New Subfolder of Documents

The Enterprise Investment Scheme (EIS) is one of four HMRC approved venture capital schemes designed to encourage private investment into growing British companies by offering attractive tax reliefs. The scheme has been around since 1994. Both companies interested in seeking investment and individuals looking to make investments in unquoted companies may be interested in the scheme.

This month we have added a brand new subfolder to our Shareholder Documents Group related to the EIS process and making an application to HMRC to obtain the relevant relief. This package of documents will be useful to companies or investors considering a share investment under the EIS.

Investors can invest up to £1 million a year in new shares in an EIS qualifying company and benefit from income tax relief equal to 30% of the amount invested. The investor must hold the shares and follow the rules for EIS investment for at least 3 years after the investment is made to avail of the tax relief.

This subfolder of template documents includes:

• a Guidance Note on the EIS, including how the scheme works, the scheme rules (including those for knowledge intensive companies), the application process and applying for advanced assurance;
• an EIS Term Sheet;
• an EIS Subscription Agreement;
• an EIS Subscription Application Letter;
• an EIS Advanced Assurance Letter; and
• Board Minutes to approve the EIS investment.

These templates have been drafted in light of the scheme rules, however the templates are a suggested starting point for drafting and we cannot provide any assurance as to their acceptability to HMRC. HMRC’s guidance on EIS can be accessed here.

It is strongly recommended that independent legal and tax advice is sought by companies or investors considering EIS investment.