Post-close events
Investor reporting
Reporting to underlying investors is at the discretion of the Investee Company, and is typically provided on a monthly or quarterly cadence.
In a syndicated deal, the Syndicate Lead may choose to manage this activity as a representative of the group of investors, or the information can be shared with the underlying investors directly by the Investee Company.
Odin does not itself provide regular reporting on your investments, but some Deal Leads will choose to communicate these updates with you through the Odin platform.
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Share certificates
The nominee entity that Odin manages is the legal custodian of your securities, so you will not receive any share certificates following the closure of a deal. However, we provide investors with certificates of beneficial ownership, which outline their holdings in specific deals. These can be downloaded via the platform.
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Selling and transferring shares
As standard, it is possible for investors to trade in and out of their positions in the SPV. We will reach out to the company confirming their approval of the transfer. We charge a fee of 2% of the value of the transfer, subject to a minimum fee of £1,000 and a maximum fee of £3,000.
A Secondary Transfer of SPV Interest (SecSI) allows for an investor in an SPV to sell their shares to another investor, who joins the SPV in their place. There are two types of SecSI transactions that we support:
- Internal - Whereby an investor sells their position to another investor already within the syndicate. This does not require consent of the investee company.
- External - Whereby an investor sells their position to an investor who is not currently within the syndicate. This does require consent of the investee company.
Transfers of SPV Interest between Odin members will not be subject to UK stamp duty but will be subject to UK stamp duty reserve tax. The reason is that the latter applies to ‘chargeable securities’, which is a wider scope covering paperless transactions and interests in shares.
The tax rate is the same (0.5%) however there is no de minimis exemption for the SDRT regime (paper transactions less than £1,000 are exempt from stamp duty).
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Tax requirements by jurisdiction
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EIS and SEIS
- The Enterprise Investment Scheme and Seed Enterprise Investment Scheme are government schemes which incentivise investment into UK companies via tax relief. Claims can either be submitted for the current tax year, or backdated into a previous tax year.
- It’s very important to remember that EIS and SEIS can only be claimed on whole shares, and not fractional shares. Where you’ve purchased a fractional amount of shares, Odin and the investee company would have to round down your claimable amount to the nearest whole share.
- To give an example, if you’d invested £5,075 into a deal where the equity share price was £100, your EIS-claimable amount would be £5,000 exactly.
- If the Deal Lead has specified a deal as being eligible for EIS, SEIS, or both, and the Investee Company has provided Odin with Advanced Assurance of this during the deal review process, as long as you a UK tax resident investing as an individual you will be eligible to claim relief via the relevant scheme after the deal has closed on Odin.
- Please note that some deals have a limited pool of EIS or SEIS relief, and that it can often be dealt on a first-come-first-served basis. Always further confirm your eligibility with the Deal Lead before making a claim.
- Ordinarily, S/EIS relief is the responsibility of the Investee Company. Sometimes, Odin will generate the S/EIS3 certificates for the deal’s investors and will distribute them instead of the Investee Company.
- If the Deal Lead is making use of Odin’s rolling close facility, please note that you won’t receive an S/EIS certificate until the deal has fully closed on Odin.
- The Investee Company will first need to complete the S/EIS1 form and submit it to HMRC. If everything is in order, HMRC will issue the Investee Company with an S/EIS compliance certificate, known as the S/EIS2 UIR.
- Once this has been received, the next step is for either the Investee Company or Odin to provide each eligible investor with an S/EIS3 certificate, which provides the details they need for their tax return.
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US investors - US federal income tax treatment
- This section is only relevant if you are a “United States person” for US federal income tax purposes. It is not tax advice and is not a comprehensive discussion of all consequences that may apply to you. You should always consult a qualified US tax adviser regarding your specific circumstances.
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Who counts as a US investor?
- For Odin’s purposes, a “US investor” is any investor who is, or may be, a US person for tax purposes. This typically includes:
- investors who have provided Odin with a US residential address during account set-up;
- investors who have completed verification with a US passport; or
- investors who have otherwise informed Odin of their US nationality and/or US taxpayer status (including dual tax residence).
- If you know you have US tax liability but you have registered on Odin with a different passport or address, you must notify Odin’s Customer Support team that you are a US investor.
- For Odin’s purposes, a “US investor” is any investor who is, or may be, a US person for tax purposes. This typically includes:
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How Odin intends to treat your Odin nominee investment for US tax purposes
- Odin uses UK bare trust nominee structures to hold shares for investors. Odin intends to treat a US person’s investment via an Odin UK bare trust / nominee (a “Nominee Investment”) as a constructive partnership for US federal income tax purposes. On this basis, you are treated as owning your proportionate share of the underlying assets held through the Odin nominee, and you are required to include in your annual US federal income tax return your share of any dividend income, capital gains, capital losses or other relevant tax items attributable to that investment.
- Odin will annually provide information about your share of dividend income, capital gain, capital loss and other relevant tax items for US federal income tax purposes, typically in connection with a distribution event (for example, an exit or dividend).
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What information Odin provides to you
- When there is a distribution (exit, dividend or similar), Odin will send you a Distribution Notice by email to the address associated with your Odin account. This notice sets out, among other things, the amount of income associated with that distribution for your records.
- If you have not received any distributions or Distribution Notices from Odin in respect of a particular investment, you have most likely not had any income relating to that investment so far. On the deal page for each investment on the Odin platform you can also access supporting information (for example, a Proof of Investment document), which you can share with your tax adviser.
- Odin does not complete US tax forms on your behalf. Odin provides information; you and your advisers are responsible for preparing and filing any required US tax returns and forms.
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Possible US reporting obligations (Forms 8938 and 8865)
- Depending on your circumstances, you may have additional US reporting requirements in relation to your Odin investments. In particular:
- - You may be required to file IRS Form 8938 (Statement of Specified Foreign Financial Assets) if the value of your foreign financial assets, including Odin nominee investments, exceeds the relevant dollar thresholds, unless your investment is held through an account maintained with a US financial institution.
- In some circumstances, you may also be required to file IRS Form 8865 in relation to the constructive partnership treatment of your Odin nominee investment. - Substantial penalties can apply for failures to file required forms (such as Form 8938) on time, unless such failure is due to reasonable cause and not willful neglect. You must consult a US tax adviser about whether these or any other forms are required in your case.
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Alternative characterisations and PFIC risk
- It is possible that the IRS may disagree with Odin’s intended treatment of your Nominee Investment as a constructive partnership and may seek to characterise the investment differently – for example, as an investment in a passive foreign investment company (PFIC). Any such alternative characterisation could affect the timing, amount and character of income, gain or loss that you must report and could create additional reporting obligations (for example, on Form 8621).
- Odin does not take a view on how the IRS will ultimately characterise your Odin investment and does not provide PFIC or other US tax advice. You must seek advice from an appropriately qualified US tax adviser on the proper treatment of your Odin investments and on any PFIC or other specialised reporting that may apply.
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Blue Sky filings and K-1 forms
- Odin does not handle US “Blue Sky” filings or state-by-state securities or tax requirements. If you require this, you should engage an appropriate third-party provider.
- Odin’s UK bare trust / nominee structures are not US domestic partnerships, and Odin does not prepare or issue US Schedule K-1 forms. You should work with your own tax adviser to determine how to report your Odin investments on your US tax returns using the information provided by Odin.
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Ongoing disclaimer
- The above discussion is intended solely for informational purposes for US persons investing via Odin’s UK bare trust / nominee structure. It does not constitute tax advice. You should always consult your own US tax advisers regarding the US federal, state and local tax consequences of investing via Odin, and regarding any tax reporting or filing obligations that apply to you.
- The above discussion is intended solely for informational purposes for US persons investing via Odin’s UK bare trust / nominee structure. It does not constitute tax advice. You should always consult your own US tax advisers regarding the US federal, state and local tax consequences of investing via Odin, and regarding any tax reporting or filing obligations that apply to you.
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Tax reporting in other domiciles
- Because Odin uses a United Kingdom Bare Trust structure to administer investments, there is complete tax transparency. This means that in practice, there are no geographic restrictions around where investors can invest from, or the companies they can invest into.
- Because of this tax transparency, you as beneficial owners of the shares would pay tax wherever you were tax resident upon a liquidity event. You do not have tax liability in the UK unless you are a tax resident in the UK.
- Odin does not provide tax advice in any geography, and if you have any questions we’d recommend seeking independent advice and/or speaking to qualified accountants.
- The same applies to any other government-sponsored tax relief scheme operated in your home country. If you need to process a claim for tax relief based on these schemes, Odin’s advice is to seek advice from a qualified accountant in the country they’re claiming the relief in.
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Exit events
An exit event refers to any event whereby you as investors can realise a return on their investment, such as the sale of the investee company or an initial public offering. Odin is well-equipped to handle the admin surrounding exit events.
- As soon as Odin receives the legals in relation to the exit - Our team will record the legals in the same shared folder that can be used to access investment agreements and share certificates. Odin will then provide our bank details in the relevant currency to the investee company and their lawyers, and will regularly monitor for the inbound funds.
- As soon as Odin receive all funds and legals from the investee company - Our team will begin work on an exit calculation, to be saved in the same internal folder as the legals. This exit calculation will then be submitted for review by our Finance team. This includes all amounts to be returned to investors, plus the carried interest the Syndicate Lead(s) will be receiving (if applicable). For every investor involved in the exit event, we’ll create a personalised copy of the Exited Investment Letter and share with every investor via email.
- As soon as investors reply - Our team will set up a wire request internally for each investor, including their bank details (we use the ones that investors provide to us upon account setup, but will always confirm that this is the bank account they’d like the exit proceeds wired to). Funds will then be released to the investor. The exit event is completed from Odin’s perspective once this has happened for all investors.
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Conversion events
- What’s a conversion event? A conversion event refers to the conversion of debt raised in a previous investment agreement into shares of the issuing company. Conversion events occur under certain conditions and can either happen very quickly or several months after the investment agreement was signed.
- How is this reflected in Odin? Once conversion legals have been completed, Odin will include those docs in the same folder that you can access to see the original set of legals the deal was closed under. Odin will not update the deal to an equity deal and edit the details to include new relevant information, like the share price. This is because we have to ensure the deal reflects the original terms the SPV invested under for posterity. You will be able to infer all relevant information, as well as understand your new shareholding, from the conversion legals.