VCM13090 | EIS: income tax relief: the issuing company: unquoted status requirement

ITA07/S184

At the time when the shares are issued, neither they nor any of the company's other shares or debentures or other securities may be quoted - that is, listed on an exchange which is at that time a recognised stock exchange (see below) or has been designated by HMRC, or be dealt in outside the UK by any means designated by HMRC.

In addition, at the time when the shares are issued there must not be any arrangements for such a listing, or for the company to become a subsidiary of another company, which would not satisfy this requirement. It may become quoted later without the investors losing tax relief, but not if there were arrangements for it to become quoted in existence when the shares were issued.

The Alternative Investment Market (AIM) and the Aquis Stock Exchange (with the exception of Aquis Main Market) are not considered to be recognised exchanges, so a company listed on those markets can raise money under the EIS if it satisfies all the other conditions. The Aquis Main Market is regarded as a recognised stock exchange and shares listed on that market at the time of issue will not qualify for EIS.

Recognised Stock Exchange

A recognised stock exchange is defined at ITA07/S1005:

• Within the UK, a recognised stock exchange is any market of a recognised investment exchange which has been designated as a recognised stock exchange by HMRC (ITA07/S1005 (1)(a))

• Otherwise, a recognised stock exchange is any market that has been so designated (ITA07/S1005 (1)(b)).

Tables of recognised stock exchanges may be found at ‘Recognised stock exchanges: definition, legislation and tables of recognised exchanges’ on gov.uk.