Income Tax Act 2007 section 174

The purpose of the issue requirement

Section 174 sets out the requirement that shares issued under the Enterprise Investment Scheme must be issued for the purpose of raising money for a qualifying business activity that promotes business growth and development.

• Shares issued under EIS (excluding bonus shares) must be issued to raise money for a qualifying business activity
• The purpose of the share issue must be to promote business growth and development
• For a standalone company, business growth and development refers to the growth of that company's own business
• For a parent company, business growth and development means the growth of the combined group business, treating all group companies' activities as a single business