EIS case: Rights changes disqualify shares
In Flix Innovations Ltd v HMRC [2015] TC04710, EIS relief was denied as a company's ordinary shares carried preferential rights on winding up.
In order for shares to qualify for tax relief under the Enterprise Investment Scheme (EIS) they must meet a set of qualifying conditions. They must be unredeemable ordinary shares and, depending on the date of issue under section 173 ITA 2007, must not contain any preferential rights, including no present or future preferential right to the company's assets on its winding up.