KRS 154.20-234: Angel Investor Program qualification requirements. (Effective

July 15, 2026)

(1) The requirements for small businesses, investors, and investments to be qualified

for participation in the Angel Investor Program are as follows:

(a) To be certified as a qualified small business, the business shall demonstrate to

the authority that it is an entity which, at the time the small business requests

certification:

1. Has a net worth of ten million dollars ($10,000,000) or less or net

income a fter federal income taxes for each of the two (2) preceding

fiscal years of three million dollars ($3,000,000) or less;

2. Is actively and principally engaged in a qualified activity within the

Commonwealth, or will be actively and principally engaged in a

qualified activity within the Commonwealth after the receipt of a

qualified investment by a qualified investor;

3. Has no more than one hundred (100) full-time employees;

4. Has more than fifty percent (50%) of its assets, operations, and

employees located in the Commonwealth; and

5. Has at no time received an aggregate amount of qualified investments

that has allowed qualified investors to receive more than one million

dollars ($1,000,000) in angel investor credits;

(b) To be certified as a qualified investor, an individual investor shall demonstrate

to the authority that he or she:

1. Is an individual natural person who may utilize a single -member limited

liability company to make the investment as long as the individual

natural person is the owner and the limited liability company is a

disregarded entity;

2. Qualifies as an accredited investor pursuant to Regulation D of the

United States Securities and Exchange Commission, 17 C.F.R. sec.

230.501, in effect as of the date the individual investor requests

certification;

3. Does not hold in excess of twenty percent (20%) ownership interes t in,

and is not employed by, the qualified small business prior to making the

qualified investment in that qualified small business;

4. Is not closely related to an individual who holds in excess of twenty

percent (20%) ownership interest in, or who is em ployed by, the

qualified small business prior to making the qualified investment in that

qualified small business. For purposes of this subparagraph, "closely

related" means any of the following in relation to the owner or owners

or spouse of the owner or owners:

a. Parents or grandparents;

b. Children or their spouses; or

c. Siblings or their spouses; and

5. Seeks a financial return from the investment made in the qualified small

business;

(c) To be certified as a qualified investment, the investment shall:

1. Be a cash investment of at least ten thousand dollars ($10,000), in a

qualified small business made:

a. Directly by a qualified investor; or

b. Indirectly through a pass -through entity formed for the sole

purpose of making one (1) or more investments in a single,

qualified small business and treated as a pass -through entity for

federal income tax purposes;

2. If made through a pass -through entity, the amount eligible for the tax

credit shall be limited to that individual's pro rata share of the capital

contributed to the entity that is ultimately invested in the qualified small

business; and

3. Be offered and executed in compliance with applicable state and federal

securities laws and regulations; and

(d) A pass-through entity utilized under paragraph ( c) of this subsection shall not

make qualified investments in more than one (1) company.

(2) In consideration for the qualified investment, the qualified investor shall receive an

equity interest, or a near equity interest, such as a simple agreement for f uture

equity, or "SAFE agreement," or a convertible debt instrument in the qualified

small business.

(3) The authority may establish additional requirements and guidelines for the efficient

implementation and administration of the Kentucky Angel Investment Act and to

carry out its purposes.