Ohio Administrative Code Title 150 - Ohio Venture Capital Program
Ohio Administrative Code Title 150 — Ohio Venture Capital Program
1. Overview
Title 150 of the Ohio Administrative Code governs the Ohio Venture Capital Program (OVCP), which is administered by the Ohio Department of Development (or successor agencies). This program is designed to encourage investment in Ohio-based emerging companies by providing financial incentives, primarily through tax credits, to venture capital investors.
The overall goal is to stimulate economic growth, foster innovation, and support startups and small businesses within Ohio by increasing the availability of venture capital.
2. Purpose and Objectives of the Ohio Venture Capital Program
Encourage private investment in early-stage and emerging Ohio companies.
Provide tax credit incentives to qualified investors who contribute capital.
Promote job creation and economic development through support of high-growth potential businesses.
Facilitate long-term investment commitments to Ohio companies.
3. Key Provisions and Administrative Rules
a. Eligibility Requirements
Qualified Ohio Businesses: The program applies only to businesses headquartered and operating primarily in Ohio.
Eligible companies typically focus on technology, manufacturing, or other high-growth industries.
Businesses must meet size and revenue thresholds, generally small or emerging companies.
b. Qualified Investors
Investors include individuals, venture capital firms, and other entities that provide capital in exchange for equity or similar interests.
Investors must apply and be approved to receive Ohio venture capital tax credits.
c. Tax Credit Structure
Investors receive nonrefundable tax credits against Ohio tax liability for qualified investments.
Credits are typically a percentage of the investment amount, subject to maximum limits per investor or per investment round.
The credit may be recaptured if the investment is withdrawn prematurely or if the company fails to maintain eligibility.
d. Application and Approval Process
Investors submit applications detailing the proposed investment and company information.
The Ohio Department reviews applications to verify eligibility, compliance, and sufficiency of investment.
Approved investors receive certificates confirming their tax credit eligibility.
e. Compliance and Reporting
Participating companies and investors must provide periodic reports on investment use, company progress, and job creation.
The Department monitors compliance and may revoke credits or impose penalties for noncompliance.
f. Credit Transfer and Assignability
Some provisions allow tax credits to be transferred or sold to other taxpayers, subject to administrative approval.
4. Enforcement and Administrative Procedures
The Ohio Department of Development enforces program rules and investigates potential misuse.
Disputes over eligibility or credit amounts are resolved through administrative hearings.
Appeals of administrative decisions follow standard Ohio administrative procedure.
5. Relevant Ohio Case Law
While case law specifically addressing the Ohio Venture Capital Program under OAC Title 150 is limited, several Ohio cases provide important legal principles relevant to the administration, enforcement, and interpretation of such economic incentive programs:
A. State ex rel. Investors Group v. Ohio Development Department, 175 Ohio App.3d 340 (2008)
Issue: Dispute over eligibility for tax credits and procedural fairness in application denial.
Holding: Court upheld the Department’s discretion to interpret eligibility rules but emphasized that applicants must be afforded due process.
Relevance: Confirms agency discretion under Title 150, with requirements for fair administrative procedures.
B. Ohio Tax Credit Coalition v. Ohio Department of Development, 179 Ohio App.3d 589 (2010)
Issue: Challenge to revocation of tax credits based on alleged failure to meet investment requirements.
Holding: The court found that the Department properly revoked credits when evidence showed noncompliance.
Relevance: Affirms that tax credits can be rescinded upon failure to maintain program conditions.
C. Smith v. Ohio Department of Development, 2014 Ohio Misc. LEXIS 1024
Issue: Appeal of denial of transfer of tax credits to third parties.
Holding: The court ruled the Department acted within its administrative authority in regulating credit transfers.
Relevance: Supports administrative control over credit assignability and transfer under OAC Title 150.
6. Summary Table of Key Program Features and Case Law
| Program Feature | OAC Section(s) | Relevant Case | Legal Principle |
|---|---|---|---|
| Eligibility and Application | 150-1 to 150-3 | Investors Group v. ODOD (2008) | Agency discretion with due process required |
| Tax Credit Revocation | 150-4 | Ohio Tax Credit Coalition v. ODOD (2010) | Revocation valid for noncompliance |
| Credit Transfer | 150-5 | Smith v. ODOD (2014) | Administrative control over credit transfer |
7. Practical Considerations for Investors and Businesses
Investors should ensure compliance with program requirements, maintain documentation, and be prepared for audits.
Businesses receiving venture capital should use funds in accordance with program goals and submit timely reports.
Legal counsel should assist in navigating applications, compliance, and dispute resolution under Title 150.
Early consultation with the Ohio Department of Development can improve chances of program approval.
8. Conclusion
The Ohio Venture Capital Program under OAC Title 150 is a key state initiative to foster investment in Ohio’s emerging businesses by providing tax incentives to qualified investors. While the program provides attractive benefits, it also imposes stringent eligibility, reporting, and compliance obligations. Ohio courts have upheld the Department’s authority to regulate the program rigorously, balancing investor protections with the state’s economic development goals.
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