IP licensing agreements between the entities.The is then that as soon as you have a multi-company structure, your investors are going to look for iron-clad agreements between the companies to ensure that the entity they’re investing in will be the one in which the ultimate value exists. When investors make an investment in your company they want to be sure that the entity they’re investing in owns all the IP, owns the future revenue stream, owns and controls the product, etc. raise investment in the ChildCo and keep the IP in a holding company, that won’t work, at least not if you want to offer SEIS/EIS. So, that makes it clear – if you created a two-tier company, you have to raise investment in the TopCo if your investors are to get SEIS/EIS. If the company has a subsidiary, it has to be 90%+ owned by the TopCo SEIS/EIS can only be made into a TopCo (any investment in a ChildCo won’t qualify for SEIS/EIS).Broadly, they create two main sets of problems: SEIS/EIS rules say investment has to be in the TopCo We think these multi-company structures are almost always a bad idea, done for the wrong reasons, and cause significant problems later. When we ask why they went with this structure, the most common response is “our accountant suggested we do this” or “to keep the IP in a separate company from the investment”. Nice and easy.īut, just occasionally we come across founders who’ve created a multi-level company structure with a holding company (we’ll call that TopCo) owning shares in a subsidiary (we’ll call that ChildCo). 99% of the companies we see on SeedLegals have just a single company registered on Companies House.
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