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Repayment of share capital to a member other than the EIS investor

EIS shares are intended to encourage the raising of additional capital, rather than the replacement of capital. If the issuing company or its subsidiary replaces the capital for a member and that member does not themselves suffer any withdrawal of relief as a result, relief given to an EIS investor may still be withdrawn or reduced¹. This is intended to discourage any replacement of capital where EIS relief has been given to any investor²:

Relief given to an EIS investor may be withdrawn or reduced if the issuing company or its subsidiary³:

1. Ìý

   •ÌýÌýÌýÌý repays, redeems or repurchases any share capital belonging to a different member, or

2. Ìý

   •ÌýÌýÌýÌý makes a payment to such a member for giving up that member's right to any share capital on its cancellation

The relief that can be withdrawn or reduced is EIS relief or CGT deferral relief (see E3.195), or SEIS relief (see E3.850), or, in the