TITLE 5

Banking

Other Businesses Under Jurisdiction of State Banking Department

CHAPTER 33. BUSINESS AND INDUSTRIAL DEVELOPMENT CORPORATIONS

Subchapter I. General Provisions


This chapter shall be known and may be cited as the "Delaware Bidco Act."

66 Del. Laws, c. 344, § 1.;

(a) It is determined and declared as a matter of legislative finding that:

(1) The availability of financial and management assistance are important resources to small businesses to locate, remain and expand in the State, which, in time, will result in increased employment opportunities in the State.

(2) There is need for financial and management resource alternatives to small businesses in the State due to lack of bank financing in situations, including, but not limited to, start-ups, under-collateralization, management problems and above-average risk projects.

(3) Many small businesses, although in a growth mode, do not meet the investment criteria of venture capital firms.

(4) In order to increase employment opportunities and commercial transactions in the State, there is a need to encourage the development of resources directed at small businesses, which will help such businesses locate, remain and expand in the State.

(b) It is further determined and declared that the purposes of this chapter shall be to:

(1) Promote economic development by encouraging the formation of private financial institutions known as Bidcos to help meet the financing assistance and management assistance needs of growth-oriented small businesses in the State; and

(2) Provide for the licensing and regulation of Bidcos to prevent fraud, conflict of interest and mismanagement, in order to encourage:

a. Private equity investments in Bidcos; and

b. Pension funds, insurance companies, foundations, utilities and other institutions to lend funds to Bidcos.

66 Del. Laws, c. 344, § 1.;

For the purposes of this chapter, unless otherwise specifically defined, or unless another intention clearly appears or unless the context requires a different meaning:

(1) "Affiliate" means, if used with respect to a specified person other than a natural person, a person controlling or controlled by such specified person, or a person controlled by a person who also controls such specified person.

(2) "Applicant" means a Delaware corporation that has submitted an application for a license under this chapter.

(3) "Bidco" means a business and industrial development corporation licensed under this chapter.

(4) "Business firm" means a person that transacts business on a regular and continual basis, or that proposes to transact business on a regular and continual basis.

(5) "Commissioner" means the Bank Commissioner of the State.

(6) "Control" means, if used with respect to a specified person, the power to direct or cause the direction of, directly or indirectly through 1 or more intermediaries, the management and policies of such specified person, whether through the ownership of voting securities, by contract, other than a commercial contract for goods or nonmanagement services or otherwise. A natural person shall not be considered to control another person solely on account of being a director, officer or employee of such other person.

(7) "Controlling person" means, if used with respect to a specified person, a person who controls such specified person, directly or indirectly through 1 or more intermediaries.

(8) "Corporate name" means the name of a corporation as set forth in the certificate of incorporation of such corporation.

(9) "Delaware corporation" means a corporation, whether for profit or nonprofit, incorporated under the General Corporation Law of Delaware.

(10) "Insolvent" means a licensee that ceases to pay its debts in the ordinary course of business, that cannot pay its debts as they become due or whose liabilities exceed its assets.

(11) "Interests of a licensee" includes the interests of shareholders of the licensee.

(12) "License" means a license issued under this chapter authorizing a Delaware corporation to transact business as a Bidco.

(13) "Licensee" means a Delaware corporation which is licensed under this chapter.

(14) "Officer" means:

a. If used with respect to a corporation, a person appointed or designated as an officer of such corporation by or pursuant to applicable law or the certificate of incorporation or bylaws of such corporation, or a person who performs with respect to such corporation functions usually performed by an officer of a corporation; and

b. If used with respect to a specified person other than a natural person or a corporation, a person who performs with respect to such specified person functions usually performed by an officer of a corporation with respect to such corporation.

(15) "Order" includes an approval, authorization, consent, exemption, denial, prohibition or other official act taken by the Commissioner.

(16) "Person" includes an individual, proprietorship, joint venture, partnership, statutory trust, trust, business trust, syndicate, association, joint stock company, corporation, cooperative, government, agency of a government or any other entity or organization. If used with respect to acquiring control of or controlling a specified person, "person" includes a combination of 2 or more persons acting in concert.

(17) "Principal shareholder" means a person that owns, directly or indirectly, of record or beneficially, securities representing 10 percent or more of the outstanding voting securities of a corporation.

(18) "State" means the State of Delaware.

(19) "State Administrative Procedures Act" refers to Chapter 101 of Title 29.

(20) "Subject person" means a controlling person, subsidiary or affiliate of a licensee, a director, officer or employee of a licensee or of a controlling person, subsidiary or affiliate of a licensee or any other person who participates in the conduct of the business of a licensee.

(21) "Subsidiary" means, if used with respect to a licensee, a company or business firm which the licensee holds control of as permitted by § 3323(a)(2), (3), (4) or (5) of this title.

(22) "This chapter" includes any order issued or rule promulgated under this chapter.

66 Del. Laws, c. 344, § 1; 73 Del. Laws, c. 329, § 4.;

A corporation licensed under and pursuant to this chapter shall be known as a Bidco, shall be subject to regulation by the Commissioner and shall be deemed subject to the General Corporation Law of Delaware to the extent that such law is not inconsistent with the express provisions of this chapter.

66 Del. Laws, c. 344, § 1.;

Each corporation licensed under this chapter shall use the word "Bidco" in its corporate name.

66 Del. Laws, c. 344, § 1.;

(a) The Commissioner shall administer this chapter and shall have supervision responsibility for all Bidcos incorporated under the laws of this State, and shall secure the execution of all laws relative to Bidcos.

(b) The Commissioner shall issue orders and promulgate rules and regulations that are deemed necessary or appropriate to execute, enforce and effectuate the purposes of this chapter.

(c) Whenever the Commissioner issues an order or license under this chapter, the Commissioner may impose conditions that are deemed necessary or appropriate to effectuate the purposes of this chapter.

(d) Every final order, decision or license action of the Commissioner under this chapter is subject to administrative and judicial review in accordance with law.

66 Del. Laws, c. 344, § 1.;

The Commissioner shall establish a schedule of fees, which the Commissioner determines to be reasonable and necessary to effectuate the purposes of this chapter, in connection with the licensing, administration and supervision of Bidcos, and such schedule shall be subject to amendment by the Commissioner from time to time.

66 Del. Laws, c. 344, § 1.;

This chapter shall be liberally construed to accomplish its purposes.

66 Del. Laws, c. 344, § 1.;