Business Development Corporations

C.R.S. tit. 7, art. 48

in effect

C.R.S. § 7-48-101 Short title

7-48-101. Short title. This article shall be known and may be cited as the "Colorado Business Development Corporation Act".

7-48-102. Definitions. As used in this article, unless the context otherwise requires: (1) "Board of directors" means the board of directors of a corporation created under this article. (2) "Corporation" means a Colorado business development corporation created under the provisions of this article. (3) "Financial institution" means any bank, trust company, savings and loan association, public or private pension or retirement fund, insurance company or related corporation, partnership, foundation, or other institution engaged in lending or investing funds. (4) "Loan limit" for any member means the maximum amount permitted to be outstanding at one time on loans made by such member to a corporation as determined under the provisions of this article. (5) "Member" means any financial institution which undertakes to lend money to a corporation created under this article, upon its call and in accordance with the provisions of this article.

C.R.S. § 7-48-103 Incorporation - applicability of "Colorado Business Corporation Act"

7-48-103. Incorporation - applicability of "Colorado Business Corporation Act". A business development corporation may be incorporated in this state pursuant to the provisions of article 102 of this title, and all the provisions of the "Colorado Business Corporation Act", articles 101 to 117 of this title, not in conflict with or inconsistent with the provisions of this article shall apply to such corporation except as otherwise provided in this article. The purpose clause of the articles of incorporation shall recite that the purposes for which the corporation is formed are to stimulate and promote the business prosperity and economic welfare of this state and its citizens; to encourage and assist, through financial aid, advice, technical assistance, and other appropriate means, the location of new businesses and industries and the rehabilitation, improvement, and expansion of existing businesses and industries throughout the state; and, in furtherance of these purposes, to cooperate with the division of commerce and development of this state and with other organizations, public and private.

C.R.S. § 7-48-104 Domestic entity name

7-48-104. Domestic entity name. In addition to complying with part 6 of article 90 of this title, providing for entity names, each corporation created under this article shall have as part of its domestic entity name the words "Business Development".

C.R.S. § 7-48-105 Approval of governor

7-48-105. Approval of governor. The articles of incorporation shall not be filed by the secretary of state unless approved by the governor in writing. This approval shall not be given by the governor until the governor first has sought the advice of the division of commerce and development.

C.R.S. § 7-48-106 Restrictions on powers

7-48-106. Restrictions on powers. (1) The powers of a corporation shall be subject to the following restrictions: (a) It shall not approve any application for a loan until the applicant shall have shown that the applicant has applied to a financial institution that could lawfully lend the amount of money sought and that the financial institution has refused in writing to make the requested loan. (b) It shall not incur any secondary liability for the debts of others but may assume primary liability therefor. (c) It shall not give security for any loan made to it unless all loans to it are secured ratably in proportion to unpaid balances due.

C.R.S. § 7-48-107 Acquisition or disposition of securities and capital stock

7-48-107. Acquisition or disposition of securities and capital stock. Notwithstanding any other provision of law, any person, corporation, public utility, financial institution, or labor union may acquire, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of any bonds, notes, debentures, securities, or other evidences of indebtedness or the shares of capital stock of a corporation created under this article; but the amount of capital stock which may be acquired by any member of such corporation shall not exceed ten percent of the loan limit of that member.

C.R.S. § 7-48-108 Membership - loans from members

7-48-108. Membership - loans from members. (1) Any financial institution is authorized to become a member of a corporation by making application to the board of directors on such form and in such manner as the board of directors may require, and membership shall become effective upon acceptance of the application by said board. Membership shall be for the duration of the corporation; but upon written notice given to the corporation two years in advance, a member may withdraw from membership at the expiration date of the notice and shall not thereafter be obligated to make any loans to the corporation. (2) Every member shall make loans to the corporation as and when called upon by it to do so, upon such terms and conditions as approved from time to time by the board of directors, subject to the following conditions: (a) All loans shall be evidenced by negotiable instruments of the corporation and shall bear interest at a rate of not less than one-half of one percent in excess of the rate of interest determined by the board of directors to be the prime rate on unsecured commercial loans as of the date of the loan. (b) All loan limits shall be established at the thousand dollar amount nearest to the amount computed in accordance with the provisions of this section. (c) No loan to a development corporation shall be made if immediately thereafter the total amount of the obligations of the said corporation would exceed ten times the amount then paid in on its outstanding capital stock. (d) (I) The total amount outstanding at any one time on loans to a development corporation made by any member must not exceed the lesser of twenty percent of the total amount then outstanding on loans to such development corporation by all members thereof, two hundred fifty thousand dollars, or the following limit to be determined as of the time a member becomes a member on the basis of figures contained in the most recent year-end statement prior to its application for membership: (A) Three percent of the capital and permanent surplus of banks and trust companies; (B) Three percent of the total reserve and surplus accounts of a savings and loan association; (C) One percent of the capital and unassigned surplus of stock insurance companies, except fire insurance companies; (D) One percent of the unassigned surplus of mutual insurance companies, except fire insurance companies; (E) One-tenth of one percent of the assets of fire insurance companies; and (F) Comparable limits for other financial institutions as established by the board of directors of the development corporation. (II) All loan limits shall be recomputed as of the first day of January of each even-numbered year, but no member's loan limit shall be increased as the result of such recomputation without the consent of the member. (e) Each call for loans made by the corporation shall be prorated among the members of the corporation in substantially the same proportion that the adjusted loan limit of each member bears to the aggregate of the adjusted loan limits of all members. The "adjusted loan limit" of a member shall be the amount of such member's loan limit reduced by the balance of outstanding loans made by the member to the corporation and the investment of such member in capital stock of the corporation at the time of the call. (f) A member of a corporation created under this article shall not be a member of more than one such corporation.

C.R.S. § 7-48-109 Capital stock - stockholders and members

7-48-109. Capital stock - stockholders and members. (1) Each share of stock of a corporation shall have a par value of one hundred dollars and shall be issued for cash. No preferred stock shall be issued. At least one hundred thousand dollars shall be paid into the treasury for capital stock before the corporation shall be authorized to transact any business other than that which relates to its organization. (2) Each stockholder shall be entitled to one vote, in person or by proxy, for each share of capital stock held, and each member shall be entitled to one vote, in person or by proxy, for each one thousand dollars of the authorized loan limit of such member as determined under section 7-48-108 (2). (3) The rights given by the "Colorado Business Corporation Act", articles 101 to 117 of this title, to stockholders to attend meetings and to receive notice thereof and exercise voting rights shall apply to members as well as to stockholders of a corporation created under this article. The voting rights of the members shall be the same as if they were a separate class of stockholders, and stockholders and members shall in all cases vote separately by classes. A quorum at a meeting shall require the presence in person or by proxy of a majority of the holders of the voting rights of each class.

C.R.S. § 7-48-110 Directors

7-48-110. Directors. The business and affairs of a corporation shall be conducted by a board of directors. The number of directors shall be a multiple of three. Two-thirds of the directors shall be elected by the members and one-third shall be elected by the stockholders. Any vacancy in the office of a director elected by the members shall be filled by the directors elected by the members, and any vacancy in the office of a director elected by the stockholders shall be filled by the directors elected by the stockholders.

C.R.S. § 7-48-111 Amendments to articles of incorporation

7-48-111. Amendments to articles of incorporation. No amendment to the articles of incorporation shall be made which increases the obligation of a member to make loans to the corporation or which makes any change in the principal amount, interest rate, maturity date, or security or credit position of any outstanding loan made by a member to the corporation or which affects the right of a member to withdraw from membership or the voting rights of such member, without the consent of each member who would be affected by such amendment.

C.R.S. § 7-48-112 Earned surplus

7-48-112. Earned surplus. Each year the corporation shall set apart as earned surplus not less than ten percent of its net earnings for the preceding fiscal year until such surplus is equal in value to one-half of the amount paid in on the capital stock then outstanding. If the amount of surplus so established becomes impaired, it shall be built up again to the required amount in the manner provided for its original accumulation.

C.R.S. § 7-48-113 Members to have rights of stockholders

7-48-113. Members to have rights of stockholders. The rights given to stockholders under the provisions of sections 7-102-106, 7-103-104, 7-110-203, and 7-114-102 shall apply to members as well as to stockholders of a corporation created under this article.

C.R.S. § 7-48-114 Deposit of funds

7-48-114. Deposit of funds. No corporation formed under the provisions of this article shall at any time be authorized to receive money on deposit. The corporation shall not deposit any of its funds in any banking institution unless such institution has been designated as a depository by a vote of a majority of the directors present at an authorized meeting of the board of directors, exclusive of any director who is an officer or director of the depository so designated.

C.R.S. § 7-48-115 Books and records

7-48-115. Books and records. A corporation shall keep, in addition to the books and records required by sections 7-116-101 and 7-116-102, a record showing the names and addresses of all members of the corporation and the current status of loans made by each to the corporation. Members shall have the same rights with respect to such books and records as are given to stockholders by sections 7-116-101 to 7-116-106.

C.R.S. § 7-48-116 Credit of state not pledged

7-48-116. Credit of state not pledged. Under no circumstances is the credit of the state pledged in this article.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://leg.colorado.gov/sites/default/files/images/olls/crs2024-title-07.docxFetched: 10/6/2026