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Mutual trading

09 June 2009
Issue: 4209 / Categories: Forum & Feedback
A company limited by guarantee facilitates the investment in enterprise investment schemes by its members who are charged fees to cover the legal costs, etc. associated with the making of such investments

I have a client a company limited by guarantee (BACO) that is utilised by business angels as a means of making enterprise investment scheme (EIS) investments.

BACO does not invest itself but does raise funds by charging subscription fees and deal fees to members and deal fees to invested companies.

This income is used to meet legal accountancy and administration fees arising from the investment processes. There is no profit motive and it is really the vehicle under which the investment club administers their investments.

Not all members of the investment clubs are formal members of BACO i.e. they do not act as guarantors. There are two tiers of members: those that are guarantors and those that are not.

The former pay slightly less than the latter in terms of subscriptions and deal fees to recognise the additional time and personal costs arising from...

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