Q&As

Can shares acquired under an Advance Subscription Agreement still qualify for EIS or SEIS relief?

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Published on LexisPSL on 13/12/2017

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • Can shares acquired under an Advance Subscription Agreement still qualify for EIS or SEIS relief?

Can shares acquired under an Advance Subscription Agreement still qualify for EIS or SEIS relief?

An Advanced Subscription Agreement is an agreement:

  1. between an investor and a company

  2. for the investor to pre-pay for shares that are to be allotted and issued by the company in a subsequent funding round

  3. usually on terms that provide the investor with a discount to the price paid by other investors at the subsequent funding

Such agreements are commonly used to enable early stage companies to secure early funding while protecting the investor from the risk of an inappropriate price for the shares they are acquiring by waiting until the wider funding round for the price to be determined.

There are great many conditions that must be met for an investment to qualify for enterprise investment scheme (EIS) or seed enterprise investment scheme (SEIS) relief. While the conditions for the two regimes are very similar there are some differences. In the context of an Advance Subscription Agreement, it may not be certain whether it is EIS or SEIS relief that will be sought at the time of the actual subscription for shares, therefore

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