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AS 2011: AIC welcomes relaxing of VCT rules

The Association of Investment Companies director general Ian Sayers says the Chancellor’s decision to remove the £1m investment limit on Venture Capital Trusts will reduce the amount of red tape in the sector.

In today’s autumn statement, Chancellor George Osborne announced plans to scrap the £1m limit that VCTs can invest in a single company over any 12 month period. The AIC says that rule has resulted in significant burdens for the VCT sector, such as preventing a VCT from offering all the funds a small company may require. It also means that a small company looking for £5m of investment would need to garner that from five VCTs rather than one.

Sayer says: ““The Chancellor’s decision to remove the £1million investment limit demonstrates his commitment to reducing red tape in the VCT sector. Making this change will significantly enhance the capacity of the sector to support entrepreneurial businesses. The impact of this change should not be underestimated – it could transform the VCT sector.

“The burden of agreeing investment terms with multiple funding partners significantly increases costs.  Removing this limit will mean individual VCTs can invest more efficiently, grow in size and secure economies of scale.  At the same time, SMEs will be more able to identify a one-stop-shop partner able to meet their funding needs.”

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