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Where Taxpayers and Advisers Meet

Convertible Loan impact on EIS

masplin
Posts:2
Joined:Wed Mar 14, 2018 7:47 pm
Convertible Loan impact on EIS

Postby masplin » Wed Apr 20, 2022 3:47 pm

Hi

I am an EIS investor in a struggling business. I am looking to loan the company some short term capital while they try to raise new equity using a secure convertible loan. I am not doing an ASA as cant be secured. My question is the impact this could have on my existing EIS investment

1. If the loan converts to equity I know it is not a qualifying investment. However is this some how "receiving value" and does this affect the status of existing EIS shares?
2. If the loan is repaid I assume this is "receiving value" so again does this affect existing EIS shares and/or does it affect my ability to invest in future under EIS?
3. If the company goes bust and I receive the security is this "receiving value" and again does it affect the status of existing EIS shares

I have emailed HMRC, but the reply may not come in time. Appreciate any advice as cannot find clear guidance anywhere

Mike

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