Jenson Seed EIS Fund - Clubfinance

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60 Jenson Seed EIS FundSEIS and EIS Conditions 6111.1.1 Timing requirementsKey to an Investor being able to obtain SEISRelief is that he/she owns an Investment fora minimum of three years. If an Investment issold within three years any relief claimed willbe repayable to HMRC.Also before the Investor can claim anySEIS Relief, the Investee Company musthave spent 70% of the Investor’s share ofthe Investment or have been trading for atleast four months. In addition, the InvesteeCompany must spend all SEIS monies raisedwithin three years of the Investment.11.1.2 SEIS Qualifying InvestorsTo be a SEIS Qualifying Investor,the Investor must:• not be an employee of the InvesteeCompany or a qualifying subsidiary of theInvestee Company;• not be the recipient of a loan whichwould not have been made or wouldhave been made on different terms if he/she had not subscribed for the Shares;• not have a substantial interest in theInvestee Company at any time from thecompany’s incorporation nor within threeyears of his/her Investment. A substantialinterest includes a 30% shareholding inthe Investee Company or its subsidiaries,or the ability to control 30% of the votes inthe Investee Company; and• be subscribing for Shares in the InvesteeCompany through the Fund for genuinecommercial reasons and not as part ofa scheme or arrangement whose mainpurpose is to avoid tax.11.1.3 SEIS general requirements• The Shares issued by the SEIS QualifyingCompany must either be ordinary sharesor preference shares that carry a fixednon-cumulative dividend but do not haveany additional rights to capital on thewinding up of the Investee Company. Inaddition the Shares must be subscribed forwholly in cash, and must be fully paid upat the time they are issued.• The Investee Company must issue theShares to raise money for the purposesof a qualifying business activity which iseither a new qualifying trade or researchand development, from which a newqualifying trade may be derived, thatthe Investee Company or one of its 90%subsidiaries will carry on.• There must be no pre-arrangedarrangements for Investors to exit orrealise their Investment in the InvesteeCompany. Although this document hasset out possible routes for the Fund torealise the Investments, in compliancewith this provision, the Fund Manager willnot reach any agreement with InvesteeCompanies about a definite exit routeas part of the arrangements in which theInvestee Companies issues the Shares.• A SEIS Qualifying Investment must bemade by the Investor and issued byan Investee Company for genuinecommercial reasons and not as part ofa scheme to avoid tax.• An Investment must not be issued inconnection with or as a result of adisqualifying arrangement. It is believedthat a disqualifying arrangement is anarrangement where the purpose ofthe parties is to secure that an InvesteeCompany carries on a qualifying businessactivity and that SEIS relief on the relevantshares issued can be obtained (ratherthan either of these matters being thecharacteristics and outcome of a genuinecommercial transaction) and that most ofthe monies raised will be paid to a partyto the arrangement or that the qualifyingbusiness activity would have beencarried on as part of another business.There is considerable uncertainty at themoment regarding the interpretation ofthe legislation as regards disqualifyingarrangements because the language isboth circular and ambiguous but it is theintention of the Fund Manager to onlymake Investments which HMRC haveapproved as being genuinely commercial.11.2 EIS ConditionsThe conditions for EIS Qualifying Investmentsare set out in Part 5 of the Income TaxAct 2007 and are broadly similar to thoseof SEIS Qualifying Companies with thequalifying trades being exactly the same.A key difference is the thresholds foremployees and gross assets are greater:to be an EIS Qualifying Company, theInvestee Company must have less than 250employees and pre-share issue gross assetsof less than £15 million.
62 Jenson Seed EIS FundInvestor’s Agreement 6312 INVESTOR’S AGREEMENTThis Agreement sets out the terms andconditions agreed between the Investornamed in the Application Form, ForesightGroup LLP, and Jenson Funding Partners LLPrelating to the Investor’s participation in theJenson Seed EIS Fund.Associateany person, partnership or entity which(whether directly or indirectly) controls or iscontrolled by another person, partnership orother entity. For the purpose of this definition“control” shall refer to the ability to exercisesignificant influence over the operating orfinancial policies of any person or entity1. Definitions, Constructionand Interpretation1.1. The following terms shall have thefollowing meanings in this Agreement:AIMAdministrator & CustodianAdministrator & Custodian Standard TermsApplicable Lawsthe Alternative Investment Market of theLondon Stock ExchangeReyker Securities plc, a public limited companyregistered in England and Wales with registerednumber 1747595 whose registered office is 17Moorgate, London, EC2R 6AR. Authorised andregulated by the Financial Services Authorityunder number 115308the standard terms of the Administrator &Custodian under which the Investor appointsthe Administrator & Custodian to provideadministrative and custodian services to theInvestor in relation to his/her Portfolio and theNominee is appointed as the Investor’s nomineeall relevant UK laws, regulations and rules,including those of any government or of the FSAClosing DateComplying FundConnected Personsa date on or by which Contributions areaccepted by the Fund Manager to formPortfolios of the same Set within the Fundan arrangement, specified in paragraph2 of the Schedule to the Financial Servicesand Markets Act 2000 (Collective InvestmentSchemes) Order 2001 (SI 2001/1062), whichis in summary: an arrangement in relationto EIS shares that would have been acollective investment scheme if the schemearrangements had not provided that:(a) the operator will, so far as practicable,make investments which, subject to eachparticipant’s individual circumstances, qualifyfor relief under Part 5 of the Income Tax Act2007; and(b) the minimum contribution to thearrangements by each participant must benot less than £2,000a director, shareholder, partner, employee orassociate of the Fund Manager and Jenson, orany of their Associates (as the case may be)Application Forman application form to invest in the Fundcompleted by the Investor in the formprovided by the Fund ManagerContributionthe total gross amount contributed byan Investor in accordance with the termsof the offer set out in the InformationMemorandum
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