Many private UK biotech and medtech companies have raised equity financing from high net worth individuals under the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) schemes. The Treasury is currently undertaking a consultation process concerning tax reliefs for equity investments in small, higher risk enterprises, including "seed" investment in start up enterprises. The aim is to gather views and evidence on a new scheme to support seed investment and on a number of reform options to improve the effectiveness of the existing EIS and VCT schemes. The consultation period ends on 28th September 2011, so there is still time to make submissions.
The consultation is organised around three main themes:
- additional support for seed investment;
- simplification of the current EIS and VCT schemes; and
- improved focusing of the EIS and VCT schemes to ensure they remain appropriately targeted.
The Treasury would like to hear from businesses, investors, representative bodies and others interested in tax-advantaged venture capital schemes in the UK.
One issue which the Treasury is consulting on is anti-dilution clauses in shareholders' agreements. The consultation document says such clauses are likely to fall foul of current EIS legislation. Views are invited as to whether the EIS rules on the use of anti-dilution clauses are deterring investments.
The consultation document can be found here.