes of that business firm.
(4) A licensee may exercise the incidental powers that are necessary or convenient to carry on the business of, or are reasonably related to the business of, providing financing assistance and management assistance to business firms.
D.(1) With the approval of the commissioner, a licensee may form, or acquire and hold control of, a corporation or other entity which is licensed as a small business investment company under the Small Business Investment Act of 1958, Public Law 85-699, 15 U.S.C. §689.
(2) With the approval of the commissioner, a licensee may form, or acquire and hold control of, a company or other entity which is a local development company in accordance with the Small Business Investment Act of 1958, whether or not such a development company is or may become certified by the Small Business Administration under Section 504 of the Small Business Act of 1958, 15 U.S.C. §697.
E.(1) A licensee shall transact its business in a safe and sound manner and shall maintain itself in a safe and sound condition.
(2) In determining whether a licensee is transacting business in a safe and sound manner or has committed an unsafe or unsound act, the commissioner shall not consider the risk of a provision of financing assistance to a business firm, unless the commissioner determines that the risk is so great compared with the realistically expected return as to demonstrate gross mismanagement.
(3) Paragraph (2) of this Subsection does not limit the authority of the commissioner to do any of the following:
(a) Determine that a licensee's financing assistance to a single business firm or a group of affiliated business firms is in violation of Paragraph (1) or constitutes an unsafe or unsound act, if the amount of that financing assistance is unduly large in relation to the total assets or the total shareholders' equity of the licensee.
(b) Require that a licensee maintain a reserve in the amount of anticipated losses.
(c) Require that a licensee have in effect a written financing assistance policy, approved by its board of directors, including credit evaluation and other matters. The commissioner shall not require that a licensee adopt a financing assistance policy that contains standards which prevent the licensee from exercising needed flexibility in evaluating and structuring financing assistance to business firms on a deal by deal basis.
F.(1) For purposes of this Section:
(a) "Associate" means that term as defined in R.S. 51:2397(A)(1)(b).
(b) "Relative" means parent, child, sibling, spouse, father-in-law, mother-in-law, son-in-law, brother-in-law, daughter-in-law, sister-in-law, grandparent, grandchild, nephew, niece, uncle, or aunt.
(2) If a licensee provides financing assistance to a business firm or engages in another business transaction, and if that financing assistance or transaction involves a potential conflict of interest, the terms and conditions under which the licensee provides the financing assistance or engages in the transaction shall not be less favorable to the licensee than the terms and conditions that would be required by the licensee in the ordinary course of business if the transaction did not involve a potential conflict of interest. Each person who participates in the decision of the licensee relating to a transaction described in this Section and has knowledge of a potential conflict of interest involving that transaction shall take care that the potential conflict of interest is disclosed in the financing documents of the transaction or, for a business transaction not involving financing assistance, in another appropriate document.
(3) For the purpose of Paragraph (2) of this Subsection, transactions engaged in by a licensee which involve a potential conflict of interest include but are not limited to the following:
(a) Providing financing assistance to a principal shareholder or member of the licensee, to a person controlled by a principal shareholder or member of the licensee, or to a director, officer, manager, partner, relative, controlling person, or affiliate of a principal shareholder or member of the licensee.
(b) Providing financing assistance to a business firm to which a principal shareholder or member of the license is a director, officer, manager, partner, relative, controlling person, or affiliate of a principal shareholder or member of a licensee, or a person controlled by a principal shareholder or member of the licensee provides or plans to provide contemporaneous financing assistance.
(c) Providing financing assistance to a business firm which has or is expected to have a substantial business relationship with another business firm which has a director, officer, manager, or controlling person who is also a director, officer, manager, or controlling person of the licensee or who is the spouse of a director, officer, manager, or controlling person of the licensee.
(d) Providing financing assistance to a business firm if that business firm, or a director, officer, manager, or controlling person of that business firm, contemporaneously has lent or will lend money to an associate of the licensee.
(e) Providing financing assistance for the purchase of property of an associate or principal shareholder or member of the licensee.
(f) Selling or otherwise transferring any of its assets to an associate or principal shareholder or member of the licensee.
G. If the commissioner fails to issue an order approving or denying an application for a license under this Chapter, within forty-five days from receipt by the commissioner of an application which complies with R.S. 51:2389(B), the application shall be considered approved by the commissioner.
Acts 1991, No. 506, §1; Acts 2004, No. 806, §1; Acts 2014, No. 350, §1.