The measure

Changes are being made to legislation governing the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) that were required when they were given European Commission (EC) approval as State Aid in April 2009.

The key points are:

• a requirement that the company in which the investment is made must not be in financial difficulty;
• a requirement that the company must have a permanent establishment in the UK replacing the existing requirement that the company carries on its trade wholly or mainly in the UK;
• the requirement that a VCT's shares must be listed in the official UK List which will be replaced by a requirement that the shares must be traded on an EU regulated market;
• changes in the rules governing the amount of a VCT's investment which must be held as equity; and
• changes in the definition of small company for the purposes of both schemes.

Who will be affected?

Investors in EIS and VCTs will be affected.

When?

Draft legislation is issued today for comment by 1 February 2010. The legislation will be included in the Finance Bill.