Why you shouldn’t promise SEIS or EIS to investors
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Why you shouldn’t promise SEIS or EIS to investors
Video information:
In this video, Anthony highlights the importance of never promising SEIS or EIS.
Always be careful to never promise SEIS or EIS to investors. You can always indicate best efforts and the reason is that firstly it’s not fully in your power to promise it.
Firstly, it’s at the discretion of HMRC and secondly things may come up over the life of the company that mean you can’t offer it later despite your best intentions now.
So for example, if the company, if you sell the company within three years, the investors will lose their SEIS or EIS.
If you flip it to Delaware US company because you’ve got into a US accelerator or you’ve got US investment, your investors will lose their SEIS.
If you if the company goes into administration, they may write off and get their SEIS, as a write off, which is great, but you may turn out that you morph your business.
You start offering leasing services or banking services or something, that will disqualify SEIS or EIS. Then again, your investors will lose out.
So, if you think that your business may morph into a disqualifying area where you think you may sell within the 3-year period, you should have an upfront discussion with your investors to let them know the plans say that you’ll use best efforts or reasonable efforts or you’ll talk to them if it changes but be sure not to promise something because there’ll be unhappiness if you can’t keep that promise.
If you need more, hit us up at SeedLegals.com. There are a whole load of articles and our team are there to answer any questions.
Thank you very much.
Anthony is CEO & Co-Founder of SeedLegals, a revolutionary new legaltech platform that lets startups and investors complete the legals needed to build, grow and fund their business, at a fraction of the cost of using a law firm.
Known as “The man behind BBC iPlayer”, Anthony ran the iPlayer and other BBC services from 2007 to 2010, taking the iPlayer from pre-launch to major success story. He is a technical and product visionary whose career has included 3D graphics, P2P music, internet video, social TV and online communities.
Video information:
In this video, Anthony highlights the importance of never promising SEIS or EIS.
Always be careful to never promise SEIS or EIS to investors. You can always indicate best efforts and the reason is that firstly it’s not fully in your power to promise it.
Firstly, it’s at the discretion of HMRC and secondly things may come up over the life of the company that mean you can’t offer it later despite your best intentions now.
So for example, if the company, if you sell the company within three years, the investors will lose their SEIS or EIS.
If you flip it to Delaware US company because you’ve got into a US accelerator or you’ve got US investment, your investors will lose their SEIS.
If you if the company goes into administration, they may write off and get their SEIS, as a write off, which is great, but you may turn out that you morph your business.
You start offering leasing services or banking services or something, that will disqualify SEIS or EIS. Then again, your investors will lose out.
So, if you think that your business may morph into a disqualifying area where you think you may sell within the 3-year period, you should have an upfront discussion with your investors to let them know the plans say that you’ll use best efforts or reasonable efforts or you’ll talk to them if it changes but be sure not to promise something because there’ll be unhappiness if you can’t keep that promise.
If you need more, hit us up at SeedLegals.com. There are a whole load of articles and our team are there to answer any questions.
Thank you very much.
Anthony is CEO & Co-Founder of SeedLegals, a revolutionary new legaltech platform that lets startups and investors complete the legals needed to build, grow and fund their business, at a fraction of the cost of using a law firm.
Known as “The man behind BBC iPlayer”, Anthony ran the iPlayer and other BBC services from 2007 to 2010, taking the iPlayer from pre-launch to major success story. He is a technical and product visionary whose career has included 3D graphics, P2P music, internet video, social TV and online communities.
Video information:
In this video, Anthony highlights the importance of never promising SEIS or EIS.
Always be careful to never promise SEIS or EIS to investors. You can always indicate best efforts and the reason is that firstly it’s not fully in your power to promise it.
Firstly, it’s at the discretion of HMRC and secondly things may come up over the life of the company that mean you can’t offer it later despite your best intentions now.
So for example, if the company, if you sell the company within three years, the investors will lose their SEIS or EIS.
If you flip it to Delaware US company because you’ve got into a US accelerator or you’ve got US investment, your investors will lose their SEIS.
If you if the company goes into administration, they may write off and get their SEIS, as a write off, which is great, but you may turn out that you morph your business.
You start offering leasing services or banking services or something, that will disqualify SEIS or EIS. Then again, your investors will lose out.
So, if you think that your business may morph into a disqualifying area where you think you may sell within the 3-year period, you should have an upfront discussion with your investors to let them know the plans say that you’ll use best efforts or reasonable efforts or you’ll talk to them if it changes but be sure not to promise something because there’ll be unhappiness if you can’t keep that promise.
If you need more, hit us up at SeedLegals.com. There are a whole load of articles and our team are there to answer any questions.
Thank you very much.
Anthony is CEO & Co-Founder of SeedLegals, a revolutionary new legaltech platform that lets startups and investors complete the legals needed to build, grow and fund their business, at a fraction of the cost of using a law firm.
Known as “The man behind BBC iPlayer”, Anthony ran the iPlayer and other BBC services from 2007 to 2010, taking the iPlayer from pre-launch to major success story. He is a technical and product visionary whose career has included 3D graphics, P2P music, internet video, social TV and online communities.
