– does not allow the subscription to be refunded under any circumstances; – Can`t vary, cancel or assign; – Does not carry any interest; and – has a longstop date (no more than 6 months from the date of the agreement). This legal field is relatively new and is developing and evolving. In our experience, it is important that investors and businesses receive technical investment legal advice through ASAs and SEIS/EIS tax breaks. NB (especially for investors), while we find that pre-registration agreements are becoming more and more popular, we often find that the start-up never manages to spend the shares that are subject to the subscription fees already paid. In one case, we saw recently that a start-up was dissolved, but since the shares were never issued and no EIS 1 compliance statement was filed, investors were not even able to claim loss relief on EIS – which led an investor to call these fundraising mechanisms « opaque Seims »! The more complex the agreements or the longer the period between pre-purchase and share issuance, the greater the risk of non-compliance with the rules relating to the duration of the SEIS discharge. The ASA should not act as an investment tool with other benefits such as investor protection. The payment of the subscription should not be a loan. Second, if a company wishes to apply for SEIS or EIS VOR insurance, it should do so before purchasing the ASA. This appears to be done on the basis that the investment is actually made at the time of the asA seizure, so that a subsequent insurance application would not have been made in advance. In the past, HMRC has provided prior assurance for ASAs as qualification for EIS and SEIS reliefs, but did not have specific guidelines on the terms of these instruments.
HMRC will not consider that pre-subscription contracts are suitable for SEIS, unless the agreement is reached: formalizing a participation can take a long time and involves an effective evaluation for the company. With the availability of the Seed Investment Program (« SEIS ») and the Enterprise Investment System (« EIS »), with tax breaks for start-ups, startups are raising more private capital than ever before, and pre-subscription contracts are becoming increasingly popular to raise money quickly and easily, without necessarily agreeing with investors on an valuation. New investors should take into account the statutory provisions of the company in which they invest and the shareholders` pact (if any), since the investor is subject to these documents as soon as the company has issued the new shares and awarded them to the investor. However, the guidelines give a new attitude to HMRC in that, if the company wishes to apply for a prior commitment, it should do so before the creation of the ASA. If a prior guarantee is requested from an ASA already in force, HMRC will now reject the application (on the basis that the advance guarantee is a discretionary and non-legal service and considers that advance guarantees are not mandatory to obtain discharge on eis. HMRC appears to consider that an investment is « as good as it does when entering an ASA » and therefore does not need a notification to be reviewed in advance » and that the company should instead rely on the submission of the S/EIS1 compliance statement at the corresponding point after the issuance of shares. The more complex the agreements or the longer the time between pre-purchase and share issuance, the greater the risk of non-compliance with TBEI`s rules of use.