Income Tax Act 2007 section 166

Connection with issuing company

Section 166 defines what it means for an individual to be "connected" with the company issuing shares under the Enterprise Investment Scheme (EIS), and signposts the specific sections that set out the different ways such a connection can arise.

• An individual is connected with the issuing company if either the individual themselves, or an associate of that individual, falls within one of the specified categories of connection.
• The three categories of connection are: being an employee, director or partner of the company (section 167); having an interest in the capital or other financial rights of the company (section 170); or subscribing for shares under certain arrangements (section 171).
• A special rule in section 252A(12) can disapply the exemption for directors otherwise available under section 168, particularly in the context of knowledge-intensive companies.
• This definition of connection applies throughout the investor chapter of the EIS rules, except for the specific purpose of section 168(4), and further supplementary definitions are provided by section 257(2).