VCM15010 - Investee companies: general

This part of the manual deals with the rules applying to the investee company - that is, the company issuing the shares - and sets out briefly, for comparison purposes, those rules which apply to more than one of the venture capital schemes. It also gives guidance and background information for those rules that apply for more than one scheme. For the remainder there are cross-references to the more detailed information that appears in the parts of the manual devoted to each separate scheme.

For the EIS, the investee company must be a 'qualifying company'. To be a qualifying company it must satisfy certain conditions, and most of those conditions apply throughout a period that starts with the issue of the shares and ends immediately before the termination date. It follows that it cannot be known for certain whether a company qualifies in relation to a given share issue until the termination date related to that issue. This applies in respect of both income tax relief and deferral relief. More detailed guidance is at VCM20500 onwards.

For the CVS, the investee company must be a 'qualifying issuing company'. As in the case of the EIS, it cannot be known for certain whether a company is a qualifying issuing company in relation to a given share issue until the termination date. More detailed guidance is at VCM50010 onwards.

For the VCT scheme, the conditions relating to the company invested in by the VCT are included with other conditions to be satisfied by the investment, and the question is whether the holding in the investee company is part of the VCT's 'qualifying holdings'. The status of the holding at any particular date depends on whether the requirements are satisfied at that date. It is possible for a holding to move in and out of qualifying status. The only conditions which must have been satisfied at the outset if the holding is ever to qualify are those concerned with the company's gross assets and the employment of the money raised by the issue. More detailed guidance is at VCM62310 onwards.

For VC loss relief, the company that issued the shares must be a 'qualifying trading company'. The meaning of this term is explained at VCM45600.