Raising capital using the EIS
The Enterprise Investment Scheme (EIS) has been designed to increase investment in the early development of high potential growth businesses. Companies seeking EIS investment are typically more developed than those looking for funding using the Seed Enterprise Investment Scheme (SEIS) and the investment limits and tax reliefs available reflect this.
The maximum amount of funds that a company can raise through investments qualifying for the EIS is £5M in any 12 months with a maximum of £12m over the company’s lifetime. The company must receive investment under a venture capital scheme within 7 years of its first commercial sale.
There is a maximum limit on the number of employees that the investee company can have when shares are issued. The company must have less than 250 full-time employees or their part-time equivalents. For groups of companies, the limit applies across the group.
The company’s gross assets (or of the group assets where the company is a parent company) must not exceed £15 million before any shares are issued and not be more than £16 million immediately afterwards.
There are also time limits when investments can be raised by the company and how and when the money must be spent.
There are different rules, typically more generous criteria, for ‘knowledge-intensive’ companies that carry out a significant amount of research, development or innovation.