Finance (No. 2) Act 2017

The existing investments requirement

3 After section 257LD insert—

“257LDA The existing investments requirement

(1) If at the time immediately before the investment is made the investor holds any shares in or debentures of—

(a) the social enterprise, or

(b) a company which at that time is a qualifying subsidiary of the social enterprise,

those shares or debentures must be risk finance investments or (in the case of shares) permitted subscriber shares.

(2) A share or debenture is a “risk finance investment” for the purposes of this section if—

(a) it is a share that was issued to the investor, or a debenture of which the investor is the holder in return for advancing an amount, and

(b) at any time, a compliance statement under section 205, 257ED or 257PB is provided in respect of it or of shares or investments including it.

(3) Subscriber shares are “permitted subscriber shares” for the purposes of this section if—

(a) they were issued to the investor and have been continuously held by the investor since they were issued, or

(b) they were acquired by the investor at a time when the company which issued them—

(i) had issued no shares other than subscriber shares, and

(ii) had not begun to carry on or make preparations for carrying on any trade or business.

(4) In this section “debenture” is to be read in accordance with section 257L(6).”