IVCA's Current Legislative Issues
Second Illinois Technology Development Account Proposed with the potential for $100-$150 million in new venture capital investments
Building on the success of the Illinois Technology Development Account (TDA I), established by legislation in 2003, new legislation has been introduced to create a second fund (TDA II).
If approved by the Legislature, this fund will provide much-needed venture capital to the high technology sector in Illinois by:
- Allowing up to 2% of the Treasurer’s investment portfolio to be invested in venture capital funds (up from 1% in TDA I); and
- Establishing a new public/private partnership with capital from private institutional investors being invested side-by-side with the Treasurer’s capital.
A strong supporter of TDA I, IVCA endorses TDA II and is actively working to help enact authorizing legislation.
Illinois Pension Ethics Reform
Illinois pension ethics reform legislation quickly moved through the General Assembly the last few days of March 2009 and was signed by the Governor within 24 hours. Public Act 96-0006 provides significant reforms to how Illinois pension funds select investment consultants and advisors among other provisions. IVCA is generally supportive of the new law but is concerned about one key provision affecting fund-of-funds…read more..
Illinois PPRT Increase and Repeal
On July 15 2009, the General Assembly and the Governor signed a bill that would among many other provisions repeal the ability of a partnership or LLC filing a tax return in Illinois from deducting reasonable compensation paid to partners for services in computing the PPRT (Personal Property Replacement Tax), unless that amount is actually paid out as a guaranteed payment for services.
Following intense opposition from the business community, the General Assembly repealed the PPRT change during the veto session in October and the Governor signed the bill into law on December 16th .
For more information... click here
Are private equity and venture funds with Illinois public pension funds as LPs covered under the new ethics requirements?
Illinois Public Act 95-971, which became effective January 1, 2009, imposes certain registration and notification requirements and campaign contribution prohibitions. The Governor's Executive Order 3, which also became effective January 1, 2009, imposed additional campaign contribution prohibitions.
On April 3, 2009, Governor Quinn rescinded Executive Order 3 by issuing Executive Order 9. The new Executive Order noted the uncertainty and confusion regarding the scope of Executive Order 3 and its relationship to Public Act 95-971 and pending campaign finance and procurement reforms, concluding that rescinding the earlier Order was appropriate.
On July 15 2009, the General Assembly and the Governor signed a bill that would among many other provisions repeal the ability of a partnership or LLC filing a tax return in Illinois from deducting reasonable compensation paid to partners for services in computing the PPRT (Personal Property Replacement Tax), unless that amount is actually paid out as a guaranteed payment for services.
Following intense opposition from the business community, the General Assembly repealed the PPRT change during the veto session in October and the Governor signed the bill into law on December 16th .
For more information... click here
Although there was initial concern that a new 2008 law and Executive Order addressing Illinois' “pay-to-play” culture may cover private equity and venture funds which accept investments from the state pension plans, after careful review, it is the consensus among several prominent private equity attorneys that as a general matter private equity and venture funds with Illinois pension funds as LPs are likely not subject to the act or the Executive Order solely because of the investments made by the public pension funds.
From a practical perspective, however, it may be advisable to comply with the political contributions ban to executive officeholders (Governor, Lt. Governor, Treasurer, Attorney General and Comptroller) if one has or will pursue contracts influenced by that office. The law covers Illinois public pension plans and designates the Governor as the official responsible for awarding contracts in this area. Many believe this would be the most prudent course of action given the considerable risks associated with making these political contributions while receiving public investments.
