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04: The underlying investments

Both VCTs and EISs are investments in small unlisted companies, which can include companies quoted on the Alternative Investment Market (AIM). A qualifying company cannot have gross assets of more than £7m before the issue of shares and £8m after the issue.

The EIS investment must be in newly issued ordinary shares, which carry no preferential rights. A VCT must invest at least 70% of their assets in newly issued securities of unlisted companies.

  • No more than 15% of a VCT by value may be invested in any single company or group of companies.
  • At least 70% of the VCT’s investments must be in new ordinary shares of qualifying companies, with certain preferential dividend rights.
  • At least 10% of a VCT’s investment in any company must be in ordinary, non-preferential shares.

VCTs have three years from the date of share issue in which to satisfy the 30% and 70% provisions.Last Updated 
The value of your investments - and the income from them - can fluctuate and it is possible that you might not get back a significant amount of your investment. Past performance is not a guide to future performance and may not be repeated.