Venture Capital Trusts
Four changes are to be made to the enterprise investment scheme (EIS) and
venture capital trust (VCT) schemes.
The existing requirement for the shares making up a VCT's ordinary shares to be included in the UK official list is to be replaced with a requirement that shares should be admitted for trading on any EU regulated market. The new rules will also increase the shareholding requirements of 'eligible shares' from a minimum of 30% to 70%. The definition of such shares will also change to include shares with preferential rights to receive dividends.
In the case of both EIS and VCT schemes, new rules will be introduced to exclude investments in companies which would be classed as an "enterprise in difficulty" under European Commission rules. In addition, under current rules there must be a qualifying trade which is carried on wholly or mainly in the UK. This is to change so that the requirement will be for the company issuing the shares to simply have a permanent establishment in the UK.
Who will be affected?
Investors in EIS and VCT schemes.
The new rules will be introduced in a Finance Bill as soon as possible after the summer recess.
These changes were required in order to satisfy the European Commission rules concerning the provision of approved state aid.