I act for a small local pub which was bought by locals who raised funds under an EIS scheme. In common with so many rural pubs, the business runs at best at break even and more often at a loss and relies heavily on financial support from existing shareholders.
I have been asked an interesting question which, as so often happens these days, is outside the scope of my expertise (!). It is thought that there may be a case for forming a CIC to purchase the shares of the existing limited company, as this is more likely to be able to raise grants and apply for financial assitance from bodies such as the parish council. Existing shareholders have, to all intents and purposes, written off their initial investment and have no expectation of dividends or capital returns.It is likely that at least some, if not all, of the directors/guarantors of the CIC will be existing directors/shareholder of the limited company.
If the CIC were to purchase the exiting shares at a nominal value, would the existing shareholders be able to make any use of the capital loss on their shares, and would there be any implications for relief previously granted under the EIS - which has just entered its third year?
Any advice would be much appreciated.