Friday, 10 March 2017

Crowdcube's Cell Therapy offers to buy out shareholders with a return but loss of EIS reliefs


Cell therapy raised over £600k in December 2014. Now new investment from Japan has enabled a company restructuring and an offer to shareholders to either take a share swop or cash - representing an almost 2X gain.

This is Crowdcube's best result to date. Shareholders paid £37 in 2014 and 24 moths later they are being offered £101. 

Although it is not all good news.

EIS reliefs which would have been taken by all B shareholders for tax year 2103/14, will have to be recharged if they opt to sell - with interest. They will also be liable to the full extent of any CGT for this tax year, giving them very limited time to adjust if their allowance is already used up.

I suppose you could argue you could get these odds at the bookies. Still it's better than poke in the eye with a blunt stick


6 comments:

  1. If they take a share swap will they keep their EIS status?

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    1. Good point - they dont discuss this. My guess is no the EIS will go as well but you need to check with an expert.

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  2. I think they have asked for (and expect) reassurance from hmrc that eis status remains if the share swap is taken.

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    1. If I understood it correctly they requested acknowledgement from HMRC of 'paper for paper' treatment so the exchange would not trigger any capital gains or corporation tax.

      Even though I assume that the same would apply in regard to EIS they didn't mention it so it might be worth double checking.

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  3. Wasn't Cell Therapy lined up for an IPO according to their pitch on crowdcube? Still, more than doubling your money isn't a bad outcome.

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  4. I am going to keep my shares in Cell Therapy (Celixir). This company has the potential to become a diamond. They now clearly say that they wont have an IPO in the foreseeable future, but it does not matter, let them develop more first. B shares' tax relief will be withdrawn if the B shareholder sells and gain will be taxed acc. to point 4. in the documentation. Their documentation on this offer is very clear.

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