[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR108.160]

[Page 112-113]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
                CHAPTER I--SMALL BUSINESS ADMINISTRATION
 
PART 108_NEW MARKETS VENTURE CAPITAL (``NMVC'') PROGRAM--Table of Contents
 
              Subpart C_Qualifications for the NMVC Program
 
Sec.  108.160  Special rules for NMVC Companies formed as limited 

partnerships.

    (a) Entity General Partner. (1) A general partner which is a 
corporation, limited liability company or partnership (an ``Entity 
General Partner'')

[[Page 113]]

shall be organized under state law solely for the purpose of serving as 
the general partner of one or more NMVC companies.
    (2) SBA must approve any person who will serve as an officer, 
director, manager, or general partner of the Entity General Partner. 
This provision must be stated in an Entity General Partner's Certificate 
of Incorporation, operating agreement, limited partnership agreement or 
other similar governing instrument.
    (3) An Entity General Partner is subject to the same examination and 
reporting requirements as a NMVC Company under sections 361 and 362 of 
the Act. The restrictions and obligations imposed upon a NMVC Company by 
Sec. Sec.  108.1810, 108.30, 108.410 through 108.450, 108.470, 108.500, 
108.510, 108.585, 108.600, 108.680, 108.690 through 108.692, and 
108.1910 apply also to an Entity General Partner of a NMVC Company.
    (4) The general partner(s) of your Entity General Partner(s) will be 
considered your general partner.
    (5) If your Entity General Partner is a limited partnership, its 
limited partners may be considered your Control Person(s) if they meet 
the definition for Control Person in Sec.  108.50.
    (b) Other requirements for Partnership NMVC Companies. If you are a 
Partnership NMVC Company:
    (1) You must have a minimum duration of 10 years or two years 
following the maturity of your last-maturing Leverage security, 
whichever is longer. After 10 years, if all Leverage has been repaid or 
redeemed and all amounts due SBA, its agent, or Trustee have been paid, 
the Partnership NMVC Company may be terminated by a vote of your 
partners;
    (2) None of your general partner(s) may be removed or replaced by 
your limited partners without prior written approval of SBA;
    (3) Any transferee of, or successor in interest to, your general 
partner shall have only the rights and liabilities of a limited partner 
pending SBA's written approval of such transfer or succession; and
    (4) You must incorporate all the provisions in this paragraph (b) in 
your limited partnership agreement.
    (c) Obligations of a Control Person. All Control Persons are bound 
by the disciplinary provisions of sections 365 and 366 of the Act and by 
the conflict-of-interest rules under Sec.  108.730. The term NMVC 
Company, as used in Sec. Sec.  108.30, 108.460, and 108.680, includes 
all of the NMVC Company's Control Persons. The conditions specified in 
Sec.  108.1810 and Sec.  108.1910 apply to all general partners.
    (d) Liability of general partner for partnership debts to SBA. 
Subject to section 365 of the Act, your general partner is not liable 
solely by reason of its status as a general partner for repayment of any 
Leverage or debts you owe to SBA unless SBA, in the exercise of 
reasonable investment prudence, and with regard to your financial 
soundness, determines otherwise prior to the purchase or guaranty of 
your Leverage.
    (e) Special Leverage requirement. Before your first issuance of 
Leverage, you must furnish SBA with evidence that you qualify as a 
partnership for tax purposes, either by a ruling from the Internal 
Revenue Service or by an opinion of counsel.

                       Capitalizing a NMVC Company