Can non-SEIS shares be issued prior to SEIS shares

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My clients company has 100 shares in issue (2 shareholders 50% each). They propose to issue a further 400 shares split equally between them so they have 250 each. They will then issue 500 further shares to external investors under SEIS. So the initial shareholders will have a 25% holding each and the investors will hold 50%.

My question is, is the non-SEIS share issue going to be a problem in claiming the SEIS relief? Would they be better off just issuing 100 SEIS shares or doing a share split in order to increase the number of shares in issue?

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By kaff
22nd Sep 2017 20:06

I can't think of any reason why the share issue to the existing shareholders should compromise the SEIS issue, providing that the new investors are unconnected with the founders. Did you have something specific in mind?
To be on the safe side, you might want to issue the investor shares the day after the founders' shares, so they are not part of the same issue of shares for SEIS purposes. That will prevent any potential issues meeting the "employment of money" test, which applies in respect of the funds raised by a particular share issue (i.e. all shares of the same class issued on the same day), even if not all the shares in that issue are SEIS shares.

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