TECHNICAL INFORMATION FOR INVESTEE COMPANIES

Qualifying Company Requirements

A qualifying company is one which:

  • is a Micro, Small or Medium Sized Enterprise within the European Commission definition in force for the relevant period (see notes below for a definition and for details of restrictions applying to medium-sized enterprises);
  • is incorporated in the State or another European Economic Area (EEA) State;
  • is resident in the State or is resident in another EEA State and carries on business in the State through a branch or agency;
  • is not regarded as a firm in difficulty for the purposes of the Community Guidelines on State Aid for rescuing and restructuring firms in difficulty;
  • is an unquoted company (except in the case of companies listed on the Irish Enterprise Exchange (IEX));
  • is engaged in a qualifying trade or whose business consists of holding shares or securities in one or more qualifying subsidiaries; and
  • has its issued share capital fully paid up.
  • A company will not cease to be regarded as a qualifying company if it is wound up or dissolved during the three year relevant period, provided it can be shown that the winding up or dissolution is for bona fide commercial reasons, and not part of a scheme or arrangement the main purpose of which (or one of the main purposes of which) is the avoidance of tax.

Qualifying Companies and Subsidiaries

A qualifying company can have subsidiaries provided generally that:

  • the subsidiaries are at least 51% owned by the parent company; and
  • the subsidiaries are themselves qualifying companies, or carry out certain services for, or functions on behalf of, the parent company or its subsidiaries.

Qualifying Trades

The company in which investment is made must carry on qualifying trading operations. These are:

  • the manufacture of goods (including computer services)
  • the operation of certain tourist traffic undertakings
  • internationally traded services
  • the cultivation of mushrooms
  • the micro-propagation of plants and plant cloning
  • the cultivation of horticultural produce in greenhouses
  • research and development activity which is undertaken with a view to carrying on certain of these
  • qualifying trading operations
  • commercial research and development activities
  • the construction and leasing of Advance Factory buildings
  • the production, publication, marketing and promotion of certain musical recordings by a new artist
  • recycling activities in relation to waste material, which has been subjected to any process or treatment, which results in value-added material that is reusable.

Some of the above activities require certification by a development agency and/or grant aid to qualify for BES purposes.

Use of BES Money Invested

The company must use the equity raised to do one or other of the following:

A

  • enable the company, or enlarge its capacity, to undertake its trading operations; or
  • enable the company to engage in, or assist the company in, research and development, the acquisition of technological information, the development of new or existing products or services or the provision of new products or services; or
  • enable the company to identify new markets, and to develop new and existing markets, for its products or services; or
  • enable the company to increase its sales of products or provision of services;

and/or
B

  • must use the equity raised with a view to the creation and/or maintenance of employment in the company or, in the case of the construction and leasing of advance factory buildings, in either or both a company contracted to construct the advance factory building and a company which enters into a lease for its use.

The company may use the money received for the purpose of the trade of a subsidiary provided the above rules and those relating to subsidiaries are met. A rule relating to subsidiaries is that where a company issues eligible shares for the purposes of raising BES funding for a qualifying trade which is carried on by its qualifying subsidiary, the company is not allowed to on-lend the proceeds of the BES fund raising to the subsidiary; the company must use the funds instead to acquire eligible shares in the subsidiary.

For further information on the Pinnacle BES Fund fundraising opportunities, please contact Maebh Gavin, Corporate Finance Manager, Horwath Bastow Charleton in Limerick on 061 310 311 or email Maebh Gavin.