The Office of General Counsel issued the following informal opinion on December 3, 2001, representing the position of the New York State Insurance Department.

RE: Proposed CAPCO Acquisition


Would the proposed acquisition of EBD Company, Inc. ("EBD") by NC, Inc. ("NC") adversely affect the certified capital company ("CAPCO") status of EBD or the "WS CAPCOs" (the subsidiaries of NC)?


The proposed acquisition would not cause EBD or the WS CAPCOs to lose their certification as CAPCOs.


An organization is currently considering an acquisition of 100% of the outstanding common stock of EBD. If this transaction is completed, NC will own EBD and the WS CAPCOs.

It was further stated that in future CAPCO programs, NC will establish a single CAPCO, and that EBD and WS will not attempt to raise capital in the same CAPCO program.


There is nothing in the CAPCO statute (N.Y. Tax Law § 11 (McKinney Supp. 2001)) that would prohibit the proposed acquisition. Note, however, that with respect to any future CAPCO programs, the CAPCOs owned by NC, because of their common ownership, would not each be able to obtain full allocations. This result is required by Regulation 156, N.Y. Comp. Codes R. & Regs., tit. 11, § 400.5(e) (1998), which provides, in pertinent part, as follows:

The aggregate amount of tax credits requested by a certified capital company and its affiliate or affiliates shall not exceed the aggregate tax credits available for such year, and any aggregate amount of tax credits requested by such certified capital company and its affiliate or affiliates in excess of the aggregate limit available for such year shall be excluded in calculating the proportion of tax credits allocated to certified investors in such certified capital companies.

For further information you may contact Supervising Attorney Michael Campanelli at the New York City Office.