84R1346 TJB/CLG-F
 
  By: Elkins H.B. No. 590
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the creation of research technology corporations by
  institutions of higher education; providing for tax exemptions;
  providing a penalty.
         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)  "Contribution" has the meaning assigned by Section
  1.002, Business Organizations Code.
               (2)  "Creating institution" means an institution of
  higher education or private or independent institution of higher
  education that creates a corporation under this chapter.
               (3)  "Institution of higher education" and "private or
  independent institution of higher education" have the meanings
  assigned by Section 61.003.
               (4)  "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 developing and commercializing one or more
  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 tax
  exemption authorized by Section 157.008.
         (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 Chapters 20 and 21, Business Organizations Code, and Title 1 of
  that 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
  provided by 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 produced or services performed by the
  corporation must be produced or performed 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 continues in
  existence as a for-profit corporation governed by Chapters 20 and
  21, Business Organizations Code, and Title 1 of that code.  A
  corporation that files a restated and amended certificate of
  formation as authorized by this subsection is not governed by the
  other provisions of this chapter, except that the corporation must
  comply with Section 157.008 to obtain a tax exemption authorized by
  that section and is subject to the penalty provided by Section
  157.009 for noncompliance.
         (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.  TAX EXEMPT STATUS OF CORPORATION. (a)  This
  section applies only to a corporation created under this chapter,
  including a corporation that files a restated and amended
  certificate of formation as authorized by Section 157.007, that:
               (1)  is engaged exclusively in developing and
  commercializing one or more technologies owned wholly or partly by
  the creating institution, including activities that are incidental
  to developing and commercializing those technologies; and
               (2)  complies with Section 157.006.
         (b)  The corporation is entitled to an exemption from ad
  valorem taxation of:
               (1)  the real and tangible personal property owned by
  the corporation that is used for a purpose described by Subsection
  (a)(1); and
               (2)  the real property owned by the corporation that
  consists of:
                     (A)  an incomplete improvement that is under
  active construction or other physical preparation to make the
  property suitable to be used for a purpose described by Subsection
  (a)(1); and
                     (B)  the land on which the incomplete improvement
  is located that will be reasonably necessary for the corporation's
  use of the improvement.
         (c)  The corporation is exempted from the franchise tax
  imposed by Chapter 171, Tax Code.
         (d)  The sale, storage, use, or other consumption of a
  taxable item directly used or consumed by the corporation is
  exempted from the sales and use taxes imposed by Chapter 151, Tax
  Code.
         (e)  This section does not limit the eligibility of the
  corporation for any other available tax benefit, including a tax
  benefit under Chapter 312 or 313, Tax Code.
         (f)  If the corporation acquires property after January 1 of
  a tax year, the corporation may receive an exemption authorized by
  Subsection (b) for the applicable portion of that tax year
  immediately on qualification for the exemption.  Sections 11.43(d)
  and 26.113, Tax Code, apply to an exemption authorized by
  Subsection (b) of this section in the same manner as those
  provisions apply to an exemption covered by Section 11.42(d).
         (g)  The corporation must maintain a complete record of all
  taxes that the corporation would have been liable for if the
  corporation had not been entitled to the exemptions authorized by
  this section.  The corporation shall submit the records to the
  comptroller without delay on request of the comptroller when
  determining the corporation's liability for any penalty assessed
  under Section 157.009.
         Sec. 157.009.  PENALTY FOR NONCOMPLIANCE WITH CORPORATE
  OPERATIONS REQUIREMENTS.  (a)  A corporation created under this
  chapter, including a corporation that files a restated and amended
  certificate of formation as authorized by Section 157.007, that
  ceases to comply with Section 157.006 is liable to the state for a
  penalty in an amount equal to any taxes, including ad valorem taxes,
  for which the corporation received an exemption under Section
  157.008 for the five calendar years preceding the year in which the
  noncompliance began.  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.
         Sec. 157.010.  CONFLICT WITH BUSINESS ORGANIZATIONS CODE.
  To the extent of any conflict between a provision of this chapter
  and a provision of the Business Organizations Code, the provision
  of this chapter controls.
         SECTION 2.  (a)  Except as provided by Subsection (b) of this
  section, this Act takes effect January 1, 2016.
         (b)  Sections 157.008(b) and (f), Education Code, as added by
  this Act, take effect January 1, 2016, but only if the
  constitutional amendment proposed by the 84th Legislature, Regular
  Session, 2015, authorizing the legislature to provide for an
  exemption from ad valorem taxation of certain property owned by
  research technology corporations created by public or private
  institutions of higher education to develop and commercialize
  technologies owned by the institutions is approved by the voters.  
  If that amendment is not approved by the voters, Sections
  157.008(b) and (f), Education Code, as added by this Act, have no
  effect.