Issuing SEIS & EIS shares – 4 Key Considerations
You may have obtained SEIS / EIS pre-approval from HMRC, but you need to be careful about correctly issuing the SEIS and EIS shares. Vasiliki Carson of Sapphire Capital explains the four key considerations you need to bear in mind when issuing these shares.
1 – Date SEIS shares at least one day ahead of EIS shares (and if you don’t you will need a court decree to amend stock issuances and that’s a slow and costly affair).
2 – Keep appropriate and thorough documentation (including a written shareholder agreement, board minutes etc. and file them with Companies House).
3 – Ensure that the company has received full payment for the shares (or you can’t issue them in the first place).
4 – At the time of stock issuance, you must ensure that the company still qualifies for the EIS:
It is prudent to make sure that the firm is a “qualifying business trade”. If you had any change in strategy or corporate mission since you applied for advance assurance you need to check again that you still qualify.
Additionally, remember the limitation that you cannot issue more than £5 million of EIS shares in one year; furthermore, based on the fluctuations of the Euro and Pound sterling currency lately, I would suggest you stay lower than £5 million so that you don’t fall foul of any EU State Aid limitations.