Prohibited activities and interests

Prohibited activities and interests. For qualified equity investments made on or after January 1, 2017, no qualified active low-income community business that receives a qualified low-income community investment from a qualified community development entity that issues qualified equity investments under this Act, or any affiliates of such a qualified active low-income community business, may directly or indirectly (i) own or have the right to acquire an ownership interest in a qualified community development entity or member or affiliate of a qualified community development entity, including, but not limited to, a holder of a qualified equity investment issued by the qualified community development entity or (ii) loan to or invest in a qualified community development entity or member or affiliate of a qualified community development entity, including, but not limited to, a holder of a qualified equity investment issued by a qualified community development entity, where the proceeds of such loan or investment are directly or indirectly used to fund or refinance the purchase of a qualified equity investment under this Act. For purposes of this Section, "affiliate" means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with another entity. For purposes of this Section, an entity is "controlled by" another entity if the controlling person holds, directly or indirectly, the majority voting or ownership interest in the controlled person or has control over the day-to-day operations of the controlled person by contract or law, provided that a qualified community development entity shall not be considered an affiliate of a qualified active low-income community business solely as a result of its qualified low-income community investment in such business. This Section is not intended to affect ownership or affiliate interests that arise following the sixth anniversary of the issuance of the qualified equity investment. (Source: P.A. 100-408, eff. 8-25-17.)