The company you have invested in has a large number of smaller individual shareholders.

This makes their capitalisation table (their list of direct shareholders) long. This is not necessarily an issue, but it does make governance decisions a little bit problematic.

Any time there is a matter that requires investor consent (eg. the decision to acquire another business), the company must consult a large number of investors, slowing down decision making. This is problematic, since some decisions need to be made very quickly.

In order to simplify things, the company wants to restructure their cap table, moving you and many other investors into a Special Purpose Vehicle (an SPV).

The key implications are as follows:

  1. You will retain the right to sell your shares when you want to and will not be forced to sell unless it is part of a standard "drag along" scenario (governed by the shareholders agreement you have already subscribed to).

  2. You will agree to proxy your voting rights to a nominated representative of the investor group, meaning you will no longer be involved in company governance.

  3. Your investment will retain the same tax status, and you will still be able to avail of any S/EIS tax relief that you are eligible for.

The process to transfer your shares into the SPV is very simple, and requires you simply to sign a legal agreement agreeing to the transfer.

The legal structure will be as follows:

Join Odin Limited (the Trustee and platform operator) creates a limited company that holds the shares in trust on behalf of investors (the beneficiaries). The beneficiaries retain all economic rights related to the assets.

For example, in the image below we have created the entity "Odin Investments Limited" - this is the SPV that holds the shares. A single "lead" will control the governance rights on behalf of the other investors.

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