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Using a holding company to buy out Eis investors?

Rising Investment through Eis/Seis however afraid that investors will sell shares to take control.

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Hi, I'm quite new to the business world and I just a bit concerned about going down this route to raise capital for my business, I understand that the shares can be held for a certain amount of years for the tax relief to benefit the shareholders but is there a way to guarantee that I can buy back the shares and therefore keep control of the enterprise I am settling up? I'm aware that this may be a silly question but I'm just starting out.

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28th Jun 2019 08:36

It's a precondition of EIS that there has to be no agreement in place at the outset for the shares to be bought back.

It's to encourage investment in business, if you set it up so that "investors" have to sell their shares back then it's effectively a loan, not an investment.

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By Jdopus
28th Jun 2019 08:58

As Duggimon said, you can't specify at the outset that they have to sell the shares back to you at a specified time.

What I believe you can do is have rules in the articles of association that require you to have right of first refusal if a shareholder wishes to sell their shares (i.e. you get first option to buy them) and rules over who they're allowed to sell the shares to. This should give you some scope to keep control of the entity once your EIS investors cash out.

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28th Jun 2019 09:44

However you can't insist they sell the shares to anyone in the future to you or anyone if they don't want to

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