ANNAPOLIS -- For the second year in a row, a bill will be pushed in the General Assembly that its backers say will be a boon to new firms, particularly high-tech start-up companies.
The so-called "limited-liability company" legislation was introduced during the most recent assembly session, but it died in committee.
"This form of business would spur the development of high-tech start-up companies, because it would make the research and development losses immediately available to investors as a tax write-off," said Stuart Levine, a Baltimore attorney who helped draft Senate Bill 345. A similar measure will be introduced into the House.
A limited-liability firm is basically "a partnership, with a corporate shell," Mr. Levine said. "It is an entity that has limited liability protection, just like a corporation does for its shareholders, but is taxed as a partnership under the provisions of the Internal Revenue Code."
Fledgling life sciences firms exhaust the bulk of their capital on research and development, Mr. Levine said. Being able to form a limited liability company would let the equity holders enjoy the tax benefits of those losses.
A limited-liability measure was one of the last pieces of legislation introduced to the Senate Judicial Proceedings Committee in the last session and was voted down. However, the panel had asked to review the bill before the next session gets under way.
Sen. Walter M. Baker, D-Cecil, the chairman of the Judicial Proceedings Committee, called the proposal "an interesting concept." He said that the measure has a better chance of being passed this year by his committee, now that it's had a chance to take an in-depth look at it. "It's already been tried and tested in other jurisdictions," Mr. Baker said.
"I think it's an idea whose time has come," said Mark Sargent, who teaches business law at the University of Maryland School of Law.