corporate finance 19 Harder-working money with an EIS


With interest rates low on savings, true entrepreneurs are looking to find ways to make their money work harder. Investment in new and expanding companies often attracts them since the tax benefits of the Enterprise Investment Scheme (EIS) are more valuable than ever given the return on ’safer’ investments. However, be aware there are some legal pitfalls for the unwary, warns Amanda Brockwell of Coffin Mew Solicitors (pictured)


The EIS is designed to encourage investment in smaller companies that are deemed to be higher risk investments. While many are now familiar with the benefits and tax reliefs available under the schemes there are some legal pitfalls:


• Preferential dividends – Originally shares had to be ’full risk’ shares. Thanks to changes announced in the Autumn 2011 Budget, there is no longer an absolute prohibition on this, provided the preference shares do not contain cumulative rights and other timing considerations are satisfied. Either way, careful drafting in any investment agreement and/or the Articles of Association will be required to ensure that shares are still eligible for the valuable reliefs.


• Fully paid shares – The subscription price must be paid wholly in cash, and be paid in full by the time the shares are issued. This seems


like a simple point, but there has been litigation surrounding the timing of the payment; it has been argued that if shares were issued before payment was received, they are ineligible, and this would not be rectified if the subscription price was paid even shortly afterwards.


• Connection – There are three important points here:


- A financial interest in the company, or a subsidiary, can make an investor connected with it and means you can lose EIS Relief.


If


you control the company, or hold more than 30% of the share capital (or share and loan capital taken together) or voting rights, you are connected with the company. These conditions apply throughout the period beginning two years before the issue of the shares and ending three years after the issue. The interests of your associates (business


Handelsbanken opens first branch in Salisbury


Following a property deal through regional commercial property agency Myddelton & Major, Swedish bank Handelsbanken has officially opened its first branch in Salisbury, making it the latest occupier to move into Salisbury Office Park.


Handelsbanken’s arrival at the Park means the bank, founded in Sweden in 1871, now has 125 branches in the UK since establishing a foothold in the early 2000s.


The bank, which specialises in providing highly personalised, bespoke banking services to corporate and personal customers, will be the latest company to move into the thriving business park on London Road.


Handelsbanken, being led locally by branch manager Graham Renshaw, signed a 10-year lease on a 152 sq m ground floor office, at a headline rent in the region of £13 per sq ft, equivalent to £22,400 a year, on a full repairing and insuring basis. A further five-figure sum was invested by Handelsbanken in a fitting-out project prior to moving.


Philip Holford, a partner at the Salisbury office of Myddelton & Major, representing the park’s new landlord, London-based Spreakley Associates, said: “The arrival of Handelsbanken means Salisbury Office Park is very much a thriving epicentre for the financial and professional services community in the city.“


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – JUNE 2012


connected with it. As such, the scheme is not designed to incentivise employees.


- Business angels – where the investor’s only connection with the company is as a director who is not entitled to remuneration and he has not previously been involved in carrying on the trade the company is carrying on at the time it issues the relevant shares, an investment may still qualify for income tax relief.


Contact Coffin Mew Solicitors for more information on how the firm can assist investors or companies attracting investment.


Details:


partners, relatives etc) are also taken into account.


- Employment – if you are a director or an employee of the company, you are


Amanda Brockwell 023-8057-4302 amandabrockwell@coffinmew. co.uk


Jamie Earley 023-8057-4305 jamieearley@coffinmew.co.uk


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