Part 5

Enterprise investment scheme
Chapter 2

The investor

Meaning of connection with issuing company

Directors qualifying for relief despite connection
169
1
Section 163(1) does not prevent the investor from being a qualifying investor despite the investor’s connection with the issuing company at any time in period A relating to the relevant shares if—
a
the investor is connected with that company merely because of the investor, or the investor’s associate—
i
being a director of, or of a company which is a partner of, the issuing company or a subsidiary of the issuing company, and
ii
being in receipt of, or entitled to receive, remuneration as such, and
b
conditions A and B and (where applicable) condition C are met.
2
Condition A is that, in relation to the director (“D”), whether D is the investor or an associate of the investor—
a
D’s remuneration, or
b
the remuneration to which D is entitled,
consists only of remuneration which is reasonable remuneration for services rendered to the company of which D is a director in D’s capacity as such.
3
Condition B is that the investor was issued with the relevant shares, or a previous issue of shares in the issuing company which meet the requirements of section 173(2), at a time when the investor had never been—
a
connected with the issuing company, or
b
involved in carrying on (whether on the investor’s own account or as a partner, director or employee) the whole or any part of the trade, business or profession carried on by the issuing company or a subsidiary of that company.
4
Condition C is that, if the issue of the relevant shares did not meet condition B, they were issued before the termination date relating to the latest issue of shares which met that condition.
5
For the purposes of condition A any necessary and reasonable remuneration falling within section 168(2)(f) is to be left out of account.
6
In this section “remuneration” includes any benefit or facility.