490 Qualifying companies

Summary

This section sets out the rules which a company must comply with in order to be a qualifying company for the purpose of raising Employment and Investment Incentive (EII) funds, Start-Up Capital Incentive (SCI) funds and/or Start-Up Relief for Entrepreneur (SURE) funds.

The RICT Group

(2)(a)(b)The RICT Group shall be a micro, small or medium-sized enterprise within the meaning of Annex 1 to Commission Regulation (EU) No. 651/201 of 17 June 2014 (commonly referred to as “GBER”).

The RICT Group shall not be an undertaking in difficulty. “Undertaking in Difficulty” takes its meaning as set out in the General Block Exemption Regulations.

As well as the company itself, each company in the RICT Group must be unlisted and have no agreement at the time of the share issue to become a listed company.

The company cannot be subject to a recovery order for State Aid previously granted and deemed illegal and incompatible with the internal market by the commission. The company must hold a tax clearance cert.

(3)(b)All company’s in the RICT Group must have their issued shares fully paid up throughout the relevant period.

Qualifying companies

(1) For the purposes of Part 16 TCA 1997, a company shall be qualifying if it is incorporated in the State, in another EEA State or in the UK and complies with section 490 and section 491.

(3)(a) Throughout the relevant period (as defined in section 488) the company seeking relief and in order to be a qualifying company, must be resident in the State, or in an EEA State other than the State, or resident in the United Kingdom. It must intend to carry on relevant trading activities from a fixed place of business in the State.

The company cannot at any time throughout the relevant period, control or with a person connected with it, control another company other than a qualifying subsidiary. The company cannot at any time throughout the relevant period be under the control of another company, unless that control is by the National Asset Management Agency, or by a company referred to in S616(1)(g). No arrangements can exist at any time in the relevant period whereby the company could not fulfil these criteria.

(4)(a) The company must exist wholly for the purpose of carrying on relevant trading activities or be a company whose business consists wholly of the holding of shares or securities or the making of loans to, one or more qualifying subsidiaries of the company. In the case of the latter, a company can in addition to these activities, carry on relevant trading activities also. These relevant trading activities must be carried on from a fixed place of business in the State.

(4)(b) Where a company issues eligible shares for the purposes of raising money for relevant trading activities which are, or are intended to be, carried on by a qualifying subsidiary the amount so raised can be used only for the purpose of acquiring eligible shares in the qualifying subsidiary and for no other purpose.

Company Winding Up

(5) Without interfering with the general conditions for a company to be a qualifying company, a qualifying company will cease to retain that status if before the end of the relevant period, a resolution is passed, or an order is made, for the winding up for the company (or any other act is done for the like purpose) or the company is dissolved without winding up.

(6) However, a company does not cease to be a qualifying company by reason only of the fact that it is wound up or dissolved without winding up if it can be demonstrated that the winding up or dissolution is for genuine commercial reasons and (not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax), and the company’s net assets, if any, are distributed to its members before the end of the relevant period or, in the case of a winding up, the end (if later) of 3 years from the commencement of the winding up.

Genuine commercial reasons need not be limited to insolvency but could include other matters, for example, a falling off of trade or a bona fide reconstruction.

Relevant Date: Finance Act 2021