A solution to the equity gap?

Article Abstract:

The British government has been launching tax-based programs since 1993 to make equity more accessible to private companies. These schemes include the capital gains tax reinvestment relief, the Enterprise Investment Scheme (EIS) and the venture capital trust (VCT). Reinvestment relief and EIS have not been very successful in attracting investors and in raising significant amounts of equity funds. In contrast, the VCT scheme is increasingly gaining the attention of the investment community because of the many generous tax reliefs it offers. Among the scheme's many attractions are the maximum of 20% income tax relief on 100,000 pounds sterling invested annually, up to 20% capital gains tax (CGT) reinvestment relief, tax-exempt distributions from the VCT and CGT exemption for disposals of VCT shares.

Tax policy, Tax incentives

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Finance for the growing business: the 'hands on' capital link

Article Abstract:

In England, the 'hands-on' venture capital approach is particularly helpful to young companies. To compensate for the risks involved, venture capitalists require a detailed business plan describing money allocation. Thus, the client company has to accept a certain amount of control and restrictions in the shareholder agreement. The venture capitalist, as nonexecutive director of the company, has monitoring duties to the financial investors, as well as special duties (such as providing information to investors, attending monthly board meetings, and acting as an extra resource when the situation warrants it). There is considerable overlap between the executive director's and the nonexecutive director's duties.

Small business

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Where the BES scores in raising equity capital

Article Abstract:

British companies that are not listed on public markets can obtain financial assistance through Britain's Business Expansion Program (BES), which provides small businesses with some tax relief based upon the company's need to raise equity capital. The BES application process and the economics of BES relief are discussed, and the basic concepts of the BES program are explained: subscription prices, backup financial resources, and costs of raising equity.

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