Income Tax Act 2007 section 257DG

The control and independence requirement

Section 257DG sets out the control and independence requirement that must be met by a company issuing shares under the Seed Enterprise Investment Scheme (SEIS), ensuring it neither controls non-qualifying companies nor is itself controlled by another company.

• During period A, the issuing company must not control any company that is not a qualifying subsidiary, whether on its own or together with any connected person, and no arrangements may exist that could cause it to fail this condition.
• During period A (ignoring any on-the-shelf period), the issuing company must not be under the control of another company, either alone or together with any person connected with that other company, and no arrangements may exist that could bring it under such control.
• An on-the-shelf period is a time during which the issuing company has issued only subscriber shares and has not begun to carry on, or make preparations for carrying on, any trade or business.
• This requirement is subject to the rules on continuity of SEIS relief where the issuing company is acquired by a new company through an exchange of shares.