Part 5Enterprise investment scheme

Chapter 3General requirements

The requirements

173AAF1Maximum risk finance investments at the issue date requirement

1

The total amount of relevant investments made in the issuing company on or before the issue date must not exceed—

a

if the issuing company is a knowledge-intensive company at the issue date (see section 252A), £20 million, and

b

in any other case, £12 million.

2

In subsection (1) the reference to relevant investments made in the issuing company includes—

a

any relevant investment made in any company that at the issue date is, or has at any time before that date been, a 51% subsidiary of the issuing company (including investments made in such a company before it became such a subsidiary but, if it is not such a subsidiary at the issue date, not investments made in it after it last ceased to be such a subsidiary),

b

any other relevant investment made in a company to the extent that the money raised by the investment has been employed for the purposes of a trade carried on by another company that has at any time before the issue date been a 51% subsidiary of the issuing company (but, if it is not such a subsidiary at that date, ignoring any money so employed after it last ceased to be such a subsidiary), and

c

any other relevant investment made in a company if—

i

the money raised by the investment has been employed for the purposes of a trade carried on by that company or another person, and

ii

after the investment was made, but on or before the issue date, that trade became a relevant transferred trade (see subsection (4)).

3

If only a proportion of the money raised by a relevant investment is employed for the purposes of a trade which becomes a relevant transferred trade, the reference in subsection (2)(c) to the relevant investment is to be read as a reference to the corresponding proportion of that investment.

4

Where—

a

at any time on or before the issue date, a trade is transferred—

i

to the issuing company,

ii

to a company that at the issue date is, or has at any time before that date been, a 51% subsidiary of the issuing company, or

iii

to a partnership of which a company within sub-paragraph (i) or (ii) is a member,

(including where it is transferred to a company within sub-paragraph (ii), or a partnership of which such a company is a member, before the company became such a subsidiary but, if the company is not such a subsidiary at the issue date, not where it is transferred to such a company or partnership after the company last ceased to be such a subsidiary), and

b

the trade or a part of it was previously (at any time) carried on by another person,

the trade or part mentioned in paragraph (b) becomes a “ relevant transferred trade ” at the time it is transferred as mentioned in paragraph (a).

5

In this section—

  • “the issue date” means the date on which the relevant shares are issued;

  • “relevant investment” has the meaning given by section 173A(3), and section 173A(4) and (5) (which determines when certain investments are made) applies for the purposes of this section;

and section 173A(6) and (7) (meaning of “trade” etc) applies for the purposes of this section as it applies for the purposes of section 173A.