A2688

ASSEMBLY, No. 2688

STATE OF NEW JERSEY

INTRODUCED JANUARY 29, 1997

By Assemblymen GARRETT, CORODEMUS, Assemblywoman Heck, Assemblymen Kelly, Wolfe, Azzolina, Geist, Blee, Augustine, Arnone, T. Smith, Holzapfel, Moran, Gregg, Cottrell, Gibson, Asselta, LeFevre, Assemblywoman Crecco, Assemblymen Lance, Romano and Doria

An Act concerning export financing and amending P.L.1995, c.209.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 2 of P.L.1995, c.209 (C.34:1B-94) is amended to read as follows:

2. The Legislature finds and declares that:

a. Currently, despite the existence of banks with active international export departments, small and medium-sized businesses in New Jersey find it difficult to obtain pre-export financing and other export finance services needed to defray the costs of potentially profitable orders.

b. Although there is currently a State-sponsored export working capital program for small and medium-sized businesses and an export loan guarantee program offered in conjunction with participating banks, relatively few transactions have been approved under these programs.

c. The public interest calls for encouraging the growth of exports and small and medium-sized businesses as well as providing stimulation to the economy and to employment by the creation of an export financing company supported by both public and private funds.

d. The public funding of an export financing company shall be accomplished by the purchase of stock or an interest in the company, as the case may be, by the New Jersey Economic Development Authority and other public entities involved in international export markets, such purchases to be specifically limited as to the percentage of participation.

e. The capitalization of the export financing company would be so structured that the New Jersey Economic Development Authority and other public entities would incur minimal risk on their investment, with private investors assuming most of the risk and earning more of the profits should the new venture prove successful.

(cf: P.L.1995, c.209, s.2)

2. Section 3 of P.L.1995, c.209 (C.34:1B-95) is amended to read as follows:

3. As used in this act:

"Authority" means the New Jersey Economic Development Authority, established pursuant to section 4 of P.L.1974, c.80 (C.34:1B-4).

"Commissioner" means the Commissioner of Commerce and Economic Development.

"Department" means the Department of Commerce and Economic Development.

"Export financing company" means a private corporation or limited liability company incorporated or organized for the purpose of financing the export activities of small or medium-sized businesses.

"Limited liability company" means a company organized pursuant to the "New Jersey Limited Liability Company Act," P.L.1993, c.210 (C.42:2B-1 et seq.).

"Small or medium-sized business" means a business enterprise, which has its principal place of business in this State, is independently owned and operated as a sole proprietorship, partnership [or], corporation, or limited liability company with a level of gross income from operations defined by the authority as a small or medium-sized business.

(cf: P.L.1995, c.209, s.3)

3. Section 4 of P.L.1995, c.209 (C.34:1B-96) is amended to read as follows:

4. The authority is authorized, notwithstanding any law to the contrary, to invest such moneys from the "Economic Recovery Fund," established pursuant to section 3 of P.L.1992, c.16 (C.34:1B-7.12), or from other export or business assistance programs administered by the authority, as may be available and which the authority deems appropriate for the purposes of this act, in an export financing company, hereinafter "the company," to be incorporated or organized pursuant to the provisions of this act, which, together with those investments which may be made in the stock or interest of the company by other public entities involved in international export markets that may include, but not necessarily be limited to, the Delaware River Port Authority and the Port Authority of New York and New Jersey, shall be at a minimum amount to be determined by the Export Finance Company Advisory Council established pursuant to section 7 of this act. The moneys shall be used for the purchase of stock or an interest in the company, provided that the class of stock or interest purchased by the authority and other public entities shall be of such type and character as to require the company to repay the investment of funds from the authority and other public entities prior to the repayment of funds from private sources, but in no event shall the amount of such stock or interest purchased by the authority and other public entities exceed 49% of the total outstanding stock or total shared interest of the company. The authority is authorized in its discretion to sell or otherwise dispose of the stock or interest purchased by the authority as shall be in the interest of the authority but the authority shall sell or otherwise dispose of the stock or interest no later than three years after the date of purchase.

Nothing in this act shall be construed to preclude the company from being organized as a limited liability company or to preclude the authority and other public entities involved in international export markets from purchasing an interest in such a limited liability company provided that the interest purchased by the authority and other public entities shall not exceed 49 percent of the total shared interest of the company, and provided that the operating agreement of the company grants the authority and any other public entity the right to resign and receive a distribution, representing the fair value of the authority's or public entity's interest in the company, prior to the resignation of and distribution to any private members.

(cf: P.L.1995, c.209, s.4)

4. Section 5 of P.L.1995, c.209 (C.34:1B-97) is amended to read as follows:

5. In order to qualify as an export financing company eligible to be the subject of an investment by the authority and by the other public entities involved in international export markets, a company shall:

a. Have a board of directors or board of trustees appropriate to the form of incorporation or organization of the company consisting of: (1) the commissioner and the chairman of the authority, who shall be members ex officio; and (2) representatives of export trading companies, banking and other financial institutions, and other representatives of the private sector, who shall be selected by private stockholders or members, and who shall constitute the majority of the membership of the board.

b. Retain the services of an independent commercial auditor:

(1) to determine the extent to which funds made available to the company for its purposes have been expended in a manner that is consistent with the purposes of this act and the charter or operating agreement of the company; and

(2) to prepare and submit to the Legislature, the State Treasurer, the authority and the other public entities participating in the purchase of stock or an interest in the company, an independent certified statement annually containing the findings and determinations of such auditor.

c. In connection with the investment of authority moneys in the company pursuant to this act, solicit other forms of support, such as grants from the federal government or from other public and private sources, and make available its stock or a shared interest for purchase by private entities.

(cf: P.L.1995, c.209, s.5)

5. Section 7 of P.L.1995, c.209 (C.34:1B-99) is amended to read as follows:

7. a. There is established an Export Finance Company Advisory Council in, but not of, the Department of Commerce and Economic Development. The council shall be made up of eleven members: one shall be the Commissioner of Commerce and Economic Development, or the commissioner's designee; one shall be the Chairman of the New Jersey Economic Development Authority, or the chairman's designee; three public members shall be appointed by the Governor; three public members shall be appointed by the President of the Senate; and three public members shall be appointed by the Speaker of the General Assembly, one of whom shall be designated by the Speaker as chair of the council. The appointment of the members shall take place within 60 days of the effective date of this act. The appointee of the Speaker of the General Assembly designated as chair of the council shall convene the council as soon as is practicable following the appointment of at least six public members to the council.

b. The members of the council shall serve without compensation.

c. The council is authorized, empowered and directed to:

(1) Develop a form of organization and a plan of operation for the export financing company consistent with the purposes of this act. In so doing the council shall consider, but not be limited to, the form of organization, plan of operation and experiences of local and regional business partnerships organized jointly by the public and private sectors in the State for business development purposes.

(2) Seek out and gain commitments from persons, natural and otherwise, to be initial investors in [and], incorporators of or founding members of the export financing company.

(3) Cooperate and coordinate its efforts at gaining public and private sources of equity capital for the establishment of the company with the Department of Commerce and Economic Development.

(4) Investigate the feasibility of gaining additional public sources of equity capital for the establishment of the company from sources which may include, but need not be limited to, other departments and agencies of this State and in other states which are engaged in economic development and which seek to cooperate with the council to assist it in the accomplishment of its mission.

(5) Continue to interact with and to monitor the export finance company, as well as provide advisory input, during and subsequent to its creation and expansion.

d. Within one year of the effective date of this act, the council shall provide the Governor and the Legislature with information concerning the results of its efforts under subsection c. of this section, the status of the export financing company and the implementation of the goals of this act.

e. Nothing in this act shall prohibit public members of the council from being among those who serve on the export finance company board of directors or board of trustees, as appropriate to its organizational charter or operating agreement.

(cf: P.L.1995, c.209, s.7)

6. This act shall take effect immediately.

STATEMENT

The Export Finance Company Advisory Council (hereinafter, "council"), which was formed pursuant to the "Export Financing Opportunities Act," P.L.1995, c.209, to develop a form of organization and a plan of operation for the proposed Export Finance Company (hereinafter, "company"), has been meeting regularly since February 1996. The council recently recommended that the "Export Financing Opportunities Act" be amended to clarify that the council should continue to monitor and provide advisory input to the company when it is created and to permit council members to serve on the company's Board of Directors or Board of Trustees, as the case may be.

The bill also allows the company to be organized as a limited liability corporation (hereinafter, "LLC"), which may have certain operation and tax advantages. The bill also provides the authorization to the New Jersey Economic Development Authority or other public entity to purchase interest in such an LLC as long as the interest purchased does not exceed 49 percent of the total shared interest of the company, and provided that the operating agreement of the LLC permits the authority or other public entity to resign and receive a distribution from the company before any private sector members.

Allows export financing company to be organized as a limited liability corporation.