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Can a UK startup use an Advance Subscription Agreement (ASA) for fundraising?
Under English company law and HMRC SEIS/EIS guidance, a UK startup can use an Advance Subscription Agreement (ASA) to receive investment before a priced equity round. Unlike a convertible loan or US SAFE note, an ASA must be purely equity without interest or repayment terms, and shares must be allotted within a fixed longstop date.
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Related questions
- Can an ASA carry an interest rate or repayment clause?
- No. For an ASA to qualify under SEIS or EIS rules, the investment cannot be a debt. It must be an advance payment for shares with no interest and no repayment obligation.
- What is a typical longstop date for a UK ASA?
- Under HMRC guidelines for SEIS and EIS relief, the longstop date for conversion into shares is typically no more than six months from the date of the agreement.
What this answer does not cover
- This answer covers company law and general SEIS/EIS requirements only. It does not assess the specific terms of an individual fundraising round.
- Tax relief qualification depends on the investor and company meeting all statutory conditions at the time of investment.