Raising funds during the covid time was a task in itself, Covid taught us how extreme emergencies can pop up, and one should prepare ahead of time. Disastrous events are not notified before arriving. One such measure is the concept of EIS shares. The term EIS is the acronym for an enterprise investment scheme, which was coined to help small firms raise funds, further acting as a tool for the industrialization of a state. Often it is seen that at the time of raising funds we all prefer to bring secure enterprise, leading to only one or two gold fishes, and robbing the chance of small firms to raise to their full potential.
EIS Qualifying Companies
Generally, the companies that back position in the EIS qualifying list are small-scale industries and are privately owned. The firm should not be trading on the recognised stock exchange at the time of the issue of EIS shares. The owner should not hold other companies other than the company for which shares are issued, several employees should be less than or equivalent to 250. The above-mentioned are some of the qualifications the firm has to fulfil to be a beneficiary of EIS. What happens is that the government writes off the taxes of an individual who invests in the company coming under the umbrella of EIS.
EIS Investment Direct Or Via Funds
EIS shares are typically issued for early-stage businesses so that they can get the opportunity to reach their maximum potential, hence contributing to the GDP of the nation. Once the company comes under the EIS qualifying list, it is eligible to issue EIS shares under its name. Investors who want to invest in early-stage businesses can invest directly or via funds. Which method to use completely depends upon the investor's personal choice, his/ her confidence in investing, an industry he or is gonna invest in, type and scope of product that is to be launched. EIS via a fund enables the investor the diversification of capital, let’s, for example, assume an investor is interested in finance and climate change he could invest in a startup bank along with a cleantech enterprise. Thus fulfilling his both interests.
During covid times an increase in the number of startups has been seen
all around the world, but the main issue arose when these startups needed
funding for bigger projects, Since they were recently started, no investor is
ready to risk the funding, and often their potential is undermined. So the
government opened EIS shares, in which whoever invested in the start-ups that
qualify for the EIS enrollment procedure would be given the privilege of the
tax break. The tax break provided is proportional to the investment made and is
variable for different firms. These Tax break rules are dependent on the
circumstances and can be altered, so before investing refer to the governmental
sites and check the tax rates.
