The measure

Four changes are to be made to the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) schemes.

The existing requirement for the shares making up a VCTs ordinary shares to be included in the UK official list is to be replaced with a requirement that shares should be admitted for trading on any EU regulated market. Equally, the new rules will increase the requirement as regards 'eligible shares' from a minimum of 30% to 70%. The definition of such shares will also change to include shares with preferential rights to receive dividends.

In the case of both EIS and VCTs new rules will be introduced to exclude investments in companies which would be classed an "enterprise in difficulty" under European Commission rules. In addition, under current rules there must be a qualifying trade which is carried on wholly or mainly in the UK. This is to change so that the requirement will be for the company issuing the shares to simply have a permanent establishment in the UK.

Who will be affected?

Investors in EIS and VCT schemes.

When?

The new rules are to be introduced as soon as practicable.