Taxes Consolidation Act 1997 section 496

Qualifying investment (company perspective)

Section 496 specifies what constitutes a qualifying investment from the company's perspective under the employment investment incentive scheme (EIIS).

• An investment is a qualifying investment where an individual subscribes for eligible shares in a qualifying company, the company uses the money wholly or mainly for a qualifying purpose within the relevant period, and the investment is based on a business plan.
• A qualifying purpose means using the money for relevant trading activities, or for R&D+I connected with intended trading activities where the company has not yet commenced trading, provided the expenditure contributes directly to the creation or maintenance of employment; it does not include acquiring interests in subsidiaries or trades.
• An initial risk finance investment qualifies only where each RICT group member has either not operated in any market or has been operating for less than 10 years since incorporation (or commencement of the relevant enterprise) or less than 7 years since its first commercial sale, with acquired or merged businesses' operational periods generally included unless their turnover is below 10% of the acquiring or combined entity's turnover in the prior year.
• An expansion risk finance investment qualifies only where it is based on a business plan for a new economic activity and the amount raised exceeds 50% (or 30% for certain environmental or critical raw material investments) of the RICT group's average annual turnover over the preceding 5 years; a follow-on risk finance investment qualifies only where the original investment involved eligible shares issued on or after 6 April 1984 and the follow-on was foreseen in the original business plan.