KRS 154.20-283: Prohibition against certain qualified investments and financial interests

-- Investment fund manager's limitations on holding management positions in

small businesses in which investment fund has invested.

(1) No qualified investments shall be made in a small business that is the "alter ego" of

the investment fund or the investment fund manager. For purposes of this

subsection, a business is an "alter ego" of an investment fund or an investment fund

manager if any of the following criteria are satisfied:

(a) Prior to an investment fund making a qualified investment in the small

business, the small business is owned in whole or in an amount greater than

twenty percent (20%) of the small business by an investor, officer, director,

partner, member, manager, trustee or employee of the investment fund or the

investment fund manager; or

(b) The small business employs on a full-time or part-time basis an investor.

(2) An investment fund manager may occupy any management position in any small

business in whic h that investment fund has made a qualified investment for the

purpose of:

(a) Filling a management position in an effort to remedy problems arising from a

lack of profitability of the small business, or from dishonesty of the persons

otherwise managing the small business; or

(b) Serving in a management position in the small business in order to add value

to the investment fund and the business by his or her experience, skills, or

relationships to help a business succeed.

(3) No officer, member, or employee of the authority shall have a direct or indirect

financial interest in any investment fund or investment fund manager.