Regulatory and Tax Reform

Economic Innovation International, Inc.

Regulatory and Tax Reform

Economic Innovation International Inc. has engaged in fundamental restructuring of commercial bank securities law and tax law as it affects private and public equity capital markets, as well as long-term, publicly traded debt markets in Alaska, Arkansas, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, Puerto Rico, Tennessee, Virginia, Washington and Wyoming.

Securities regulatory changes have been instituted by Economic Innovation in order to make it possible for investment banks, commercial banks, savings banks, S&Ls, power utilities, gas utilities, telephone utilities, corporations, partnerships and individual investors to invest in private equity instruments created by Economic Innovation in Arkansas, Florida, Kansas, Louisiana, Maine, Massachusetts, Montana, Nebraska, Nevada, North Carolina, Oklahoma, and Virginia.

Tax law changes have been instituted by Economic Innovation in order to make it possible for investment banks, commercial banks, savings banks, S&Ls, power utilities, gas utilities, telephone utilities, corporations, partnerships and individual investors to invest in private equity instruments created by Economic Innovation in Arkansas, Kansas, Louisiana, Massachusetts, North Carolina, and Oklahoma. Following is a list of the tax and regulatory reforms carried out by Economic Innovation.

Reform of the Inter- and Intra-state Banking Laws of Louisiana

Economic Innovation was engaged by the Association for Competitive Banking to develop legislation which restructured the LA banking laws.

Full intra-and inter-state banking replaced the previous constraints which prevented commercial banks from crossing parish (county) borders.

Prepared an analysis which demonstrated the constraints the old law had on economic development.

Developed state of the art commercial banking legislation which introduced fully competitive banking practices to the State.

Arkansas Bank Regulatory Reform (1985)

Economic Innovation was engaged by the Arkansas Governor to develop a Comprehensive Economic Development Plan for the State.

Implemented bank regulatory changes to free up private Arkansas capital for higher risk economic investments.

Investments included: “leeway investments”, equity in real estate, and collaborative pools of mortgages for resale in national secondary markets.

Arkansas Pension Fund Regulatory Reform (1985)

Arkansas Public Employee Retirement System and Arkansas Teacher's Retirement System changed from legal list to:

risk to allow for modern portfolio management practices and a dramatic increase in portfolio value from 1985 to present.

Indiana Bank Regulatory Reform (1986)

Economic Innovation was engaged in the mid 1980s to do a comprehensive capital markets analysis for the State of Indiana.

Analysis led to inter- and intra-state banking legislation reform and the creation of the Indiana Economic Development Council.

The Council was one of the first state strategic private/public partnerships in the nation.

Legislation enabled commercial banks to operate in other counties within Indiana.

This was in exchange for an investment in the Indiana Community Business Credit Corporation (ICBCC).

The ICBCC is a small cap mezzanine fund which finances growing businesses within the State.

Florida Public Securities or “Blue Sky” Regulatory Reform (1991)

Economic Innovation was engaged by the Governor and subsequently Enterprise Florida to assist with the implementation of public security.

“Blue Sky” regulatory reform was formed including the establishment of a Uniform Limited Offering Registration procedure and,

an Individual Investor Association to encourage individual Florida investors to make prudent investments in Florida securities.

Oklahoma Public Securities or “Blue Sky” Regulatory Reform (1987)

Economic Innovation prepared a comprehensive analysis of the Oklahoma economy for the State Legislature.

The firm drafted and implemented reforms to the Oklahoma public securities or “Blue Sky” legislation.

Increased the ability of growing Oklahoma firms to raise capital prudently in the public markets from Oklahomans and out of state investors.

Oklahoma Utilities Tax Reform (1987, 1993)

Massachusetts Insurance Company (1978, 1998)

Economic Innovation was engaged by the Governor of Massachusetts and a group of private sector leaders.

Performed a comprehensive economic analysis of Massachusetts in 1974 and propose institutional reforms.

Determined that the state tax and regulatory policies prohibited insurance companies from investing in growing small and medium sized companies.

These small and medium sized companies were essential to the economic vitality of the State.

Proposed reforms which permitted the Industry to make more than US$500 million of fiduciarily sound investments in growing small firms.

These investments have since created more than 15,000 jobs over the last 20 years.

As a result of the success of these tax and regulatory reforms, Economic Innovation was re-engaged in 1997 by the Life Insurance Association of MA.

In 1997 the firm developed new pools of $200 million now being prudently invested in disadvantaged urban and rural areas of MA.

Oklahoma Venture Capital Tax Credit (1987)

Economic Innovation was engaged by the State Legislature to design legislation which would create a $50 million stand-by tax credit.

The tax credit promoted the development of a private equity industry as a part of a broad effort to move the Oklahoma economy forward.

Oklahoma shifted from a concentration of low wage jobs dependent on natural resources to high value jobs that applied technology to those resources.

The Oklahoma Capital Investment Board (OCIB) was also created by Economic Innovation.

OCIB enabled the state to leverage a $14 million investment into a $125 million investment in 5 new nationally regarded VC partnerships in Oklahoma.