§ Mr. GryllsTo ask the Chancellor of the Exchequer if he will make a statement on the proposed restriction on companies raising finance under the business expansion scheme.
§ Mr. Norman LamontMy hon. Friend the Economic Secretary to the Treasury announced during the Budget debates on 17 March that provided a company had issued a prospectus before Budget day and issued the shares before the end of the present tax year, the £500,000 limit would be increased to £1 million. However, there are some companies which do not offer shares to the public and do not need therefore to issue a prospectus. In order to help these companies the announced relaxation will also apply400W to a share issue made in pursuance of an offer for sale in writing made before Budget day, provided that the shares are issued before the end of the present tax year.
It has also been suggested that the limitation on the amount raised in any period of 12 months could prevent a company using the BES to raise finance when it needs it. So we propose to amend this rule in a way which will give companies more flexibility while retaining the principle of an annual limit. The amended limit will apply to the amount raised in a tax year, but in order to prevent companies effectively doubling the limit by making share issues both at the end of one tax year and the beginning of the next, the limit will also apply to the amount raised in any period of six months.