83R17064 JSA-F

By: Elkins, N. Gonzalez of El Paso H.B. No. 2780

Substitute the following for H.B. No. 2780:

By: Elkins C.S.H.B. No. 2780

A BILL TO BE ENTITLED

AN ACT

relating to the establishment of research technology corporations by institutions of higher education; providing for tax exemptions.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle H, Title 3, Education Code, is amended by adding Chapter 157 to read as follows:

CHAPTER 157. UNIVERSITY RESEARCH TECHNOLOGY CORPORATIONS

Sec. 157.001. PURPOSE AND FINDINGS. The legislature finds that the development and commercialization of technology by public and private institutions of higher education are critical components of the educational and research missions of those institutions and key contributors to the economic development and well-being of this state. The activities authorized by this chapter directly support those important public purposes.

Sec. 157.002. DEFINITIONS. In this chapter:

(1) "Creating institution" means an institution of higher education or private or independent institution of higher education that creates a corporation under this chapter.

(2) "Institution of higher education" and "private or independent institution of higher education" have the meanings assigned by Section 61.003.

(3) "Technology" means the application of scientific knowledge for practical purposes and includes inventions, discoveries, trade secrets, copyrighted materials, tools, machines, materials, processes to do work, processes to produce goods, processes to perform services, processes to carry out other useful activities, trademarks, and computer software.

Sec. 157.003. CREATION OF CORPORATION. (a) An institution of higher education or private or independent institution of higher education may create a special-purpose corporation for the exclusive purpose of supporting development and commercialization of technologies owned wholly or partly by the institution. A corporation created under this chapter that engages in other purposes that are not incidental to that authorized purpose is not entitled to the benefits of this chapter, including any special tax treatment.

(b) The certificate of formation of a corporation created under this chapter must state that the corporation is governed by this chapter and state the name and purposes of the corporation and other information required by law. Except as otherwise provided by this chapter, a corporation created under this chapter is governed by Chapter 21, Business Organizations Code.

Sec. 157.004. MANAGEMENT OF CORPORATION; RIGHTS OF CREATING INSTITUTION. (a) The creating institution shall name the persons constituting the initial board of directors of the corporation. Directors other than the initial directors shall be determined as otherwise provided by this chapter and Chapter 21, Business Organizations Code.

(b) The creating institution must at all times be a shareholder in the corporation. The creating institution shall be issued shares in the corporation when the corporation is created as agreed on by the organizers of the corporation according to any contribution of the institution.

(c) The creating institution may be issued shares in the corporation in exchange for the contribution of rights in the technology of the institution or of other contractual obligations, as agreed on by the board of directors.

Sec. 157.005. TECHNOLOGY LICENSING. The creating institution may license to the corporation any technology owned by the institution.

Sec. 157.006. REQUIRED OPERATIONS IN TEXAS. The principal offices of the corporation must be located in this state and the majority of any goods or services produced by the corporation must be produced in this state.

Sec. 157.007. DURATION. (a) A corporation created under this chapter is limited in duration to 15 years. At the expiration of that period, the corporation may file a restated and amended certificate of formation under which the corporation becomes a for-profit corporation governed by Chapter 21, Business Organizations Code.

(b) Subsection (a) does not limit the time or manner in which the corporation may be terminated as otherwise provided by law.

Sec. 157.008. RESEARCH AND DEVELOPMENT AUTHORITY. (a) The creating institution may establish a research and development authority to act on behalf of the institution to support the corporation. The creating institution shall appoint a director or board of directors to manage the authority on the institution's behalf and may adopt any procedures necessary for the administration of the authority.

(b) An authority established under this section by an institution of higher education is an instrumentality of this state and of the creating institution. An authority established under this section by a private or independent institution of higher education shall be organized as a nonprofit organization and is considered to be acting for educational and charitable purposes.

(c) An authority may acquire, own, hold title to, lease, or operate real property and facilities. The corporation may transfer real property, facilities, or other assets of the corporation to the authority for any consideration to which the corporation agrees, including:

(1) in exchange for a license, right, or other interest in any technology of the creating institution;

(2) a charge against the creating institution's share of any anticipated future earnings or increase in capital; or

(3) other consideration, including a contribution of research or other services to the corporation.

(d) The corporation by lease or other agreement with the authority may conduct any activities of the corporation on real property or facilities owned by the authority.

(e) The real property and facilities of an authority, including those used by the corporation for purposes of research, development, or other commercialization of technology owned by an institution of higher education, are considered to be used for public, educational, and charitable purposes and are exempt from ad valorem taxation by any taxing unit as long as the property and facilities are used for those purposes or are under active construction or improvement to make the property and facilities suitable to be used for those purposes.

Sec. 157.009. TAX EXEMPT STATUS OF CORPORATION. (a) A corporation created under this chapter is exempt from taxation under Chapter 171, Tax Code.

(b) The corporation is exempt from other taxation by this state or a political subdivision of this state to the same extent that the creating institution is exempt from that taxation.

(c) This section does not limit the eligibility of the corporation for any other available tax benefit, including under Chapter 312 or 313, Tax Code.

Sec. 157.010. SANCTIONS FOR RELOCATION. (a) If a corporation created under this chapter relocates its operations so that the corporation does not remain in compliance with Section 157.006 regarding the location of its principal offices or the majority of its production activities, the corporation is liable to this state for a penalty in an amount equal to any taxes, including property taxes, for which the corporation received an exemption under Section 157.009, or for which an authority received an exemption under Section 157.008 in connection with the activities of the corporation, for the five calendar years preceding the year of relocation. The comptroller shall determine the corporation's liability for the penalty and assess the amount owed.

(b) A penalty assessed under this section is due on the date designated by the comptroller, not later than the 90th day after the date assessed, and shall be collected in the same manner as a state tax. A lien exists on any property of the corporation to secure the payment of any amount assessed under this section. The comptroller by rule shall establish the methods of payment and shall adopt other rules necessary to administer and enforce this section.

(c) Amounts received under this section shall be deposited in the state treasury to the credit of the general revenue fund.

SECTION 2. This Act takes effect September 1, 2013.