SEIS+EIS Information Memorandum - Jonathan Lea Network

SEIS+EIS Information Memorandum



This product constitutes an easily adaptable SEIS information memorandum, together with a set of tailored guidance notes which aim to explain the key components of the document. While the product has been drafted with the SEIS regime in mind, it can nevertheless be adapted to be used as an EIS information memorandum also.

The information memorandum is a marketing document which can be issued to potential investors in order to facilitate investment in a new start-up company.

The only drafting that needs to be done from your side is to insert the relevant information into the square brackets provided. The wording inside the square brackets which we have included explains clearly the information that should be inserted. You are advised to fill in the wording in square brackets in lower case. Any figures should be entered in numerical form. The brackets should be removed after the amendments are made and relevant detail inserted (so as to produce a ‘final form’ version of the information memorandum).


Guidance notes for SEIS / EIS Information Memorandum

This information memorandum can be provided to potential SEIS investors / subscribers where a Company is raising its first tranche of seed investment in order to grow its business.

General breakdown of the document

The information memorandum provides detail on page one showing the company’s name and outlines the company’s fundraising plans. Set out below is an explanation as to how the first page of the document could be filled out using a hypothetical example of ‘Company A’.

Suppose that Company A was recently incorporated and has an issued share capital of 100 ordinary shares of nominal value £1.00 each, which are all held by the founder. In order to better facilitate the raising of seed investment, the first step in the process would be for Company A to subdivide its share capital. Suppose therefore that Company A subdivides its share capital to instead create 10,000 ordinary shares of nominal value £0.01 each.

Company A intends to raise £100,000 pursuant to SEIS at a post-money valuation of £1 million. On this basis, Company A needs to issue SEIS investors with shares amounting to 10% of its share capital after the issue of new shares (on the basis that £100,000 / £1 million X 100 = 10).

If the company issues 1,112 new ordinary shares of nominal value £0.01 each (increasing its total issued share capital to 11,112 ordinary shares of nominal value £0.01 each in the process), this will represent as close to a 10% shareholding as is possible – this is because 1,112 / 11,112 X 100 = 10.00719942404608%.

If Company A issues those shares to the SEIS investors at a share price / subscription price of £89.93 per share, this will lead the company to raise the £100,000 it requires (given that 89.93 X 1,112 = £100,002.16).

In such a case, Company A would fill out the first page of the information memorandum as follows:

Company A SEIS Investment

Company A

(incorporated and registered in England and Wales with registered number 12345678)

Proposed Placing of up to 1,112 Ordinary Shares of nominal value £0.01 each at an issue price of £89.93 per share


This Information Memorandum is being issued by Company A (the Company) to a limited number of potential investors in connection with the possible issue of up to 1,112 Ordinary Shares of nominal value £0.01 each in the capital of Company A for cash at an issue price of £89.93 per share. This Information Memorandum should not be distributed, published or reproduced, in whole or in part, nor should its contents be disclosed by recipients to any other person other than their own professional advisers”.


Documents and important detail contained within the Information Memorandum

The information memorandum makes clear throughout that its contents have not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 and that any investment in the company carries / entails a significant element of risk and that the investor could lose all of any property or other assets invested.

There is protection provided to the company at page two which provides that the information memorandum has been prepared in good faith, but no responsibility or liability is or will be accepted by the Company in relation to the information memorandum’s accuracy or completeness.

There is scope in the information memorandum for the company to explain its business as well as its fundraising and future growth plans (this detail could be inserted under ‘Part I, Introduction’). The information memorandum can also include important information such as details of the company’s key management, its financial forecasts, a detailed investment proposal setting out its fundraising requirements and details of how the company intends to spend the monies raised.

The company can also outline the risk factors that it is specifically exposed to so as to give potential investors / subscribers further information with which they can assess the level of investment risk (although any potential investor / subscriber is advised to first seek professional advice from an individual authorised under the Financial Services and Markets Act 2000 (‘FSMA 2000’) before making a decision on whether to invest in the company or not).

The information memorandum also includes some key information relating to the tax benefits that investments in SEIS qualifying companies can benefit from, along with an example taken from HMRC’s own guidance manuals for SEIS showing how the tax reliefs / benefits work in practice. Again, a potential investor / subscriber should always obtain tax advice from a sufficiently qualified individual and / or a person authorised under the FSMA 2000 before making a decision to invest.

Part 1 of Appendix 1 of the information memorandum contains a set of instructions for the investors on how to complete the subscription letter contained within Part 2 of Appendix 1. A ‘deadline’ can be inserted at Part 1 of Appendix 1 by which the company must receive the completed subscription letter and the relevant subscription monies.

The subscription letter essentially functions as a short-form subscription agreement that the investor must sign and complete as part of the investment process. The subscription letter sets out the material terms on which the investment will be made. The letter makes clear that the investor will be liable to pay the consideration in sterling by cheque or via CHAPS transfer to the company’s account (details of which will be supplied separately to the investor upon request). Following the transmission of the consideration monies and once the investor has provided the completed subscription letter, the letter confirms that the company will allot and issue the new shares to the investor, enter the investor’s name in the register of members of the company and execute and deliver to the investor a share certificate for the shares (which will contain the investor’s details as contained within Schedule 1 of the letter).

The letter also contains acknowledgement provisions which shows the investor confirming that he/she understands that an investment in the company involves a high degree of risk given that there is no established market for liquidity in shares held in a private limited company.

The letter is only issued to people defined in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as ‘certain high net worth individuals’, ‘sophisticated investors’, ‘self-certified sophisticated investors’ and any other person to whom it may be lawfully communicated (each defined as an ‘Appropriate Investor’).

The investor must insert their details at Schedule 1 of the subscription letter – Schedule 1 essentially acts as the investor’s ‘application form’.

At Schedule 2, the investor must then sign a declaration which confirms that they are one of the following: a certified high net worth individual; a certified sophisticated investor; or a self-certified sophisticated investor.


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