--- title: S/EIS Existing Shareholder Requirement description: What requirements do EIS investors face if they already hold shares in your company. --- [Skip to content](https://help.seedlegals.com/en/4966555-s-eis-existing-shareholder-requirement#main-content) English Show submenu for translations ![special-case-sl-logo.png\]](https://help.seedlegals.com/hs-fs/hubfs/special-case-sl-logo.png?width=165&height=18&name=special-case-sl-logo.png) - [Blog](https://seedlegals.com/resources/?nr=1) Open main navigation Close main navigation - [Blog](https://seedlegals.com/resources/?nr=1) - English Show submenu for translations - [Home](https://seedlegals.com/) [Home](https://seedlegals.com/) How can we help? - There are no suggestions because the search field is empty. 1. [Help Centre (UK)](https://help.seedlegals.com/en?hsLang=en) 2. [SEIS/EIS](https://help.seedlegals.com/en/seis-eis?hsLang=en) 3. [Before starting - Do I qualify for SEIS/EIS?](https://help.seedlegals.com/en/seis-eis?hsLang=en#before-starting-do-i-qualify-for-seis-eis) # S/EIS Existing Shareholder Requirement ## What requirements do EIS investors face if they already hold shares in your company. Part of the requirement when receiving SEIS/EIS relief is not only that the issuing company qualifies, but also that the investors are eligible for relief. At SeedLegals, we will check this as part of our Compliance review to ensure that your investors do not breach any requirements. **What is the existing shareholding requirement and what is its purpose?** One of the requirements for an investor to be eligible for EIS relief is S. 164A of the Income Tax 2007 - the existing shareholdings requirement. This requirement outlines that if at the time the relevant shares are issued, the investor holds other shares in the company, those shares must be either - 1. *A risk finance investment (i.e shares subscribed for under the SEIS, EIS or SITF rules for which the invested company submits a compliance statement to HMRC under section 205, 257ED or 257PB of the ITA 2007 respectively);* 2. *Subscriber shares which -* 1. *Were issued to, and have since they were issued been continuously held by, the investors, or;* 2. *Were acquired by the investor at a time when the company had not issued any shares other than subscriber shares and had not begun to carry on or make preparations for carrying on any trade or business (also known as the shelf period).* HMRC have confirmed that for the purpose of this act subscriber shares refer to *incorporation shares*. This means that if the investor received shares issued outside of the incorporation round, that are non SEIS/EIS shares, they will no longer be eligible for EIS relief. The purpose of this rule goes toward the intention of the SEIS/EIS relief, which is to encourage investors to invest into high risk companies that they might have not invested in otherwise. If the investors are willing to invest outside of an SEIS/EIS round, it could be argued that there would not be sufficient risk to capital for SEIS/EIS to be granted. **What does this mean for your investors?** This typically becomes an issue in cases where investors have received shares for services that they provided to the company. If they received shares, they will no longer be eligible to receive EIS relief. If they receive options for the services they provided, they will still be eligible to receive EIS relief so long as they have not exercised the options. 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