Future Fund FAQs
About the Future Fund
Note
All defined terms in this document are set out in the Glossary of Terms document available on the portal.
These FAQs are provided for informative purposes. They are not intended to provide advice of any kind (including legal, financial, tax or other professional advice). You should seek professional or specialist advice before doing anything on the basis of this content.
The Future Fund scheme has now closed for new applicants. We are now processing applications which were correctly completed and submitted by a lead investor and matched by the investee business before 23:59 GMT on Sunday, 31 January 2021, when the scheme closed to new applications. The online portal will remain open for Investee companies with legally completed CLAs to submit information and MI for portfolio monitoring purposes. Please see the Closure of Scheme FAQs for further information on how this impacts new and existing applicants.
Are there restrictions for use of proceeds from the Loans?
Loans advanced under a CLA cannot be used to repay shareholder or related party loans (other than under any bank or venture debt facilities), pay dividends, pay bonuses or discretionary payments that are non-contracted or not in the ordinary course of business for 12 months, pay advisory, placement or similar corporate finance type fees in relation to that CLA or lend to, invest in, or otherwise provide finance to companies or persons that are not part of the Investee Company’s group. In the case of non-UK Parent companies, the proceeds from the loan should be used in respect of the UK business of the Investee Company.
What should the proceeds from the Loans be used for?
Loans advanced under a CLA should be used solely for the purposes of operating expenditure and/or capital expenditure in respect of the company’s group’s business.
What happens if I don’t have an external investor or investors lined up?
The Future Fund provides matched funding and therefore will require third party investor(s) for an application to be made. The Future Fund does not offer a ‘matchmaking’ service where companies can find investors on the portal.
Investors are strongly recommended to confirm the commitment of any other investors investing alongside them before submitting an application for an Investee Company.
Will the fund be split into sub-funds for different sizes of investment?
No. Applications will be processed on a “first come, first served” basis. The fund will not be split into sub-funds for different sizes of investment.
Will I be more successful if I ask for less money, will my allocation be scaled back?
No. Applications will be processed on a “first come, first served” basis. The application process does not make any distinction on the size of investment.
When do I have to have previously raised £250,000 external equity funding by?
An Investee Company must have closed at least £250,000 of equity investment for cash consideration from third-party investors in the period 1 April 2015 to 19 April 2020 inclusive. Any application will be subject to the eligibility criteria.
What is the timeframe for investment under the Future Fund?
The Future Fund launched in May 2020 and the scheme has now closed for new applicants. We are now processing applications which were correctly completed and submitted by a lead investor and matched by the investee business before 23:59 GMT on Sunday, 31 January 2021, when the scheme closed to new applications. The online portal will remain open for Investee companies with legally completed CLAs to submit information and MI for portfolio monitoring purposes.
Won’t this crowd out private investment / distort the market?
This is a temporary and targeted programme to address funding challenges arising from the Coronavirus pandemic.
Does the Government expect to make a return?
The Future Fund will operate on a fully commercial basis, on the same terms as third-party investors.
How does the interest rate work?
The rate of interest applicable will be no less than 8% (non-compounding), but may be higher for all Investors (including the Future Fund) if that has been agreed between the Investee Company and Investors (other than the Future Fund) prior to the Application.
When is the interest payable?
The interest is only charged on conversion of a Loan into shares or an event of default by the Investee Company. Companies may elect to repay interest prior to conversion.
Is income tax deductible at source in respect of any payments made by the Investee Company?
Investee Companies should make payments without a deduction of income tax at source, unless a deduction of income tax at source is required by law.
Payments to the Future Fund should be made without a deduction of income tax at source on the basis that such payments are received by UK FF Nominees Limited on bare trust for the Department for Business, Energy and Industrial Strategy which as part of the UK Government benefits from an exemption from income tax. The Investee Company is advised to seek its own tax advice in relation to whether the deduction of income tax at source is required by law for payments to the Future Fund and other investors (other than the Future Fund).
What is the conversion discount rate?
The conversion discount will be 20%, unless a higher rate has been agreed with the Investee Company and the Investors (other than the Future Fund). Please refer to CLA for further details.
When can the Loans convert into equity?
The Loans can convert into shares in the Investee Company in a variety of circumstances, including fundraisings, exit events and upon the maturity of the Loans. Please note that, Loans may alternatively be repaid on an exit event or at their maturity date either at the election of Investors or, in certain cases, automatically.
When will the Loans mature?
The Loans will mature 36 months after the execution date of the CLA.
Can an Investee Company repay the Loans if it chooses?
The Investee Company cannot choose to repay its Loan. The Loans will either convert into shares or be repayable in certain circumstances, such as: specific exit events; maturity of the Loan; or on an event of default by the Investee Company.
Is there a currency requirement for the investment funds?
All investment funds need to be in pounds sterling. All investments being made by investors the Investors will also need to be made in pounds sterling.
Are any terms of the CLA negotiable?
The form of the CLA is a fixed, standard form document. However, certain terms of the CLA, including the interest rate, conversion discount, headroom amount and valuation cap are negotiable between the Investors (other than the Future Fund) and the Investee Company in advance of Application. However, the interest and discount rates cannot be lower than 8% and 20% respectively. If no headroom amount or valuation cap is agreed, they will default to zero and void, respectively.
In the scenario where the Loans convert, which government entity would be on the Relevant Investee Company’s cap tables?
UK FF Nominees Limited. This entity holds legal title to the Future Fund’s Loans and any shares resulting from their conversion on behalf of the government.
How will the Future Fund ensure that funding is distributed to companies across the UK?
The Future Fund is open to companies in all regions and countries of the UK. Applications from potential investors will be assessed and allocated funding on a first-come-first served basis, subject to meeting the eligibility criteria. Controls are in place to reduce privileged access by more advanced potential investors submitting Applications in respect of a large number of companies on the same day.
The funds received from the Future Fund and Investors should be used in respect of the UK business of the Investee Company.
Will the CLA have tax consequences for the Investee Company, the Lead Investor and/or any Other Investor?
Entering into the CLA and/or undertaking any of the actions contemplated by it may have tax consequences for the Investee Company and/or any of the Lead Investor or the Other Investors, some of which could potentially be adverse. We would strongly recommend that the Investee Company and each Lead Investor and Other Investor seeks its own tax advice prior to entering into the CLA and/or undertaking any of the actions contemplated by it.
Will the CLA have accounting consequences for the Investee Company and/or the Lead Investor or any Other Investor?
Entering into the CLA and/or undertaking any of the actions contemplated by it will have complex accounting consequences for the Investee Company and each of the Lead Investor and the Other Investors. We would strongly recommend that the Investee Company and each Lead Investor and Other Investor seek accounting advice prior to entering into the CLA and/or undertaking any of the actions contemplated by it.
Can I use the portal to find suitable investors?
No, the portal does not allow for ‘match-making’. Your company must have matched with an investor (or investors) before the Lead Investor submits an Application.
Eligibility
What is the company eligibility criteria for the Future Fund?
To be eligible for the scheme, a company must meet the following eligibility criteria:
- the company must have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years (from 1 April 2015 to 19 April 2020, inclusive);
- if the company is a member of a corporate group, it must be the ultimate parent company;
- the company does not have any of its shares or other securities listed/quoted on a regulated market, a multilateral trading facility, a recognised investment exchange and/or any other similar market, stock exchange or listing venue;
- the company must be a UK incorporated limited company or be eligible to apply as a non-UK parent company (see specific eligibility criteria in the FAQs for non-UK parent companies);
- the company must have been incorporated on or before 31 December 2019 (or if you are a non-UK jurisdiction company, this criterion applies only to at least one UK subsidiary operating company, and
- at least one of the following must be true for the company (this criterion applies to your group):
- half or more employees are UK based; and
- half or more revenues are from UK sales.
Who can apply for the Future Fund?
This is an investor-led scheme which means the Lead Investor applies on behalf of itself, the Investee Company and the Other Investors and provides information about the Investee Company and the Other Investors. Initial stages of the Application will be made by the Lead Investor, with the Investee Company subsequently providing and verifying information during the later stages of the Application.
Information about the Lead Investor and the Other Investors is used by the portal to conduct certain checks on them, to compile execution versions of the legal documentation and to send those execution versions out to the Lead Investor and the Other Investors.
Does the prohibition on providing finance to companies or persons that are not part of the company’s group preclude FinTech businesses, fund/asset managers or other businesses whose principal trade is to provide or facilitate such third-party finance?
The purpose of the Future Fund is to support innovative UK companies that typically rely on equity investment and are currently affected by Covid-19. The funding, which is unlocked by third-party investment on a match funded basis, creates a bridge to the next equity funding round.
The Future Fund can continue to be used to fund the growth of FinTech businesses, fund/asset managers and other businesses which provide or facilitate third-party finance where a Future Fund loan will be used to fund their own business’s operating or capital expenditure.
If I am a private equity backed business (for these purposes, not venture capital), am I eligible?
The Future Fund is open to all companies that meet the eligibility criteria.
Will I be eligible if I haven’t previously received £250,000 in third party equity investment?
No. The Investee Company must have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years (from 1 April 2015 to 19 April 2020 inclusive).
Are sole traders / freelancers eligible?
No. To be eligible a business must be a UK incorporated private company limited by shares (or a company equivalent to a private company limited by shares if incorporated in a non-UK jurisdiction and applying as a non-UK parent company). Sole traders, partnerships, LLPs and unincorporated bodies are not eligible, nor are companies whose shares are traded on public exchanges.
What happens if the eligibility criteria are not met?
If the eligibility criteria are not met, your Application will not be able to proceed.
Do AIM quoted companies qualify as under tax guidance they are unlisted and unquoted?
No. AIM quoted companies will not qualify, nor will companies with shares admitted to trading on any other similar market, stock exchange or listing venue.
Will companies incorporated in Scotland, Wales or Northern Ireland or other non-UK jurisdictions also be able access this funding?
The Future Fund is open to eligible companies incorporated in England and Wales, Scotland or Northern Ireland or other non-UK jurisdictions where applicable (see details on non-UK parent company applications).
What sectors can access the Future Fund?
The Future Fund is open to eligible companies operating in all sectors.
Will I be eligible where part of this round has been left open for investors who are yet to be identified?
Once the CLA has been signed, there is a 90 day window in which additional investors can make further loans to the Investee Company on the same basis as the CLA, up to a headroom amount agreed in the CLA by the Investors and the Investee Company. These further loans will have to be arranged between the relevant Investee Company and further investors outside of the portal and the relevant Investee Company will notify the Future Fund of the outcome. These additional loans do not qualify for matched funding from the Future Fund.
Application process for Future Fund
How long does it take to fill in the initial part of the Application?
Completion of the initial part of the Application should not take a long time but will require the Lead Investor to have certain information to hand – this information is set out at the start of the Application process. For those applying on behalf of a non-UK parent company the full process of assessing the application may take a little longer to allow for the impact of jurisdictional changes and any additional requirements.
Will the Future Fund require management information?
Yes, the Future Fund requires Investee Companies to provide the same information that current shareholders receive. Additionally, the Future Fund will require information to be submitted quarterly via an online portal for portfolio monitoring purposes.
Why are you collecting information on diversity as part of the Application process? What will you do with this data?
The Future Fund is collecting data on the diversity of companies to enable us to monitor the diversity of the Applications we receive. The Application asks for the gender mix and ethnicity mix of the management team and the region where the company is based. Providing gender mix and ethnicity mix data information is optional (region is given by the company address).
The Future Fund and British Business Bank will anonymise and aggregate this data and plan to publish it to contribute to increased transparency of the investment markets.
View our privacy notice.
What information does a Company need to submit once an Investor has made an application relating to them?
To submit the application you must be a statutory director or company secretary of the company.
You will need the following information to set up a Future Fund portal account:
- name;
- job title;
- email address;
- password; and
- telephone number.
We will ask you to review and add or amend the following information on the Investee Company:
- Investee Company name;
- legal form;
- date of incorporation;
- country of incorporation;
- UK Company registration number;
- registered address;
- operating/trading address (if different);
- number of full time equivalent employees (this year/last year/two years ago – as applicable);
- turnover (this year/last year/two years ago – as applicable);
- website address (if applicable);
- industry (SIC Code); and
- nature of Investee Company.
For those companies applying in relation to a non-UK Parent company there are additional information requirements related to the eligibility criteria. Investee Companies will be sent the relevant information requests during the process.
You will need the following information on each company officer and ultimate beneficial owner:
- whether they are a key principal/director or an ultimate beneficial owner;
- name;
- date of birth;
- citizenship; and
- copy of an ownership structure chart or supporting documentation showing all ultimate beneficial owners owning 25% or more of the company as well as all intermediary beneficial owners.
We will ask you to for the following information on the diversity mix of your management team – you may choose not to provide this information but we encourage you to do so:
- gender mix of management team; and
- ethnicity mix of management team.
You will need the following information on yourself:
- name;
- date of birth;
- country of birth;
- citizenship;
- address; and
- image or scanned copy of a photo ID (driving licence, passport, identity card).
You will need to confirm the following information provided by the Lead Investor on the Investment:
- amount of the loan provided in aggregate by private investors;
- amount of the loan requested from Future Fund;
- amount of the loan provided by the Lead Investor (as the Lead Investor of the group); and
- whether the Investor had previously invested in the Investee Company (yes/no).
You will need the following information on your nominated company solicitor:
- name of firm of solicitors;
- name of primary contact at firm;
- email address of primary contact at firm;
- telephone number of primary contact at firm (if applicable);
- Solicitor registration location (e.g. England and Wales); and
- Solicitor registration number of firm.
Once an Application is submitted, we will perform checks and may request further evidence.
How do I start an Application?
A Lead Investor must initiate an Application in respect of the relevant Investee Company. An Investee Company (i.e. a company seeking investment) cannot initiate an Application. Once a Lead Investor has submitted an Application, you will receive an email with instructions on how to (i) proceed with opening an online account; and (ii) progress the Application.
You can check your company’s potential eligibility for the Future Fund on the Companies page of the Future Fund website.
Can an Investee Company have more than one Application?
No, only one Application per Investee Company can be accepted. A Lead Investor must initiate an Application on behalf of all the Investors (other than the Future Fund) that would propose to participate in the funding. Matched funding must be evidenced in full for the Application to be processed.
How do I view open Applications?
You can view all open Applications by logging into your Future Fund online account, and clicking on the ‘View open applications’ button. Here you can see the status of the Application.
I know that an investor has submitted an application in connection with my company, but I haven’t received an email. What do I do?
Contact our customer support team as soon as possible. Contact details are on the Support page.
I’ve submitted an Application. What happens next?
Given the high volumes received in the final days of the scheme we are experiencing a longer application processing timeframe. The difference between application timelines will depend on a number of factors including the speed at which applicants are able to provide information and review documentation.
Process application
We will conduct a number of checks on the proposed Investor(s) and Company (including KYC and AML checks) and review the Application.
You should have received an email with more information about what happens next in the process.
I realise I’ve submitted inaccurate information in my Application. What do I do?
Contact our customer support team as soon as possible. Contact details are on the Support page.
How will the Future Fund ensure that funding decisions are fair and that it supports a broad range of companies?
The Future Fund allocates funding by applying a set of standardised eligibility criteria. These criteria are published on the website. They have been developed to allow for a broad range of companies to benefit from the Future Fund, while protecting taxpayer investment.
To protect the use of public funds, all applications will be assessed against UK Government investment standards on specific jurisdictions by reference to factors such as sanctions, tax transparency, and the cost and complexity of implementation. The UK Government will also take into account concerns around the proper use of public finances and wider public policy risks, as well as whether investment would undermine the integrity or public credibility of the Future Fund.
Can directors’ and employees’ investment to date count towards the £250,000 / can they also count as matched funders to the Future Fund?
No. The Investee Company must have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years (from 1 April 2015 to 19 April 2020, inclusive). Third-party investors means investors other than any connected person of the Investee Company, any founder, employee, worker or consultant or their connected persons. However, investment from non-executive and investment directors can count towards the £250,000 raised, and will be eligible for match funding.
If an application is successful a director of the Investee Company will be required to sign a standard form declaration which includes, among other things, a confirmation of this criterion.
How the Future Fund relates to other types of funding or Investment Schemes
Does the prohibition on providing finance to companies or persons that are not part of the company’s group mean that group companies cannot extend normal trade credit?
This is not the intention and companies that have received loans under a CLA may continue to offer normal trade credit.
Can proceeds from the Loans be used to make loans to other businesses alongside the Future Fund as part of the Future Fund Scheme?
No, this runs contrary to one of the basic principles underlying the Future Fund of matching its investment with independent, private funding from third-party investors. Investee Companies will undertake in the CLA that proceeds from the Loans will not be used to make loans to other businesses alongside the Future Fund as part of the Future Fund Scheme and the Lead Investor will be asked to confirm on behalf of itself and the Other Investors (so far as it is aware in respect of those Other Investors) that none of their proposed funding is derived wholly or partly from the proceeds of another Future Fund application.
Will the Convertible Loan Agreement (CLA) be SEIS or EIS eligible?
HM Treasury and HMRC are responsible for all decisions on tax reliefs, including on SEIS and EIS.
It is our understanding that the structure of the CLA does not meet existing rules for SEIS or EIS eligibility. Compatibility with tax schemes is a matter for HM Treasury and HMRC.
Will entering into the CLA affect the SEIS or EIS compatibility of investments made prior to the CLA?
HM Treasury and HMRC are responsible for all decisions on tax reliefs, including on SEIS and EIS.
The government has confirmed that such previous investments will not be affected where the convertible loan converts into shares. Where the convertible loan note redeems, we have been alerted that the government intends to make changes to the rules to clarify that this is compatible with such previous investments.
Will entering into the CLA affect the SEIS or EIS compatibility of future investments?
HM Treasury and HMRC are responsible for all decisions on tax reliefs, including on SEIS and EIS.
Will angel investors who have invested in start-ups qualify?
Yes, subject to meeting the eligibility criteria for the Future Fund.
How does this rank with existing ASA’s and would they qualify as a match?
Existing ASA’s do not qualify as matched funding for the purposes of the Future Fund, nor do they qualify as equity raised until they have converted into shares.
How do the Loans rank with existing debts of the Investee Company?
The Loans shall rank pari passu with all other unsecured indebtedness or obligations of the Investee Company and shall be subordinated to any secured debt of the Investee Company.
Managing your Future Fund account
How do I sign into my account?
You can sign into your account by clicking on the profile icon on our website (top right-hand corner).
I’ve forgotten my password. What do I do?
There is a ‘Reset password’ button on the sign in page. Navigate to the sign in page and follow the instructions on screen.
How do I change my personal account information?
You can edit your profile information by clicking on the ‘Edit profile’ button when you have signed into your account.
The pre-populated information in the Application is inaccurate. What do I do?
Continue with your Application and submit the Application. Then contact our customer support team as soon as possible. Contact details are on the Support page.
General Future Fund questions
What is a convertible loan?
A convertible loan is a debt instrument that may convert into shares of the company receiving the loan at a later date.
What other Government Support is in place for businesses struggling in the face of COVID19?
Please visit https://www.gov.uk/coronavirus for more information.
What is a valuation cap?
Please refer to the Glossary of Terms.
What is meant by “substantive economic presence” in the UK?
At least one of the following must be true for the Investee Company:
- half or more employees are UK based; or
- half or more revenues are from UK sales.
Why are you asking investors to sign the Investing in Women Code?
The Future Fund has signed the Investing in Women Code and is encouraging other investors to sign because we strongly believe in the value of diverse teams and their importance in business.
The Investing in Women Code is a voluntary commitment to support the advancement of female entrepreneurship in the UK by improving female entrepreneurs’ access to tools, resources and finance from the financial services sector.
The Code requires signatories to take steps to ensure senior responsibility and data transparency and that they adopt appropriate internal practices.
Investors can read further information and sign the Code.
Will diversity statistics for the Future Fund be published? If so, when will these statistics be available?
The Future Fund and British Business Bank plan to publish anonymised and aggregated diversity statistics to contribute to increased transparency of the investment markets. These statistics will be published once a sufficient number of applications have been made to Future Fund for data to be meaningful.
View our privacy notice.
What is the role of the Investee Company’s solicitor?
The distribution of funds for successful applications will be handled through nominated company solicitors. It is your responsibility to appoint solicitors with the necessary rights to practice and handle client monies. You can consult the public registers of the relevant regulatory bodies in the UK to check your solicitor has the right to practice. You may also wish to instruct a company solicitor to advise on the scheme, your eligibility under the scheme and the associated documents.
How much will legal advice cost to support this Application process?
There is no application fee for the Future Fund or standard rate for solicitor services.
When selecting a solicitor, please ensure you understand what the role of the solicitor will involve (please refer to the FAQ “What is the role of the Investee Company’s solicitor?” for further guidance).
When choosing a solicitor, it is important that you seek clarity on the Solicitor’s charging/fee structure, that this is transparent; and that you understand the work and services required. Many solicitors across the UK will be able to help you so it is always advisable to consider the options in terms of which solicitor to engage.
What are the Future Fund terms and conditions?
The Future Fund terms and conditions can be found here. If your application is successful, you will be entering into a CLA. The terms and condition of the CLA can be found on the Solicitors page of the Future Fund website.
Who is UK FF Nominees Limited?
UK FF Nominees Limited is the entity that enters into Convertible Loan Agreements on behalf of the Future Fund. UK FF Nominees Limited is the legal titleholder to the Future Fund’s Loans and any shares resulting from their conversion. It holds beneficial interest in the Loans (and any shares resulting from their conversion) on bare trust for the benefit of the Secretary of State for Business, Energy and Industrial Strategy.
Is the Freedom of Information Act applicable to the Future Fund?
The Future Fund is designed by government and delivered by the British Business Bank. As such, the Future Fund, and FF UK Nominees Limited, are subject to the Freedom of Information (FOI) Act, which gives individuals a right to request any recorded information held by a public authority. Under the FOI Act, public authorities have the right to withhold information using the relevant exemptions included in the Act. Any information requested which is commercially sensitive to either the British Business Bank, the Future Fund, Investors or Investee Companies can be withheld under S43(2) commercial interests. Where required, the British Business Bank may consult with you to understand how the release of requested information under the FOI Act would or would be likely to prejudice your commercial interests.
If you want to find out more about the Freedom of Information Act please visit https://www.gov.uk/make-a-freedom-of-information-request.
How do I log a complaint?
You can log a complaint by (1) completing the online enquiry form, (2) emailing our support team, or (3) phoning our support team. Contact details can be found on the support page of the Future Fund website.
Can I speak to someone?
If you have a general query about how to access the scheme please contact us on 03307260230 or email FutureFundSupport@british-business-bank.co.uk. If you want specific advice such as legal, tax or investment advice please speak to an appropriately qualified professional.
Frequently Asked Questions for Investors
Information for Investors
Notes
All defined terms in this document are set out in the Glossary of Terms document available on the portal.
These FAQs are provided for informative purposes. They are not intended to provide advice of any kind (including legal, financial, tax or other professional advice). You should seek professional or specialist advice before doing anything on the basis of this content.
The Future Fund scheme has now closed for new applicants. We are now processing applications which were correctly completed and submitted by a lead investor and matched by the investee business before 23:59 GMT on Sunday, 31 January 2021, when the scheme closed to new applications. The online portal will remain open for Investee companies with legally completed CLAs to submit information and MI for portfolio monitoring purposes.
Please see the Closure of Scheme FAQs for further information on how this impacts new and existing applicants.
Does the Lead Investor have to commit the largest matched investment?
No, however, the Lead Investor must invest at least £12,500.
Can Other investors oversubscribe / overmatch?
Yes, the matched funding requirement is that the Lead Investor and the Other Investors invest in aggregate an amount equal to or greater than the amount requested from the Future Fund.
In addition, following completion of the CLA transaction in which the Investors participate, it is also possible for Investee Companies to raise further sums within 90 days up to the headroom amount agreed in the CLA. Note that such further investment must be arranged by the Investee Company outside of the portal and does not qualify for matched funding from the Future Fund.
Will you be monitoring if investors do become signatories of the Investing in Women Code?
HM Treasury maintains an up-to-date public list of signatories to the Investing in Women Code.
The British Business Bank works closely with HM Treasury to support and promote the Investing in Women Code. As part of the evaluation of the Future Fund, the Bank expects to monitor investors’ commitment to the Code.
Will the Future Fund be split into sub-funds for different sizes of investment?
No. Applications will be processed on a “first come, first served” basis. The Future Fund will not be split into sub-funds for different sizes allocated by size of investment.
Is there a limit on the number of companies that a Lead Investor can apply to be funded?
No, there is no limit.
If a Lead Investor in conjunction with or on behalf of a group of Other Investors, submits multiple applications on the same day and there are a high number of other applications on that day then only one application made by that Lead Investor may be processed on that day.
Are there securities law restrictions on Investors which are resident or registered in particular overseas jurisdictions?
The release, publication or distribution of the information on this portal in or into jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the law of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable legal or regulatory requirements.
In particular, the ability of persons who are not resident in the United Kingdom, to apply as a Lead Investor or to participate in a Loan as an Other Investor may be affected by the laws of the relevant jurisdictions in which they are located.
Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction.
To the fullest extent permitted by applicable law, all responsibility or liability for the violation of such restrictions by any person is disclaimed by the Future Fund, FF UK Nominees Limited or their agents, beneficiaries, trustees or advisers. It is your responsibility to satisfy yourself as to the full observance of any relevant laws and regulatory requirements. If you are in any doubt, you should not continue to seek to access the portal.
How does the requirement that an investor must be a Private Investor apply to funds and fund structures?
An Eligible Investor must also qualify as a Private Investor to be eligible for matched funding from the Future Fund. Please see the Glossary for details of these defined terms. In broad terms, “Private Investor” is defined as “a person, company or fund who is not connected with an Investee Company… or with a connected person of the Investee Company…”.
“Connected persons” are defined using the definitions set out in sections 1122 – 1123 of the Corporation Tax Act 2010 (and by inference, sections 450–451, but excluding section 450(3) (c) and (d)), which amount to a concept of majority control defined by reference to ownership of the majority of shares in issue or control over the majority of voting rights.
These criteria apply to funds under the Future Fund eligibility rules. Whilst in different contexts and for different purposes a fund may not be a legal person and/or a fund may be considered to be a transparent look through entity, for the purposes of the Future Fund eligibility rules, all funds managed or advised by a single discretionary manager are considered to be a single investor regardless of their legal form. For this reason, multiple funds that are managed or advised by the same discretionary manager are also considered to be acting as a single investor.
The Future Fund is designed so that public investment is matched with investors who are not currently majority owners (and/or decision makers) of businesses. This is to ensure commercial outcomes for state aid and policy reasons, and to minimise the risk of conflicting interests.
Investor eligibility for Future Fund
What are the investor eligibility criteria for the Future Fund?
Investor eligibility criteria can be found on the Investor page of the website. Find further information about the scheme.
What should I do if I am unsure about my eligibility status or whether to invest in the Future Fund?
It is each Investor’s responsibility to ensure that you are eligible to make a Loan and to ensure you are comfortable making such a Loan. If in doubt, you should seek independent legal advice and/or seek advice from a financial adviser who is authorised under the Financial Services and Markets Act 2000.
Please ensure that all preparatory work and confirmations required for an application are completed and approved by the business ahead of 23:59 GMT on Sunday 31 January 2021as this is the point at which the portal will be closed to new applications. Any changes to the application (such as a change in the lead investor, change to investment amount etc) after this date may delay the processing of the application or may result in the application being rejected.
The Future Fund scheme has now closed for new applicants. We are now processing applications which were correctly completed and submitted by a lead investor and matched by the investee business before 23:59 GMT on Sunday, 31 January 2021, when the scheme closed to new applications. The online portal will remain open for Investee companies with legally completed CLAs to submit information and MI for portfolio monitoring purposes.
Can investors who have received public sector funding (from any source) prior to applying to the Future Fund make an Application with the public sector funding being used as source of funds?
Yes, provided such investors are Eligible Investors and meet all three of the following criteria:
- Investment decisions are made by private sector investment advisers, fund managers or trustees (or similar) with no influence from any public sector bodies or public sector investors.
This means that having a public sector body or representative sitting as part of an investment committee or exercising any other control over which investments were made would rule that investor out.
Public sector investors may, however, agree a defined investment mandate at the outset (which may be designed to achieve certain outcomes, such as investing in an equity gap), and provided the adviser, manager or trustee has full discretion in executing that mandate, investment decision making will be considered sufficiently independent for these purposes.
Participation of a public sector body or representative in an investor advisory committee, oversight panel or strategic board (or similar), will also be considered compatible with independent investment decisions making, provided such committees, panels, boards or similar are advisory only and have no power or authority to control investment decisions.
- There must be a carried interest provision, profit share, or equivalent performance-based compensation, to incentivise the private sector manager, adviser or trustee (or similar) to make commercial decisions.
Evidence of this will be requested as part of the application process. This can include, for example, copies of limited partnership agreements or investment management agreements. We appreciate that each structure is different and the evidence required may vary.
- The public sector funding must be deployed alongside private sector funding in your structure.
Private sector funding can sit alongside the public investment in different ways. For example, in a fund that is set up as a form of partnership, public sector funders and private sector funds invest alongside each other as limited partners. In a co-investment structure, private sector funding would be deployed alongside public sector funding on a match funded, deal-by-deal basis.
A Future Fund investment pursuant to a CLA will not count as private sector match funding for the purpose any of the rules applicable to the public sector funder, including those related to meeting its state aid obligations.
For these purposes, funding sourced from the European Investment Fund’s or the European Investment Bank’s own funds is considered private sector. Pension funds whose members are public sector beneficiaries (e.g. local authority pension funds) are also considered private because the source of funding is members’ savings and not public sector funding.
Will companies incorporated in Scotland, Wales or Northern Ireland also be able access this funding?
The Future Fund is open to eligible companies incorporated in England and Wales, Scotland or Northern Ireland.
Is there a limit to the number of companies in which I can invest, either as an Other Investor or Lead Investor?
There is no limit to the number of companies in which you can invest, whether as Lead Investor or otherwise.
Is there a minimum commitment required per Eligible Investor?
There is a required investment of at least £12,500 for the Lead Investor, but there is no minimum investment for Other Investors.
I am an overseas investor, can I invest in the Future Fund?
Yes provided you are an Equivalent Professional, High-Net Worth, Institutional or Sophisticated Investor; that your access to the portal is permitted within your jurisdiction; that you have followed all necessary formalities and obtained all necessary consents required to participate in the Future Fund scheme; and you are able to enter into the CLA without it constituting a breach of any laws in your jurisdiction.
If you are uncertain, please seek independent legal or professional advice on the consequences of making or participating in an Application.
Can any of the matched funding come from another company that has received funding from the Future Fund?
One of the basic principles underlying the Future Fund is matching its investment with independent private funding from third-party investors. The Lead Investor will be asked to confirm on behalf of itself and the Other Investors (so far as it is aware in respect of those Other Investors) that none of their proposed funding is wholly or partly derived from the proceeds of another Future Fund application
Application process for Investors in Future Fund
What information does a Lead Investor need to submit an Application concerning a company?
You will need the following information on the Investee Company:
- Investee Company name
We will use this to source and automatically populate the following information which we ask you to check:
- legal form;
- date of incorporation;
- country of incorporation;
- UK Company Registration Number;
- registered address;
- operating/trading address (if different);
- website address (if applicable);
- industry (SIC Code); and
- nature of business.
You will need to provide the current stage of equity financing of the Investee Company (for instance, start up, seed, early stage, later stage, venture capital, growth capital).
You will need the following information on the proposed investment:
- aggregate amount of the Loans proposed to be provided by the Investors (other than the Future Fund);
- amount of the Loan requested from the Future Fund;
- amount you, as the Lead Investor, propose to invest and
- whether you have previously invested in the Investee Company (yes/no).
If you are investing with Other Investors:
- number of Other Investors
- for each Other Investor:
- whether they are an Investor who is an individual or Investor Company;
- if an individual: Name, Date of birth;
- if a company: Name, UK Company Registration Number;
- email address;
- telephone number; and
- investment amount.
You will need the following information on reasons for applying for the Future Fund:
- reason for applying; and
- the intended use of funds.
You will need the following information for a contact at the Investee Company:
- name;
- job title (must be a director or company secretary);
- email address; and
- telephone number.
Once an Application is submitted, we will perform checks and may request further evidence.
Can I submit multiple applications at the same time?
Yes, you can submit multiple Applications. Each Application on behalf of a company must be made separately (i.e. you cannot submit one Application for multiple companies).
Investee Company to confirm application
The Investee Company will provide additional information in support of the Application and confirm that they are happy for the full Application to be processed.
You should receive an email with more information about what happens next in the process.
If I want to be a Lead Investor in a number of companies can I make a single application for all the companies in which I am planning to invest in order to receive the Future Fund matched funding?
No. The Lead Investor will have to make a separate Application for each company for which it is leading a proposed investment.
I applied to the Future Fund early to save my place in the queue but do not have all of the necessary documents or approvals yet, will my application be timed out?
Throughout the application process we will reach out to you when we need further information. We will use the contact details you have supplied to do this. It is important that you respond to these requests for information. If our attempts to contact you do not elicit a reply which would enable us to progress your application in the timeframes we set out in the correspondence, the application will be timed out and closed. A notice will then be issued from the Future Fund confirming that. A timed-out application does not prevent you from re applying at a later date whilst the Future Fund is still open for applications.
Can directors’ and employees’ investments to date count towards the £250,000?
The Investee Company must have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years (from 1 April 2015 to 19 April 2020, inclusive). Third-party investors means investors other than any connected person of the Investee Company, any founder, employee, worker or consultant or their connected persons (see Glossary of Terms for full definition).
Investment from any non-executive directors and directors appointed by investors are considered “third party” for the purpose of this company eligibility criterion.
Will all matched funding need to be agreed when submitting the Application?
The Lead Investor completing the Application, is required to provide details of the total amount of funding proposed to be raised under the CLA, along with contact details and amounts to be invested by all Other Investors.
The amount of funding available from the Lead Investor and the Other Investors would also determine the amount that could be matched by the Future Fund.
How the Future Fund relates to other types of funding or Schemes for investors
Will the CLA be SEIS or EIS eligible?
HM Treasury and HMRC are responsible for all decisions on tax reliefs, including on SEIS and EIS.
It is our understanding that the structure of the CLA does not meet existing rules for SEIS or EIS eligibility. Compatibility with tax schemes is a matter for HM Treasury and HMRC.
Will the CLA be eligible for Venture Capital Trust (VCT) investment?
HM Treasury and HMRC are responsible for all decisions on tax relief schemes, including VCTs.
It is our understanding that the structure of the CLA does not meet existing rules for VCT eligibility. Compatibility with tax schemes is a matter for HM Treasury and HMRC
Do AIM quoted companies qualify, as under tax guidance they are unlisted and unquoted?
No. AIM quoted companies will not qualify, nor will companies with shares admitted to trading on any other similar market, stock exchange or listing venue.
Can a director, founder, CEO, employee, consultant or other persons working for an Investee company invest in the CLA?
In order for their investment to qualify for matched funding when investing in the round alongside the Future Fund and other Investors, investors working for the Investee Company will need to fall within one of the categories of Eligible Investor and also qualify as a Private Investor(s). See the Glossary of Terms for the definitions of “Eligible Investor” and “Private Investor”.
A director who is eligible to invest on this basis cannot act as both a Lead Investor and the signatory of the Director’s Certificate on behalf of the Investee Company. A different director would need to execute the certificate.
If a director, founder, CEO, employee, consultant or other person working for the Investee Company does not qualify as a Private Investor, any investment from such a person will not qualify for matched funding by the Future Fund. However, under the terms of the CLA, it is possible for additional investment from further investors to be subscribed as part of the Headroom Amount.
Managing your account as an investor
What information do I need to create a Future Fund account, as an Investor: if I am an Investor and an entity (regulated entity or non-regulated entity)?
To submit the application you must be a director or company secretary of the entity.
You will need the following information to set up a Future Fund portal account:
- name;
- job title;
- email address;
- password; and
- telephone number.
You will need the following information on your entity:
- entity name.
We will use this to source and automatically populate the following information which we ask you to check:
- legal form;
- date of incorporation;
- country of incorporation; and
- Company registration number.
- registered address
- operating/trading address (if different)
You will need the following information if the entity is regulated:
- regulatory authority; and
- regulated reference number (e.g. FCA FRN).
You will need the following information on yourself:
- name;
- date of birth;
- country of birth;
- citizenship;
- residential address; and
- image or scanned copy of a photo ID (driving licence, passport, identity card).
You will need to tell us if your entity has received any other public sector funding prior to applying for funding from the Future Fund.
Once an Application is submitted, we will perform checks and may request further evidence.
What information do I need to create a Future Fund account, as an Investor: if I am an investment or fund manager/advisor and an entity (regulated entity or non-regulated entity)?
You will need the following information to set up a Future Fund portal account:
- name;
- job title;
- email address;
- password; and
- telephone number.
You will need the following information on your entity:
- entity name.
We will use this to source and automatically populate the following information which we ask you to check:
- legal form;
- date of incorporation;
- country of incorporation;
- Company registration number;
- registered address; and
- operating/trading address (if different).
You will need the following information if the entity is regulated:
- regulatory authority; and
- regulated reference number (e.g. FCA FRN).
You will need the following information on the investment/fund manager/advisor:
- fund (fund, entity or managed account) name (as applicable); and
- fund (fund, entity or managed account) LEI (as applicable).
You will need the following information on yourself:
- name;
- date of birth;
- country of birth;
- citizenship;
- residential address; and
- image or scanned copy of a photo ID (driving licence, passport, identity card).
You will need to tell us if your entity has received any other public sector funding prior to applying for funding from the Future Fund.
Once an application is submitted, we will perform checks and may request further evidence.
What information do I need to create a Future Fund account, as an Investor: if I am an Investor who is an individual (regulated individual or non-regulated Individual)?
You will need the following information to set up a Future Fund portal account:
- name;
- job title;
- email address;
- password; and
- telephone number.
You will need the following information on the Investor:
- name;
- date of birth;
- country of birth;
- citizenship;
- residential address; and
- image or scanned copy of a photo ID (driving licence, passport, identity card).
Once an application is submitted, we will perform checks and may request further evidence.
What information do I need to create a Future Fund account, as an Investor: if I am an investment or fund manager/advisor who is an individual (regulated individual or non-regulated individual)?
You will need the following information to set up a Future Fund portal account:
- name;
- job title;
- email address;
- password; and
- telephone number.
You will need the following information on the Investor:
- name;
- date of birth;
- country of birth;
- citizenship;
- residential address; and
- image or scanned copy of a photo ID (driving licence, passport, identity card).
You will need the following information on yourself:
- name;
- date of birth;
- country of birth;
- citizenship;
- residential address; and
- image or scanned copy of a photo ID (driving licence, passport, identity card).
You will need to tell us if your entity has received any other public sector funding prior to applying for funding from the Future Fund.
Once an application is submitted, we will perform checks and may request further evidence.
General Future Fund questions for investors
What is meant by “public sector funding”?
For these purposes, public sector funding includes (but is not limited to) funding from central Government departments, local authorities, local enterprise partnerships, public sector investors and European Structural and Investment Funds.
What is the definition of ‘Lead Investor’?
Please refer to the Glossary of Terms.
What is the definition of ‘Other Investors’?
Please refer to the Glossary of Terms.
Why are Other Investors (i.e. investors other than Future Fund and the Lead Investor) limited to 147?
The number of Other Investors should not exceed 147 to avoid Investee Companies having to produce a prospectus. The Prospectus Regulation includes an exemption whereby a prospectus is not required if an offer is made to fewer than 150 investors. Limiting the number of Other Investors to 147 and adding the Lead Investor and the Future Fund ensures the total number of investors in any Investee Company are fewer than 150.
Does a crowdfunding nominee SPV which represents all of the underlying crowdfunding investors qualify as a Lead Investor?
Yes, if the platform’s nominee SPV is the investor on record and a party to the CLA on behalf of the underlying crowdfunding investors.
If any crowdfunding investors are also to invest directly (outside the nominee structure) they would need to be added as “Other Investors” through the Application, with their details to be provided as they would also become parties to the CLA.
FAQs for Solicitors
General
Intro
All defined terms in this document are set out in the Glossary of Terms document available on the portal.
These FAQs are provided for informative purposes. They are not intended to provide advice of any kind (including legal, financial, tax or other professional advice). You should seek professional or specialist advice before doing anything on the basis of this content. Please review this set of FAQs in conjunction with the FAQs for Investors on the portal. There is important information relevant to you as a solicitor in this document.
The Future Fund scheme has now closed for new applicants. We are now processing applications which were correctly completed and submitted by a lead investor and matched by the investee business before 23:59 GMT on Sunday, 31 January 2021, when the scheme closed to new applications. The online portal will remain open for Investee companies with legally completed CLAs to submit information and MI for portfolio monitoring purposes. Please see the Closure of Scheme FAQs for further information on how this impacts new and existing applicants.
More information about applications from non UK parent companies
What is the Future Fund?
Full details of the scheme can be found on the overview page of the Future Fund website.
What are the contractual arrangements under the Future Fund and who are the contracting parties?
The contractual arrangement (to lend funds to the Investee Company) will be entered into by way of Convertible Loan Agreement. Further details on the Convertible Loan Agreement can be found on the Solicitors page of the Future Fund website.
The parties to the Convertible Loan Agreement shall be the Investee Company, the Future Fund (UK FF Nominees Limited) and the other Investors providing the matched funding.
A copy of the Convertible Loan Agreement (PDF, 290KB) can be found on the Solicitors page of the Future Fund website.
Will my client be required to sign any other documents?
If you act for the Investee Company, a director of the Investee Company will be required to provide a director’s certificate in respect of certain confirmations to be given by the Investee Company.
Information submitted throughout the application process is subject to terms and conditions.
A copy of the director’s certificate (PDF, 73KB) can be found on the Solicitors page of the Future Fund website.
In the scenario where the loan converts, which government entity would be on the company’s cap tables?
UK FF Nominees Limited. This entity holds legal title to the Future Fund’s Loans and any shares resulting from their conversion on behalf of the government.
Solicitors’ role
I have been engaged by my client in relation to the Future Fund – what is my role as a solicitor?
You may be asked by your client to assist in two aspects in relation to the Future Fund scheme:
- Legal advice: you may be asked to advise on the scheme and its associated documents, by either an Investor or the Investee Company (further information about the scheme and the application process can be on the Solicitors page of the Future Fund website). and/or
- Settlement: if you act for the Investee Company it is a requirement of the scheme that you facilitate completion and you must therefore be a UK regulated solicitor permitted to receive and hold client money – this will involve receiving and holding the completion monies to order from the Lead Investor and any Other Investor (or their solicitor(s)), to be released to the Investee Company on execution of the Convertible Loan Agreement and upon confirmation from the Future Fund via the Future Fund portal. You will also receive the completion monies from the Future Fund post-completion, which you will send as soon as possible to the investee company. Please see the FAQs on Settlement and Regulatory Guidance for further information on settlement/completion and handling client money.
I have been engaged by my client in relation to the Future Fund – do I need to register/apply to act under this scheme? Is there a panel of approved firms?
No, you do not need to register or apply to act under the scheme and there is no panel of approved firms.
If you act on behalf of the Investee Company, your client will provide your details as their nominated solicitor on the Future Fund portal. We will then contact you.
There are certain restrictions on your ability to act which are set out in the “Solicitor requirements” FAQs; please see below for further information.
Solicitor requirements
What are the solicitor requirements to act for my client in relation to the Future Fund?
To be able to act for your client in respect of this scheme, you are required to meet the following criteria:
- you must be a practising UK regulated solicitor – registered with the relevant UK regulatory body set out below; and
- if your client requires you to handle any completion monies, you must be permitted to hold client money and have a client account in accordance with the rules of your relevant UK regulatory body.
Please consult the website of your UK regulatory and/or professional body for further guidance:
- The Solicitors Regulation Authority for England & Wales (the “SRA”)
- The Law Society of Scotland (the “LSS”)
- The Law Society of Northern Ireland (the “LSNI”)
Information is also available on the website of the Law Society of England & Wales
I am a freelance solicitor regulated by the SRA – can I act?
You are not prohibited from providing legal advice to your client in respect of the Future Fund.
However, you will be unable to act if your client requires you to handle any completion monies, as freelance solicitors are not permitted to hold client money, save for money that relates to their fees and disbursements.
My firm is regulated as an Alternative Business Structure in England & Wales – can I offer this service?
You must meet the “Solicitor requirements” set out above.
Settlement – Handling the completion monies
I am instructed to act for my client in relation to settlement – can I act if I don’t have a client account?
No, in order to deal with the completion monies you must be permitted to handle and capable of handling client money.
I am advising an Investor – can I handle my client’s completion monies?
Your regulatory and legal obligations in relation to Know Your Client, AML, source of funds, and conflicts checks must be observed. If you have any concerns or questions, please contact your regulator.
If you act for an Investor, your client will receive notifications through the Future Fund portal of the progression of their application, including the request to transfer their completion monies to the nominated Investee Company’s solicitor’s client account. If you are instructed to handle your client’s completion monies on their behalf, you must be a UK regulated solicitor permitted to handle client money and you must act in accordance with the rules on client money applicable to you by your UK regulatory body.
Please note: As the nominated Investee Company solicitor will be required to provide the Future Fund portal with a standard form confirmation letter addressed to UK FF Nominees Limited on receipt of the full amount of the Investor completion monies from the Lead Investor and any Other Investor(s) (as applicable), you must ensure that your client’s completion monies are transferred to the nominated Investee Company solicitor in accordance with the requirements of this letter.
A copy of the solicitor’s confirmation letter (PDF, 103KB) can be found on the Solicitors page of the Future Fund website.
I act for the Investee Company – what is my role at completion?
A diagram of the settlement process can be found on the Solicitors page of the Future Fund website
Your involvement is summarised below:
- before completion, you will need to receive into your client account, and hold to order pending completion, the full amount of the completion monies on behalf of the Lead Investor and any Other Investor(s) (as applicable);
- as the nominated Investee Company solicitor, you will be required to provide the Future Fund portal with a standard form confirmation letter addressed to UK FF Nominee Limited on receipt of the monies described in point (1) above. You must ensure that these monies are transferred to you in accordance with the requirements of this letter;
- it will be your responsibility to liaise with the Lead Investor and any Other Investor(s) (or their solicitor(s)) to ensure that you receive the monies described in point (1) above and to agree with them the terms under which you hold those monies;
- along with the confirmation letter for signing and dating by you, the Future Fund portal will also issue the Convertible Loan Agreement for signing (but not dating) by the Lead Investor and any Other Investor(s) and the Investee Company. The Future Fund portal will also request an executed director’s certificate from the Investee Company;
- if the Future Fund portal has not received your signed and dated confirmation letter, as well as the signed and dated director’s certificate and signed (but not dated) Convertible Loan Agreement within seven days, the Future Fund portal will ask you to re-confirm that you continue to hold the full amount of the Lead Investor and any Other Investor(s) completion monies to their order in your client account;
- the Future Fund portal will then issue a fully executed and dated Convertible Loan Agreement. This constitutes completion and will be the trigger for the Future Fund portal to instruct UK FF Nominee Limited’s bank to transfer its completion monies to your client account; and
- after completion, you should release the Lead Investor and any Other Investor(s) completion monies to the Investee Company’s bank account in accordance with your instructions and you should send the completion monies from UK FF Nominees Limited to the Investee Company’s bank account as soon as possible once received in your client account.
Your regulatory and legal obligations in relation to Know Your Client, AML, source of funds, and conflicts checks must be observed. If you have any concerns or questions, please contact your regulator. If you require information on the Fund Fund’s legal structure, ownership and control for the purposes of meeting your regulatory and legal obligations then please email futurefundsupport@british-business-bank.co.uk and a KYC Corporate Information pack will be shared with you.
A copy of the standard form of solicitor confirmation letter mentioned above at point (2) can be found on the solicitors page of the Future Fund website.
Regulatory guidance
Have the UK solicitor regulatory and professional bodies provided any guidance on the solicitor’s role in the Future Fund?
These roles, as envisaged in the proper administration of the scheme, have been examined by the professional and regulatory bodies in each UK jurisdiction and are considered as being compliant with their rules on professional conduct and with their accounts rules.
Please consult the website of your UK regulatory and/or professional body for further guidance:
- The Solicitors Regulation Authority for England & Wales (the “SRA”)
- The Law Society of Scotland (the “LSS”)
- The Law Society of Northern Ireland (the “LSNI”)
Information is also available from the Law Society of England and Wales.
Do I need to provide a client care (engagement) letter for this service and if so, what information about the scheme do I need to include in it?
You should act in accordance with the rules applicable to solicitors by your relevant regulatory body in England & Wales, Scotland and/or Northern Ireland (as applicable).
I act for the Investee Company, I am instructed in relation to settlement only and I am a solicitor in England and Wales – will the SRA deem this service to be an improper use of a client account as a banking facility under rule 3.3 of the SRA Accounts Ru
Solicitors in England & Wales asked to perform the settlement process only, and who are not providing any related regulated legal advice, should consult the SRA Q&As.
Are there any particular conflict of interest restrictions that I should consider?
Independence of legal advice should be prioritised at all times. You should act in accordance with the rules and guidance applicable to solicitors by your relevant regulatory and/or professional body in England & Wales, Scotland, or Northern Ireland (as applicable). KYC and conflicts checks should be undertaken as you would do in any other matter when taking instructions from your clients.
Charging fees
Can I charge a fee for this service?
There is no prohibition to charging for fees, but your fee arrangements must be agreed with and communicated to your clients in accordance with your engagement letter and the rules and guidance applicable to solicitors by the relevant regulatory and/or professional body in England & Wales, Scotland and/or Northern Ireland (as applicable). It is good practice to ensure that your clients are aware of your fees and charging structure prior to undertaking any work.
Can I deduct my charges and expenses from the completion monies when it is in our client account, before paying it out to the client?
This will depend on the fee arrangement that has been agreed with your client. You should act in accordance with the rules and guidance applicable to solicitors by the relevant regulatory and/or professional body in England & Wales, Scotland and/or Northern Ireland (as applicable).
For applications relating to Non-UK Parent Companies
Information for Non-UK Parent Companies
Introduction
All defined terms are set out in the Glossary of Terms.
These FAQs are provided for informative purposes. They are not intended to provide advice of any kind (including legal, financial, tax or other professional advice). You should seek professional or specialist advice before doing anything on the basis of this content.
How long will the process take?
The assessment of an application involving a non-UK parent company will require time to complete in order to assess and review any jurisdiction-specific documentation received and carry out any additional structure, diligence and KYC checks that may need to be undertaken manually over and above the provisional checks we ordinarily carry out. We therefore cannot estimate a time period for completion of the assessment at the outset. We do however aim to process applications as quickly as possible.
How will the CLA work for non-UK parent companies?
The Future Fund is built around a standard-form CLA which applicants will be required to enter into in order to allow for a simplified, standardised process. However, certain terms of the CLA, including the interest rate, conversion discount, headroom amount and valuation cap are negotiable between the Investors (other than the Future Fund) and the Investee Company in advance of Application. However, the interest and discount rates cannot be lower than 8% and 20% respectively. If no headroom amount or valuation cap is agreed, they will default to zero and void, respectively. This applies to all applicants to the Fund.
In the case of applications relating to a non-UK parent companies, the jurisdiction specific CLA will be shared with an applicant in a particular jurisdiction during the course of their application process. Applicants will be given due time to review the CLA whilst their application is processed.
What currency will the funds be made payable in?
The investment from the Future Fund will be made in pounds sterling. All investments being made by the Investors will also need to be made in pounds sterling.
Application process for Non-UK Parent Companies
How does the application process for those who fall into this category work? Is there a special application form I need to complete?
The Future Fund is an investor-led application process. This will continue to remain the same for applications relating to non-UK parent companies. There are certain differences in the application process for those in this category including the eligibility criteria checks and verification, by a director of the Company, of the Group’s UK substance.
Apply to the Future Fund on behalf of a non-UK parent company.
The scheme details require the use of a UK regulated solicitor at the settlement stage. Does this also apply in the case of non-UK parent companies, or can a foreign lawyer in another jurisdiction perform this role?
No, a UK regulated solicitor will continue to be required in order to complete the final stage of the settlement and transfer of funds process. Information about the role of the solicitor.
What information or paperwork will be needed to support the application?
The required information to start the application by the lead investor includes the details required for all other applications under the scheme. View a list of required information.
However, there may be additional documents and/or confirmations required for non-UK ultimate parent company applications, including:
- evidence that the Company participated in an Accelerator Programme which satisfies the relevant eligibility criteria;
- evidence that the Accelerator Programme in which the Company participated in required the Company to be incorporated in a non-UK jurisdiction. This can be evidenced by the terms and conditions of the Accelerator Programme at the time of the Company’s participation in the Accelerator Programme, any other agreement entered into by the Company on entry into the Accelerator Programme, or a signed letter from a senior counsel/manager at the Accelerator Programme confirming the Company’s participation and that it was required to incorporate its ultimate parent company in a non-UK jurisdiction;
- additional certifications provided by a director of the Company that the Company meets the UK substance test (i.e. half or more of its employees being based in the UK or half or more of its revenues being from UK sales), as set out in the eligibility criteria; and
- other additional documentary requirements at the sole discretion of the Future Fund.
Will the Future Fund be collecting management information?
All successful applicants will be required, as set out in Schedule 4 of the CLA, to submit quarterly information via an online portal for portfolio monitoring purposes.
In addition, the Future Fund is collecting data on the diversity of companies to enable us to monitor the diversity of the Applications we receive. The Application asks for the gender mix and ethnicity mix of the management team and the region where the company is based. Providing gender mix and ethnicity mix data information is optional (region is given by the company address).
The Future Fund and British Business Bank will anonymise and aggregate this data and plan to publish it to contribute to increased transparency of the investment markets.
Is there any restriction on the currency of previous funds raised to meet the £250,000 criterion?
Previous investments need not have been made in pounds sterling; however, the aggregate investment amount needs to be the equivalent of £250,000, calculated by reference to the exchange rate at the time of each investment.
Non-UK Parent Company Eligibility
What are the changes to who can apply to the Future Fund?
The Future Fund requires the borrower to be the ultimate parent company and for that ultimate parent company to be UK-incorporated. However, companies which have substantial UK economic presence but have been required to incorporate their ultimate parent company in a non-UK jurisdiction solely in order to participate in an Accelerator Programme (in accordance with the terms and conditions of that Accelerator Programme or any other agreement entered into by the Company on entry into the Accelerator Programme) did not previously qualify for the Future Fund. The scope of the Future Fund is being extended to provide an application route for funding from the Future Fund for such companies, provided they meet certain eligibility criteria.
What are the eligibility criteria for this category of company?
A non-UK ultimate parent company (“the Company”) of a corporate group (“the Group”) which participated in an Accelerator Programme may be eligible for the Future Fund, provided that it satisfies the following criteria:
- the Company must have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years (from 1 April 2015 to 19 April 2020, inclusive);
- if the Company is a member of a corporate group, it must be the ultimate parent company;
- the Company is the equivalent of a UK limited company in the relevant non-UK jurisdiction;
- the Company does not have any of its shares or other securities listed on a regulated market, a multilateral trading facility, a recognised investment exchange and/or any other similar market, stock exchange or listing venue;
- it participated in an Accelerator Programme, on or before 19 April 2020, and participation in the Accelerator mandated incorporation of the ultimate parent company in a non-UK jurisdiction;
- if the Group (or any entity within the Group) was in existence before the Company was incorporated, the ultimate parent company of the Group (or the sole entity, if applicable) must have been incorporated in the UK
- the Company is the ultimate parent company of a Group which has:
- half or more of its employees based in the UK; or
- half or more of its revenues from UK sales;
- it is the ultimate parent company of a group which contains at least one subsidiary operating company incorporated in the UK on or before 31 December 2019 and
- the Company received investment from the Accelerator Programme on or before 19 April 2020.
To protect the use of public funds, all applications will be assessed against UK Government investment standards on specific jurisdictions by reference to factors such as sanctions, tax transparency, and the cost and complexity of implementation. The UK Government will also take into account concerns around the proper use of public finances and wider public policy risks, as well as whether investment would undermine the integrity or public credibility of the Future Fund.
Is the ‘limited company’ structure requirement still relevant for a non-UK ultimate parent company?
Yes. We appreciate that the non-UK jurisdiction in which the Company is incorporated may not use the same taxonomy as the UK, however to be eligible for the Future Fund the Company must be an entity which is equivalent to a UK limited company in that non-UK jurisdiction. For example, sole traders, partnerships, LLPs and unincorporated bodies are not eligible, nor are companies whose shares are traded on public exchanges.
Can the Company be incorporated anywhere in the world?
Subject to meeting the criteria for eligibility there are [at the outset] no specific constraints on the jurisdiction in which the Company may be incorporated. However, to protect the use of public funds, all applications will be assessed against UK Government investment standards on specific jurisdictions by reference to factors such as sanctions, tax transparency, and the cost and complexity of implementation. The UK Government will also take into account concerns around the proper use of public finances and wider public policy risks, as well as whether investment would undermine the integrity or public credibility of the Future Fund.
How will UK presence be proven?
The eligibility criteria require that the Company is the ultimate parent company of a Group which has:
- half or more of its employees based in the UK; or
- half or more of its revenues from UK sales.
As part of the application process, the Company will be requested to send a copy of its group structure containing details of employees as at that date and revenue by group company, certified by a Director of the Company.
Accelerators
What is an Accelerator Programme?
For the purposes of eligibility, “Accelerator Programme” shall mean a selective, fixed-term, cohort-based programme for early stage companies, which provides seed or venture capital investment and access to mentorship and other professional support. The Accelerator Programme must:
- have been subject to an open and competitive process (i.e. participant companies were required to formally apply in writing for the programme and were selected following a competitive assessment process against other applicants); and
- as a condition for participation in the Accelerator Programme, as evidenced by the terms and conditions of the Accelerator Programme at the time of the Company’s participation in the Accelerator Programme or any other agreement entered into by the Company on entry into the Accelerator Programme, have required the ultimate parent company of the Group to be incorporated in a non-UK jurisdiction.
Is there a list of qualifying Accelerator Programmes?
To determine whether an Accelerator qualifies, applicants should consult the definition of Accelerator Programme contained in the eligibility criteria to check whether the programme that they participated in is likely to meet the requirements set out in the definition.
How much does the Accelerator need to have invested in the Company and does this count towards the £250,000 needed to have been raised in equity?
There is no minimum investment amount required to have been made by the Accelerator Programme, provided that any investment was made on or before 19 April 2020 and that the investment was made in the context of the Company’s participation in the Accelerator Programme.
Only new shares issued by the Investee Company, and subscribed for by third party investors, will count towards the £250,000 threshold. Share transfers will not be relevant to this criterion.
FAQs for Closure of scheme
General queries
What is the cut-off point for new applications and how does this impact existing applications?
The Future Fund is open for new applications to be made until 23:59 GMT on Sunday, 31 January 2021. The portal will then be closed to new applications.
A new application is an application that has been correctly completed and submitted by a lead investor and matched by the investee business. If an application is not correctly completed and submitted by the cut off date, it will be rejected as an incomplete application.
The portal will remain open to existing applications that have been correctly completed and submitted by the cut off date. We will continue to keep these applicants informed of progress and work with them beyond 31 January 2021 to complete the next steps. All applications will need to have been accepted and legally completed, with the relevant CLA executed by all parties, including the Future Fund, by 23:59 GMT on Wednesday 31 March 2021.
Are prospective applicants that are not ready to apply by Sunday 31 January 2021 able to submit their interest by this date and then retrospectively complete their application?
No, please ensure that all preparatory work and confirmations required for an application are completed and approved by the business ahead of Sunday 31 January 2021. Any changes to the application (such as a change in the lead investor or change to investment amount) after this date may delay the processing of the application or may result in the application being rejected.
Please refer to Application Guidance for advice to investors and companies applying to the Future Fund.
I have submitted an application that is currently being processed. What happens if this processing has not been completed by 23:59 GMT on Sunday 31 January 2021?
Applications submitted by a lead investor that have been matched by the business by 23.59 GMT on Sunday, 31 January 2021 will continue to be processed after Sunday 31 January 2021. Such applications will need to have been accepted and legally completed, with the relevant CLA executed by all parties, including the Future Fund, by 23:59 GMT on Wednesday, 31 March 2021.
If I identify after the application closure date that a co-investor is not eligible (based on their application), will there be an option to submit a new application after Sunday 31 January 2021?
A new application cannot be submitted after 23:59 GMT on Sunday, 31 January 2021. Should one of your co-investors not be eligible (e.g. a connected party), you will not be able to receive matched funding for their investment. Accordingly, please ensure you have sought advice from your advisers on the eligibility criteria and that your application and parties involved satisfy these fully. Should you have any questions on this, please refer to the FAQs on our website or contact us by email, web form and telephone.