Judges: WRITTEN BY: Robert M. Spire, Attorney General LeRoy W. Sievers, Assistant Attorney General
Filed Date: 11/1/1989
Status: Precedential
Modified Date: 7/5/2016
REQUESTED BY: Director of Banking and Finance for the State of Nebraska, Cynthia H. Milligan
Can an entity incorporate under the Nebraska Business Development Corporation Act (Neb.Rev.Stat. §
Is the Research and Development Authority established by the Research and Development Authority Act (Neb.Rev.Stat. §
No.
No.
The Nebraska Business Development Corporation Act includes sections
Neb.Rev.Stat. §
This section clearly evidences that the Legislature intended that there be at least three, or any larger multiple of three, directors for each such corporation. Consequently, it follows that because two-thirds of the number of positions on the board of directors must be filled by members, it would not be possible for such corporations to incorporate without having members.
Neb.Rev.Stat. §
21-2102 (2) provides financial institution shall mean any banking institution, insurance company or related corporation, savings and loan association, co-partnership, credit union, foundation, trust, licensee under the Small Business Investment Act of 1958, and other institutions engaged in lending or investing funds, authorized to do business in the State of Nebraska, including the Small Business Administration, an agency of the United States Government.
The act further provides that "member shall mean any financial institution which shall undertake to lend money to a development corporation upon its call in accordance with the provisions of section
As quoted previously, the purposes of a development corporation, as set forth in §
The Legislative history of the Research and Development Authority Act contains testimony regarding the act when it was considered by the Banking Commerce and Insurance committee on January 27, 1986. The act, then LB 850, was introduced by Senator Nichol on behalf of the governor. The then governor testified before the committee "It's a quasigovernment board in fact See §
Additionally, on March 12, 1986, LB 850 came up for consideration upon the floor of the Legislature. At that time Senator Moorehead, a sponsor of the bill, stated that
"It is a three-step innovation process. . . . It begins with basic research. . . . The second phase of this then is the development and incubation of that research into a product or a process which would be marketed, manufactured, if you will, whatever the market-driven analysis is of it. The third phase then is the commercialization stage, the transfer of that research and development incubation into a viable business."
(Legislative Floor Debate, March 12, 1986, p. 9827) Later Senator Moorehead testified ". . . it will be up to the authority to decide where best those strengths can be capitalized on for the State of Nebraska." (Legislative Floor Debate, March 12, 1986, p. 9832)
This Legislative history is cited to demonstrate that a principal purpose of the research and development authority, as evidenced by the testimony of the governor on whose behalf the Legislation was introduced and by the bill's principal proponent, is that the authority is to select those specific projects which merit financial backing from research and development to commercialization. If the research and development authority were a member of a business development corporation, it would constitute at most one-third of the votes on the board of directors of that corporation. While that corporation would then in turn loan money to businesses in Nebraska, there would be no guarantee that the businesses receiving the loans would be those that the Legislature intended to receive financial assistance through the research and development authority act. There would be no way that the authority could insure that its funds would be used only by those projects that it had identified as deriving from successful research and needing seed capital to become a success commercial enterprise.
To conclude that the research and development authority constitutes a "financial institution" for purposes of Neb.Rev.Stat. §
Sincerely,
Robert M. Spire Attorney General
LeRoy W. Sievers Assistant Attorney General