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SEIS Volume Good - But EIS Deal Size Disappoints




Our business cousins over the fence in equity raises are having a mixed experience. There was healthy deal volume for the Seed Enterprise Investment Scheme raises, but very few Enterprise Investment Scheme deals over £4 million. Business Matters magazine reports:

In the 2018-19 tax year, £1.8 billion was invested into 3,905 companies, down from £2 billion the previous year, according to figures released by HM Revenue & Customs. Investment via the Seed Investment Enterprise Scheme (SEIS) has also fallen. In 2018-19, 1,985 companies raised a total of £163 million of funds under the SEIS scheme. This is a decrease from 2017-18 when 2,430 companies raised £195 million.EIS investors receive 30 per cent income tax relief on investments of up to £1m in return for investing in some of the UK's most high-risk start-ups, and can invest up to £2m in so-called "knowledge-intensive companies".According to accountants Price Bailey, the 'risk to capital ' rules, introduced on 1 December 2017, mean that entrepreneurs must demonstrate to HMRC that there is a "significant risk" of a capital loss on their shares exceeding the "net investment return". This is leading to nearly 1 in 10 applications for Enterprise Investment Schemes (EIS) being rejected or withdrawn.Further, it is clear that London still dominates the funding market as 49% of all EIS funding is flowing to companies in the capital. Technology companies also look to be holding strong, attracting 30% of total funding. Howev

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Regulatory Rules Need To Change With The Times




These are turbulent times. We note with interest – and approval – the comments from some distinguished operatives in the equity markets. There's a clamour in some quarter for a complete change of attitude on behalf of the regulatory authorities, who have already suspended a controversial rule more fitted to times of low volatility in equity and bond markets.The suspended rule requires wealth managers, under Mifid II legislation, to report a 10 per cent drop in portfolios within 24 hours. It has been shelved until October because of market volatility on the back of the Covid-19 pandemic.The Financial Conduct Authority took the decision suspended the rule at the beginning of April. Leading players in equities, such as Paul Killik, founder of wealth management company Killik & Co., wants the suspension to be indefinite.Killik argues that the rule should be cast aside because it can cause panic among investors during times of high volatility.Below, we reproduce an excerpt from Killik's interview in his company's quarterly magazine:

"To date, nobody has been able to explain to me the sense or logic behind this rule, which merely serves to create more fear in the minds of already anxious retail investors."One of our most important duties as financial advisers is to try to help clients overcome their natural urge to panic in rapidly falling markets. Yet, as one client is reputed to have said "'if you want me to stop panicking then stop sending me these letters'."Whilst it is encouraging that the FCA has granted firms a temporary suspension in 2020, this self-evidently crazy requirement ser

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