Income Tax Act 2007 section 257CA

The shares requirement

Section 257CA defines the type of shares that qualify for Seed Enterprise Investment Scheme (SEIS) relief, including restrictions on preferential rights and requirements for how the shares must be paid for.

• Qualifying shares must be ordinary shares that do not carry preferential rights to assets on winding up or any right to be redeemed during the relevant period.
• Certain preferential dividend rights are permitted, but not where the amount or timing of dividends depends on a decision of the company or any other person, or where unpaid dividends accumulate (cumulative dividends).
• Unless the shares are bonus shares, they must be subscribed for wholly in cash and be fully paid up at the time of issue.
• Shares are not treated as fully paid up if there is any undertaking to pay cash to any person at a future date in respect of acquiring them.