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.