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In the dynamic world of finance and investment, savvy entrepreneurs and investors are increasingly turning to Advance Subscription Agreements (ASAs) to fuel the growth of promising startups. However, diving into such agreements without a thorough understanding of the key considerations of an ASA to qualify for EIS and SEIS relief, can be risky. In this blog, I present a checklist for Advance Subscription Agreements, shedding light on six crucial points to keep in mind when dealing with an ASA.
ASAs are sometimes used to raise funds for a company quickly, at a time when the value of shares cannot be easily ascertained. An ASA enables investors to pay subscription funds into a company at an early stage, with the shares to be issued at a later date.
To conclude, by diligently following this six-point checklist, both investors and entrepreneurs can navigate the complexities of ASAs, ensuring that they are able to qualify for EIS and SEIS tax relief.
Sapphire Capital Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN: 565716). This article is a financial promotion and is intended for UK investors only. The content is for information purposes only and does not constitute investment advice or a recommendation to invest. SEIS and EIS tax reliefs depend on individual circumstances and may change. The value of investments may go down as well as up, and investors may not get back the full amount invested. Past performance is not a reliable indicator of future performance. Investment outcomes can differ substantially, potentially resulting in the loss of all your capital invested. Shares in early-stage companies are illiquid: you may be unable to sell your holding for several years, if at all. Investors should not rely on this article as a basis for investment decisions and must consider the illiquid and high-risk nature of early-stage investing. No warranty as to future outcome is implied nor should one be inferred. Tax treatment depends on individual circumstances and may be subject to change. Investments of this type are generally not covered by the Financial Services Compensation Scheme or the Financial Ombudsman Service if the underlying companies fail.