What is a requirement for qualifying companies to accept investments under the EIS?

To qualify for investments under the Enterprise Investment Scheme (EIS), a key requirement is that the company must have fewer than 250 employees. This criterion is in place to ensure that the scheme supports smaller businesses, allowing them to raise funds while also providing tax relief benefits to investors. The rationale behind the employee count limit is to focus on aiding growth and innovation within smaller enterprises, which often struggle to secure funding through traditional means.

While there are also other conditions related to asset size and company structure under EIS, such as having gross assets of no more than £15 million before the investment and no more than £16 million after, the specific limit of fewer than 250 employees is critical to the qualification process. The expectation is that these smaller businesses are more agile and able to utilize new investments effectively to spur growth and job creation. Hence, this employee limit is a foundational aspect of the EIS framework aimed at fostering entrepreneurship.