BES Business expansion scheme

pasf

I am wondering if anyone one here has invested in the BES fund due to mature in 2013. The particular fund I am refering to was administered by a Limerick based accountancy firm. I would like to hear from investors, I have information that would be of use to you. Please pm.

siralan

I invested in a BES Scheme over 5 years ago. It was actually invested in the company I work for. Because the company is struggling financially they can not pay any investors back. It has left a very sour taste in my mouth and strained relations between myself and the directors . I'm not sure if il ever get my money back . Does anyone the legal obligation on the company to repay investors ?

antoinolachtnai

It depends on the contract when you invest. If you have a 'put' option on the company (which I think is typical) you can force the company to pay you back. However, that will only work if the company actually has some money to buy you out. Otherwise exercising the option will just put the company out of business. (If the company has very valuable assets though, this could be a way of recovering some of the money.)

If you are getting a regular payment from this company (i.e., a salary), you might be able to structure that payment in a way that would be tax-friendly. This is a technical point and you would need professional advice.

If you don't know a good bit about company law, you will really need some sort of advice.

There is basically no point in having relations deteriorate. It really won't help things. It is difficult, but it is possible to find a way to make it clear to everybody that the situation is grave, whilst at the main time keeping on good terms.

siralan

Thanks for the advise it has given me some food for thought. I will look into the possibility of being paid in a tax friendly way. Much appreciated

antoinolachtnai

This is a very technical matter, to be honest, and what I describe might be tricky depending on the structure. My feeling is that it could be structured as a loan by the company to you, secured on the shares. But I could be wrong.

As I say, it is important to keep up the best relations you can (whilst still being firm about your claim).

Alan Shore

siralan wrote: »

Does anyone the legal obligation on the company to repay investors ?

Now that would be great. You invest €10k in a company and the taxpayer gives you €4,100, and you have a legal right to get the €10k back, quids in. Thats not the way it works.
You take a risk and if it works you get your money back if not you lose.
http://www.revenue.ie/en/tax/it/leaflets/it55.html#section1 risk can't be eliminated.

antoinolachtnai

You do have a legal right to get the €10k back. Having a legal entitlement does not make the investment risk-free.

dbran

Hi

BES/EIS schemes are very high risk investments as there is always the possibility that the company will fail and in that case you get burned. I would never recommend them as you could loose the lot.

If you go with a reputable firm who specialise in this kind of investment vehicle, you reduce this risk as they will not want to have their name tarnished by spoofers. Consequently they will only promote schemes where the promoters are at least known to them and the projections that they give are reasonable and the project has a least a very good chance of success.

However that said, you will be dealing with sueing a limited liability company with all the difficulties that this involves. If the company does not actually have the money to pay you back then you may be onto looser.

dbran