We responded to the BEIS Committee inquiry into scale-up companies. We noted that identifying and supporting potential high-growth companies – wherever they are located in the UK – will play a key role in generating sustainable economic growth and stimulating job creation in the years ahead.
We commented that the Government had taken some positive steps in supporting UK scale-ups, such as abolishing stamp duty on the trading of growth market shares, exempting investment returns from growth companies’ shares from income and capital gains taxes and extending Capital Gains Tax Entrepreneurs’ Relief to external investors in unlisted trading companies for newly issued shares. We noted that these measures had promoted the use of public equity markets as an affordable way for growth companies to raise capital.
We argued that improving companies' corporate governance would lead to better management and business practices and therefore help companies manage and reduce risks as they grow and develop. We encouraged the Government to play a leading role in highlighting guidance, such as the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies, that is tailored to the needs of growth companies.
To improve and incentivise the provision of patient capital, we called on the Government to:
- Enable the costs of raising equity to be tax deductible. This will give companies a greater incentive to raise finance on public markets and promote long-term economic stability;
- Broaden the scope of Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) rules to enable growing companies of all ages to raise the finance they need to flourish;
- Relax Company Share Option Plan (CSOP) requirements to incentivise the provision of long-term finance and encourage employee share ownership;
- Review of the prospectus rules to suit the needs of UK capital markets once the UK has left the EU; and
- Find alternative vehicles for public company investment and challenging the current “one share, one vote” model.
