A few weeks ago, I published a blog which looked at the tax benefits for investors when buying shares using either the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) – two of the government’s venture capital programmes. I have included a link to this post again, in case you want to read it in conjunction with this one.
Last week, my blog post looked at how you can get your business ‘investment ready’. So, this week I want to look at the EIS and SEIS from the point of view of your company and the eligibility criteria for your business to issue shares under either of these two schemes. If you are looking to raise investment for your business and want to bring in outside shareholders to inject cash, let me know. The advantages for the investors are huge, as my previous blog shows.
For SEIS:
- Your company must have been trading for less than three years.
- Gross assets in your balance sheet (that’s the total of your fixed assets and current assets) must be less than £350k.
- You must have fewer than 25 full-time staff.
There are some restrictions.
The maximum amount your company can raise over its lifetime using SEIS is £250,000. And it must not have received funding through EIS or a venture capital trust (VCT) before issuing shares. If your company controls another company (a subsidiary), then that subsidiary must also be an SEIS qualifying company. Finally, your company must not (and must never have been) controlled by another company.
For EIS:
- Your company must have been trading for less than seven years.
- Gross assets in your balance sheet must be less than £15m.
- You must have fewer than 250 full-time staff.
Again, there are some restrictions.
A maximum of £12m can be raised over a company’s lifetime using EIS and investment cannot exceed £5m in any one year. Investment must be received within seven years of the company’s first sale. If your company controls another company (a subsidiary), then that subsidiary must also be an EIS qualifying company. Your company can’t be controlled by another company (or a company that company own 50% or more) and must own more than 50% of any qualifying subsidiaries.
Exclusions
There are certain industries/sectors that are excluded from both SEIS and EIS. So, if you operate in any of these, your company won’t be able to raise investment using these highly-advantageous venture capital schemes.
Coal or steel production
Farming or market gardening
Leasing activities
Legal or financial services
Property development
Running a hotel
Running a nursing home
Generation of energy
Production of gas or other fuel
Exporting electricity
Banking, insurance, debt or financing services
Dealing in land or commodities
Shipbuilding
Producing coal
Producing steel
