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Foresight Solar EIS Fund
Targeting capital growth
from solar power
Foresight
Solar
EIS Fund
Information Memorandum with Application Form
Foresight Solar VCT Plc
Foresight
Solar
EIS Fund
Information Memorandum with Application Form
Important notice
This Information Memorandum is issued and approved by Foresight Group LLP (“Foresight”), an
authorised person within the meaning of the Financial Services and Markets Act 2000 (FSA number:
198020) whose registered office is at ECA Court South Park, Sevenoaks, Kent TN13 1DU. Reliance
on this promotion for the purpose of engaging in any investment activity may expose an individual
to a significant risk of losing all of the property or other assets invested. The Fund is only open
for participation by prospective investors who can be categorised by Foresight as a professional
client under the rules of the Financial Services Authority (“FSA”); that is to say, someone in respect
of whom Foresight undertakes an adequate assessment of his or her expertise, experience and
knowledge which gives reasonable assurance, in light of the nature of the transactions or services
envisaged, that the prospective investor is capable of making his or her own investment decisions
and understands the risks involved; someone to whom Foresight has given a clear warning of the
protections and investor compensation rights which the potential investor may lose; and someone
who has stated in writing, in a separate document from the Investor’s Agreement in Appendix
2 to this Information Memorandum, that he or she is aware of the consequences of losing such
protections. Further information explaining how this categorisation can be effected, what it means,
and the consequences thereof, is set out in the Investor’s Agreement in Appendix 2 to
this Information Memorandum.
Please note that applications may only be made, and will only be accepted, subject to the terms and
conditions of this Information Memorandum. The attention of prospective investors is drawn to the
fact that amounts invested in the Fund will be committed to investments which may be of a long
term and illiquid nature. Neither the Fund nor the companies in which it invests will be quoted on
any recognised or designated investment exchange and, accordingly, there will not be an established
or ready market for participation in the Fund nor the underlying investments. An investment in
the Fund will therefore not be easily realisable. The protections offered by the FSA to retail clients
do not apply to the Fund and compensation under the UK Investor Compensation Scheme will
not be available. This Information Memorandum does not constitute an offer or solicitation in any
jurisdiction in which such an offer or solicitation is not authorised or in which the person making such
offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such
an offer or solicitation. It is the responsibility of each recipient (including those located outside the
UK) to satisfy himself or herself as to full compliance with the applicable laws and regulations of any
relevant territory in connection with any application to participate in the Fund, including obtaining
any requisite governmental or other consent and observing any other formality presented in such
territory. Prospective investors should not regard the contents of this Information Memorandum as
constituting advice relating to legal, taxation or investment matters and are advised to consult their
own professional advisers before contemplating any investment or transaction.
The information contained in this Information Memorandum makes reference to the current laws
concerning EIS relief, IHT relief and CGT deferral. These levels and bases of relief may be subject to
change. The tax reliefs referred to in this Information Memorandum are those currently available
and their value depends on individual circumstances. Past performance is not necessarily a guide to
future performance and may not necessarily be repeated. You should be aware that share values and
income from them may go down as well as up and you may not get back the amount you originally
invested. This Information Memorandum does not constitute, and should not be considered as, an
offer to buy or sell or solicitation of an offer to buy or sell any security or share. It does not constitute
a public offering in the United Kingdom. Foresight has taken all reasonable care to ensure that all
the facts stated in this Information Memorandum are true and accurate in all material respects and
that there are no other material facts, or opinions, which have been omitted, which would make any
part of this promotion misleading. This Information Memorandum constitutes a financial promotion
pursuant to section 21 of the Financial Services and Markets Act 2000.
Further Information
If you require any further information relating to the Fund please contact Mike Currie at Foresight by
telephone on 01732 471812 or by e-mail to [email protected]
Contents
Page
nLetter
of Introduction
4
n
Expected Timetable, statistics and Costs
5
n
Enterprise Investment Scheme Tax Reliefs
6
nInvestment
n
Opportunity
7
Fund Manager
nInvestment
7
Strategy
9
nDealflow
9
nReturns
9
n
Accumulator Option
nIndividual
Roll-Over Option
10
10
nLiquidity
10
nCharges
11
n
11
Fund Structure
nHow
to Invest
nIntroduction
nInvestment
to Solar Power Investing
Team
nDirectory
nRisk
Factors
11
12
18
21
22
n
Appendix 1: Taxation
27
n
Appendix 2: Investor’s Agreement
30
n
Appendix 3: Glossary of Terms
40
n
Application Forms, Adviser’s Certificate and Schedule
42
Since its establishment in 1984, Foresight has built a reputation for creating innovative and
successful investment products that meet the needs of private investors. We now have over
12,000 investors and funds under management of over £200 million.
Letter of Introduction
March 2011
Dear Investor
The economics of generating solar electricity in the UK were
transformed in 2010 by the introduction of governmentregulated “Feed-in Tariffs” which effectively guarantee
25-year inflation-linked prices for electricity generated by
qualifying solar power systems (the “FIT Scheme”). Similar
measures introduced previously in countries such as Germany,
Spain and Italy have attracted great interest among private
investors and demand for the Foresight Solar VCT, launched in
2010, has surpassed our expectations. We are now launching
the Foresight Solar EIS Fund to give investors access to our
strong flow of solar power investment opportunities with the
added tax benefits of the Enterprise Investment Scheme.
Since establishing our solar power team in 2007, we have
invested in solar power projects with a total transaction value
of more than £150 million and forecast generating capacity
of 29 megawatts. I believe that this in-house experience
of sourcing opportunities, arranging bank finance and
completing solar power investments sets Foresight apart
from any other EIS fund manager.
Feed-in Tariffs amount, in effect, to a government guarantee
of long-term prices. In the UK alone, these incentives are
expected to be worth over £3 billion to the renewable
electricity industry in the period to 2020. Foresight Solar EIS
Fund aims to enable individuals to be part of that industry and
to benefit from the predictable revenue streams possible from
Feed-in Tariffs, which in the UK are inflation-adjusted in line
with the retail prices index. In February 2011 the Government
announced a review of the FIT regime, and this has led some
people to question the solar investment opportunity. I am
convinced that the opportunity remains attractive and I
believe that the Fund will benefit from having less competition
as potential new entrants to our market delay their plans. You
will find more information on the FIT review on page 17.
The Enterprise Investment Scheme is one of a very small
number of tax-efficient investment schemes officially
sanctioned by HM Revenue and Customs. Subject to your
personal circumstances, you should be able to reclaim 20% of
your initial investment into the Fund against your tax bill
04
Foresight Solar EIS Fund
and your investment should be outside the scope of
Inheritance Tax after two years. The EIS benefits are available
on subscriptions of up to £500,000 per individual in any one
tax year. Further details of the tax benefits are described on
page 6.
I hope that you find this Information Memorandum clear
and easy to understand. You can call us on 01732 471800
for more detail at any time. We always recommend that you
seek independent professional advice before you invest in
any product. When you are ready to invest, you will find the
Application Forms from page 42 onwards.
Bernard Fairman
Chairman
EXPECTED TIMETABLE, Statistics AND COSTS
Fund Name Foresight Solar EIS Fund
Fund Structure Unapproved EIS Fund
Target Size £20 million
Sector Focus
Unquoted companies which derive their
revenues from generating solar electricity,
primarily in the UK
Fund Manager
Foresight
Target Portfolio Size 10-20 companies with assets capable of
generating 30 megawatts of electricity
Investment Period Up to 31 March 2012*
Minimum Investment
£10,000
Closing Date
30 June 2011 **
*Foresight may extend the investment period by up to 12 months if the Fund is not fully invested
by 31 March 2012
**Foresight may accept applications after the Closing Date
05
Foresight Solar EIS Fund
Enterprise Investment Scheme Tax Reliefs
The following summary may not apply to all potential investors. You must hold each
investment for a Three-Year Period to retain the reliefs summarised below. Reliefs
are only available on your investment in EIS qualifying shares. You should seek
advice in relation to tax reliefs.
Income tax relief
You can reduce the amount of income tax you pay by 20% of
the amount you subscribe to the Fund. As an example, if you
subscribe £100,000 to the Fund, you can reduce the amount of
income tax you pay by £20,000.
Inheritance Tax Relief
Once held for at least two years, your shareholdings in EIS
Qualifying Companies should qualify for 100% Business
Property Relief. This means that they will not be part of your
estate for inheritance tax purposes.
This relief is available on the first £500,000 that you subscribe
to EIS investments in each tax year. If you subscribe more than
£500,000 to the Fund in any tax year, the reduction in your
income tax bill for that year will be £100,000.
Timing
EIS tax reliefs become available each time that Foresight
makes a qualifying investment from the Fund. As an example,
if Foresight makes the first qualifying investment from the
Fund in April 2011 and commits 10% of the Fund to that
investment, then April 2011 is the effective date for working
out the timing of your tax relief.
You cannot claim relief of more than the amount of income tax
that you are due to pay.
You can claim the relief against your income tax liability in the
year that Foresight makes each investment or in the preceding
year. As an example, if Foresight invests the whole fund in the
2011/2012 tax year, you can claim all your income tax relief
against your tax liability for 2010/2011 and/or 2011/2012. If the
investment period extends into the 2012/2013 tax year, you
would still be able to claim against your 2011/2012 tax bill.
Capital Gains Tax Deferral Relief
You can defer capital gains up to the amount of your
subscription to the Fund. This applies to gains you have made
in the three years before the effective date (see Timing across)
and gains you make up to one year after the effective date.
Gains are deferred until you sell the investments that Foresight
has made for you through the Fund. Capital gains tax will apply
to the deferred gain at the rate current when the investments
are sold.
Capital Gains Tax Exemption
Any capital gains realised on a disposal of Shares in an EIS
Qualifying Company after the Three Year Period, and on which
EIS relief has been given and not withdrawn, will be capital
gains tax free. Any capital gains realised on a disposal within
the Three Year Period will be subject to capital gains tax, but in
respect of gains realised after 23 June 2010 the effective rate
of CGT is either 18% or 28% for individuals (the tax rate used
depends on the total amount of the individual’s taxable income).
06
Foresight Solar EIS Fund
Each Investee Company will produce EIS 3 certificates as soon
as practical following investment, and Foresight will send you
the EIS 3 certificate for your part of that investment. These
certificates provide the evidence you need to claim income tax
relief and capital gains tax deferral relief.
Foresight expects to invest the Fund into Investee Companies
by 31 March 2012, but there is no guarantee that all
Investments from the Fund will be made by that date.
This means that the effective dates for most of the Fund’s
Investments are likely to be in the 2011/2012 tax year, but
some may be in the following year.
Loss relief
If any of the Investments that Foresight makes for you through
the Fund are realised at a loss, you would be able to set the
loss against your income and gains when calculating your
liability to CGT and/or income tax in the year of realisation.
This means that your maximum exposure to losses should not
exceed 48% of your total investment after taking the income
tax and loss reliefs into account (and assuming that your
marginal rate of tax is 40%; if your marginal rate is 50% then
the maximum exposure would be even lower at 40%).
Investment Opportunity
In order to promote low-carbon energy, the UK Government
and some other European countries have legislated to create
the incentive of Feed-in Tariffs, which amount in effect to a
government guarantee of long-term prices. In the UK alone,
these incentives are expected to be worth over £3 billion
to the renewable electricity industry in the period to 2020.
Foresight Solar EIS Fund aims to enable individuals to be part
of that industry and to benefit from the predictable revenue
streams possible from Feed-in Tariffs, which in the UK are
inflation-adjusted in line with the retail prices index.
Foresight believes that solar power projects are particularly
attractive for investors because the prices for electricity
under the FIT Scheme are effectively guaranteed by the UK
Government for 25 years and the technology involved is wellproven and reliable. The FIT Scheme also rewards solar
electricity production above all other renewable sources,
reflecting its higher capital cost and allowing for relative
differences in energy yield. Prices under the FIT Scheme are
set to reduce each year for new installations, but Foresight
expects the Fund to be substantially invested before 31 March
2012, the last date for which the current FIT Scheme rates are
expected to apply (see page 17 in relation to the review of the
FIT Scheme).
In the UK, investment of over £170 billion would theoretically
be required at current prices to exploit the potential PV
solar generating capacity as estimated by Foresight on the
basis of advice provided to the UK Government. Taking into
account the various practical constraints, such as funding,
planning permission and resource availability at equipment
manufacturers and installers, Foresight estimates a funding
requirement in the UK in 2011/12 of £750 million.
Fund Manager
Since establishing its solar power team in 2007, Foresight
has invested in solar power projects with a total transaction
value of more than £150 million, demonstrating its ability to
source opportunities, arrange bank finance and complete
investments. The current portfolio of Foresight’s first solar
fund has total forecast generating capacity of 29 megawatts.
Foresight’s team of 12 environmental investment managers
has been assembled gradually, allowing time to integrate their
experience in renewable energy investing and operational
management with Foresight’s proven strengths in private
equity and EIS fund management. Foresight’s achievements in
the environmental arena were recognised in 2009 when the
firm was named New Energy Investor of the Year.
Foresight has been managing UK tax-efficient funds for more
than 12 years and is responsible for more than £160 million of
VCT and EIS fund capital. As well as launching its own funds,
Foresight has also won the support of the independent boards
of five other funds to take over the management role in place
of the incumbent managers. Foresight was named Venture
Capital House of the Year at the November 2009 Unquote
British Private Equity Awards.
Foresight has demonstrated its ability to deliver value for
investors. Its first institutional fund raised £20 million and
returned £80 million to investors. In the VCT sector, Foresight
is responsible for the best performing fund in terms of total
return, outperforming more than 30 other managers of VCTs in
a sector that has raised more than £3.5 billion over 14 years. Its
Foresight 3 VCT is ranked 2nd among 56 VCTs that raised capital
in 2004/5. Foresight’s first environmental EIS fund has recently
completed its initial investment phase, providing investors with
exposure to wider UK environmental opportunities just as these
sectors are showing exceptional growth.
07
Foresight Solar EIS Fund
08
Foresight Solar EIS Fund
Investment Strategy
The Fund will invest primarily in a portfolio of EIS-qualifying
companies that will acquire Solar Power Systems backed by
the FIT Scheme or similar long-term government-backed price
guarantee mechanisms. Investee Companies will not generally
incur risks related to applying for planning permission or other
pre-construction risks, which will usually be the responsibility
of the Fund’s installation partners.
Foresight will seek to sell the Fund’s portfolio within five to six
years to generate capital gains for investors. An Individual RollOver Option is available for Investors who wish to hold their
investment for the long term and to benefit from a reliable
stream of dividends over the full 25-year Feed-in Tariff (see
Roll-Over Option on page 10).
The Fund will seek to maximise the aggregate generating
capacity of its portfolio by inviting other funds, including
Foresight Solar VCT, to co-invest in the portfolio and by using
third party gearing as appropriate. Foresight believes that this
approach will maximise value for Investors, on the basis that
the sale of a larger portfolio is likely to be more attractive
to potential acquirors and should therefore generate a
premium value.
Investments may be made in companies seeking to generate
renewable energy from other sources provided that these
benefit from the FIT Scheme or similar long-term governmentbacked price guarantee mechanisms. The majority of Solar
Power Systems financed by the Fund are expected to be in the
UK, but the Fund may also invest in other countries, provided
that substantially all of the Fund’s investments are made in
EIS-qualifying companies. Pending investment or distribution,
any uninvested funds may be held in cash, interest bearing
securities or other investments.
In order to comply with EIS rules, Foresight will seek to invest
exclusively in companies meeting the following criteria:
• consolidated gross assets do not exceed £7 million
immediately before the investment and £8 million
immediately afterwards;
• fewer than 50 full-time employees (or full time equivalent)
at the time of investment;
• EIS and VCT fundraising of no more than £2 million in any 12
months.
Dealflow
Foresight has a strong flow of solar investment opportunities
through partnering relationships with installers, operators and
developers and from its network of contacts with property
owners and professional advisers. In the UK there are more
than 300 installers accredited under the Microgeneration
Certification Scheme, ranging from large and well-established
companies to smaller and younger businesses. If the UK
market for solar power expands as predicted, installers,
developers and operators have the opportunity to grow
rapidly, a growth that could be constrained by lack of finance
for investment. As a provider of such finance, with a track
record in the solar industry, Foresight believes that it is an
attractive partner for such businesses. Foresight has already
worked effectively with installers and operators in Italy and
Spain and has built similar relationships with installers in
the UK. In November 2010, Foresight announced a strategic
partnership with Solarcentury, a leading supplier and installer
of Solar Power Systems.
Foresight plans to invest the Fund by 31 March 2012, in order
to take advantage of the highest UK guaranteed prices under
the FIT Scheme. Foresight’s pipeline of potential investments
totalled over £500 million in January 2011.
Returns
The Fund is designed to provide attractive returns to Investors
by combining initial tax relief of 20% with tax-free capital
gains on sale of the Investments, and to offer relief from
inheritance tax plus the opportunity to defer CGT deferral
opportunities.
For Investors wishing to maximise capital growth and to
realise their investment in five to six years, Foresight aims to
deliver a capital return of 130p per £1 invested in the Fund by
April 2017. If the planned level and timing of sale proceeds is
achieved, then Investors benefiting from full EIS tax reliefs
would achieve a tax-free cash profit of 63% of their net cost of
investment, and a gross equivalent compound annual return of
16.7% per annum (assuming that the Investor’s marginal rate
of income tax is 50%).
Investors looking for income and wishing to hold their
investment for the long term should expect to receive an
annual yield of 6.3% (calculated on the amount subscribed
less income tax relief) after the first year.
Interest earned on cash balances held in the Fund will be
added to the relevant Investor’s subscription.
09
Foresight Solar EIS Fund
Accumulator Option
Income available for dividends will normally be paid to
Investors as and when it arises. If you prefer to roll up dividend
entitlements in order to maximise capital gain, please select
the Accumulator Option on the Application Form. Foresight will
seek to convert your entitlement to dividends into an increased
call on the capital in each Investment, to be realised in years
5-6 as a capital gain.
The Accumulator Option will be structured within the articles
of association of each Investee Company so that future
Investment returns are shared (as between those Investors
who take their dividends and those who roll up their dividend
entitlements) in proportion to the aggregate of (i) the amount
of each Investor’s initial investment; and (ii) the amount of
dividend entitlements which each Investor has rolled up.
If you and members of your family intend to invest in the Fund,
you should consider taking independent tax advice if one or
some but not all of them intend to select the Accumulator
Option. This is because HMRC may treat dividend entitlements
converted under the Accumulator Option as a settlement of
income on your spouse, civil partner or a child, which would
remain taxable on you.
Individual Roll-Over Option
Some Investors may wish to stay invested for the longer
term to take advantage of the 25-year income profile of solar
power assets. Each Investor is therefore invited to tell us
whether he or she wishes to exit in years 5-6 as planned or to
stay invested for the long term. Each Investor may select the
Individual Roll-Over Option at any time up to 30 June 2015.
Selection may only be made in writing addressed to Foresight
Group, ECA Court, 24-26 South Park, Sevenoaks, Kent, TN13 1DU.
Foresight will manage the Fund’s Investments with the aim
of providing the necessary flexibility consistent with meeting
each Investor’s preference to exit or remain invested for
the long term. Under certain circumstances Foresight
may be unable to meet the wishes of Investors in relation
to the Individual Roll-Over Option. For example, if the
Individual Roll-Over Option is exercised in respect of a
relatively small proportion of the Fund, it may be impractical
or uneconomic for the Fund to continue. Foresight may
therefore decide to terminate the Fund and realise and
distribute all Investments.
Liquidity
Investors who need to realise their Investment early will be
able to offer their Investments for sale through Foresight
at their most recent valuation. Foresight will endeavour to
arrange for any Investments so offered to be bought in by
the Investee Companies, or acquired by the Foresight VCTs or
10
Foresight Solar EIS Fund
other Investors. This does not imply any obligation on the part
of the VCTs to acquire Investments and there is no guarantee
that Investments offered can be sold or that they can be sold
at their most recent valuation.
Charges
Foresight intends that Investors should benefit from tax reliefs
on the full amount of their subscription to the Fund. For this
reason, the charges described below are payable by Investee
Companies rather than by the Fund. The percentages shown
below will be applied to the amount invested by the Fund in
each Investee Company. The charges will accrue from 1 April
2011 and will be payable quarterly in advance from the date
of investment in the relevant Investee Company. VAT will be
added where applicable.
Fund Management Charges
Annual management charge 1.5%
Secretarial charge
0.3% (subject to an index-linked
minimum of £60,000 in
aggregate)
Foresight will bear any legal, accounting and other fees
incurred by the Fund in connection with potential Investments
which do not proceed to completion and may retain for its own
benefit any arrangement fees and directors’ or monitoring
fees which it receives in connection with Investments.
Performance Incentive
Foresight will be entitled to a performance incentive fee,
payable from the proceeds of realising the Fund’s assets. This
fee is only payable once Investors have received proceeds of
at least £1 per £1 invested. The performance incentive fee is
calculated as 20% of distributions to Investors in excess of
£1 per £1 invested until total distributions reach 130p per £1
invested and 30% above that level.
Fundraising Charges
Initial charge
Annual trail commission
5.5%
0.5%
Foresight will receive the initial charge and will pay the costs
of establishing the Fund, including introductory commission
to authorised financial advisers, legal and taxation costs, the
preparation of this Information Memorandum and any other
direct expenses incurred.
Annual trail commission will be paid to your adviser for up to
six years and is capped at 3% of the amount you subscribe to
the Fund. The administration of annual trail commission will
be managed by Foresight Fund Managers Limited which will
maintain a register of advisers entitled to trail commission.
If you change your adviser, you should inform Foresight Fund
Managers Limited of the details of your new adviser, who will
be entitled to receive the annual trail commission instead.
Advisers should keep a record of Application Forms submitted
bearing their stamp to substantiate any claim for annual
trail commission.
Fund structure
The Fund comprises a number of discretionary managed
Portfolios, which are managed in accordance with the
investment objectives and restrictions set out in Schedule 1
of the Investor’s Agreement. Each Investor for legal and tax
purposes is the beneficial owner of a specific number of shares
in each Investee Company, the aggregate of which comprise
his or her Portfolio. The combined Portfolios comprise the Fund
which is as an unapproved EIS fund. The Nominee will be the
registered holder of all Investments of the Fund.
The Fund is not a collective investment scheme within the
meaning of section 235 of the Financial Services and Markets
Act 2000 because it is a complying fund within the meaning of
Article 2 of the Schedule to the Financial Services and Markets
Act 2000 (Collective Investment Schemes) Order 2001 and,
pursuant to clause 15.2 of the Investor’s Agreement, Investors
are entitled to the withdrawal rights prescribed by that Article.
Notwithstanding this, as Investors in the Fund will make
Investments together and their Investments will be managed by
the Fund Manager on a common basis, the Fund will constitute
a collective investment undertaking within the meaning of the
Markets in Financial Instruments Directive (“MiFiD”), which
came into force in the UK on 1 November 2007. Therefore, by
virtue of the exemption for collective investment undertakings
in article 2.1(h) of MiFiD, the Fund falls outside the ambit of
MiFiD. This means, in particular, that Investors may participate
in the Fund as professional clients if their financial adviser
is prepared to certify that that they have the expertise,
experience and knowledge to understand the risks involved
in a participation in the Fund and that they are capable of
making their own investment decisions. Investors who do not
have financial advisers may participate if they can be assessed
as a professional client by Foresight. There is no requirement
to demonstrate a minimum net worth or level of dealing or
previous employment in a professional capacity in the financial
sector.
How to Invest
Please read the Investor’s Agreement and complete the
Application Form, both of which are included in this document.
You can invest any amount from £10,000 upwards, subject to
the amount being a multiple of £1,000.
Please send the completed Application Form to us by post.
We will notify you if we accept your application and our
acceptance of your Application Form will create a binding
agreement between you and Foresight.
11
Foresight Solar EIS Fund
Introduction to solar power investing
Enough solar energy reaches the earth every hour to meet
the world’s energy consumption for a whole year. After forty
years of development, the technology to harness some of this
energy in the form of electricity is tried and tested and familiar
to many people from the images of solar panels published in
so many newspapers, magazines and online. It is generally a
more expensive way to generate electricity than the burning
of fossil fuels, but enjoys government financial support as part
of the drive to reduce greenhouse gas emissions by building
renewable energy generating capacity.
The European Union decided many years ago to promote
renewable energy as part of the response to climate change.
Over the last ten years, Germany, Spain and Italy among
others have demonstrated how massive private sector
investment in renewable energy can be unleashed by longterm prices effectively guaranteed by governments. In 2010
the UK adopted a similar price incentive, called a Feed-in Tariff.
This Feed-in Tariff, effectively guarantees for 25 years an
inflation-linked price for electricity generated by qualifying
Solar Power Systems.
Foresight believes that solar power generation supported by
Feed-in Tariffs is attractive for investors in a time of economic
uncertainty and austerity in government spending. Demand
for solar electricity in the UK is not dependent on a general
economic recovery and is expected to grow at rates well above
GDP growth. The Feed-in-Tariffs in the UK are not paid by
the government and were not altered by the Comprehensive
Spending Review of October 2010. The UK Government
has committed to ensure that 15% of all of the UK’s energy
needs are met from renewable sources by 2020 and this
commitment implies a need for investment of an estimated
£100 billion, part of which is expected to be directed to
solar power. Spain, Italy and other EU countries have similar
commitments.
Having invested in solar power installations in Spain and Italy
over the last three years, Foresight understands the exciting
opportunities that Feed-in Tariffs can unlock for private
investors. Foresight has already established relationships with
installers, banks and other key counterparties and created
a pipeline of investment opportunities. With a three year
track record in solar power investing and an in-house team
of experts in project finance, procurement and operations,
Foresight intends to play a leading role in opening the solar
power opportunity to private investors.
Many people are aware of solar power, but have questions
about how it works, whether it is economic or how Investors
can profit from it. This Introduction to Solar Power Investing
is intended to answer some of the more common questions.
It does not seek to provide all the information necessary to
invest successfully in solar power and does not constitute
advice in relation to the Fund.
What is solar power?
The building blocks of a solar power generator are
photovoltaic cells, typically made of semiconductor material
such as crystalline silicon, which converts light into electricity.
Packaging a number of these photovoltaic cells into a frame,
12
Foresight Solar EIS Fund
with a sheet of glass on the front to protect the semiconductor
wafers from weather and physical damage, creates a solar
panel of the sort so often depicted in the media. A typical
photovoltaic Solar Power System will comprise a number
of panels connected together and linked to an inverter, a
standard item of electrical equipment that converts the direct
current generated by the panels into alternating current, the
form of electricity supplied through the electricity mains.
Panels may be mounted on rooftops or on the ground, and
may be fixed or track the sun. Large numbers of PV systems
have already been installed, mostly in other EU countries using
crystalline silicon-based panels. Systems of this type are the
main focus for the Fund and are referred to in this document
as “Solar Power Systems”.
Solar Panel
Photovoltaic Cell
anti-reflective coating
silicon layers
metal conductor strips
metal backing
What about watts?
To calculate the potential revenue that a Solar Power System
can generate, we need to know both the value of each unit of
electricity and the number of units that can be expected to be
generated each year, termed “annual output” and measured in
“kilowatt-hours (kWh)”. Annual output is a function of a Solar
Power System’s peak capacity, measured in “kilowatts peak
(kWp)”, the amount of solar energy reaching its panel(s), and
a performance factor that allows for the alignment of the
panels in relation to the sun, as well as the temperature and
other factors.
A typical, well-sited Solar Power System in the UK can produce
an annual output of 900 kilowatt-hours of electricity for every
1 kilowatt of peak capacity.
Capacity is related to the physical size of the panels and the
efficiency with which they convert solar energy into electricity.
Efficiency is typically guaranteed by the panel manufacturer.
Annual output is forecast using meteorological data for
average monthly sunlight levels for different geographical
areas, allowing for weather and the number of daylight hours.
Foresight’s experience suggests that estimates properly based
on this data are reliable.
(a megawatt = 1,000 kilowatts; a gigawatt = 1,000,000 kilowatts)
13
Foresight Solar EIS Fund
An Introduction to Solar Power investing
Insolation – solar energy reaching the UK
Units are kilowatt-hours per m2 per year
900
1000
1100
1200
Source: Design of Feed-in Tariffs for Sub-5MW Electricity in Great Britain, quantitative analysis prepared for Department for Energy
and Climate Change, July 2009
Vital statistics for some examples of PV Solar Systems:
School rooftop
Warehouse rooftop
CapacityOutput in kilowatt-hours annually*
in kW peakUK
ItalySpain
100
86,900
135,000
140,000
300
260,700
405,000
420,000
2,000
1,738,000
2,700,000
2,800,000
Ground-mounted
*Based on data from the Photovoltaic Geographical Information System (“PVGIS”) for London, Brindisi
(Italy) and Toledo (Spain)
14
Foresight Solar EIS Fund
An Introduction to Solar Power investing
Is the equipment reliable?
Solar Power Systems have few moving parts and operate over
long periods with minimal maintenance. The UK Government
has stated that “PV is easier to deploy than other technologies
and carries less risk to the investor since it is a tried and
tested technology”. Research by the independent EU Energy
Institute suggests that more than 90% of the solar panels
on the market ten years ago remain capable of performing
well after thirty years of life, albeit with a slight drop in
performance.
Compliance with the UK FIT Scheme requires the owner of
an eligible Solar Power System to agree standard terms and
conditions. An electricity supplier cannot impose conditions
on an owner of a Solar Power System which are additional
to or more onerous than those that are necessary to enable
the electricity supplier to meet its obligations under the UK
FIT Scheme. Owners must also be entered in the register
maintained by The Gas and Electricity Markets Authority in
the UK pursuant to The Feed-in-Tariffs (Specified Maximum
Capacity and Functions) Order 2010 (SI 2010 678).
The major suppliers of solar panels usually guarantee the
efficiency of their equipment over long periods. Typical
guarantees underpin 90% of the rated efficiency for ten
years and 80% for the remaining fifteen years. The top ten
suppliers worldwide of photovoltaic solar panels in 2009
were First Solar, Suntech, Sharp, Yingli, Trina Solar, Sunpower
Corporation, Kyocera Corporation, Canadian Solar Inc.,
SolarWorld AG and Sanyo Electric.
The UK 2010 Generation Tariff depends on the capacity of
the Solar Power System and the date on which it is installed.
Smaller systems get a higher price to compensate for the
lower economies of scale, while installations after 31 March
2012 will get a lower price to match an expected fall in the
capital cost of Solar Power Systems as the market grows. The
UK FIT Scheme does not apply to Solar Power Systems with a
net capacity of more than 5 megawatts peak.
Solar Power Systems owned by Investee Companies will
generally be installed and maintained by specialist contractors,
who may also provide guarantees to supplement the core
equipment guarantees. Such guarantees and contracts are of
course subject to normal commercial limitations.
Why is solar power interesting now?
The UK Government has recently decided to follow the lead
set by other EU countries and in April 2010 implemented new
Feed-in Tariffs – FITs for short. The UK 2010 FITs effectively
guarantee inflation-linked prices for electricity produced by
Solar Power Systems for 25 years, at a level which has been
calculated to offer attractive returns on investment. Similar
schemes introduced in Germany, Spain and Italy a number of
years ago stimulated major investment in the sector. Foresight
has been investing in solar power projects in Italy and Spain
since 2008 and believes that the UK FITs will drive a wave of
investment which the Fund can exploit.
Getting FIT
The Energy Act 2008 introduced powers for the Secretary
of State to implement FITs. These powers were exercised
to modify the standard UK conditions which govern the
supply of electricity by electricity suppliers. The UK FIT
Scheme requires licensed electricity suppliers to pay the
owner of any Solar Power System who complies with the UK
FIT Scheme a “Generation Tariff”, effectively a guaranteed
inflation-linked premium payment on every unit of electricity
generated . In addition, the owner is free to use or sell the
electricity separately, either at a guaranteed price initially set
at 3p per kilowatt-hour (the “Export Tariff”) or in the open
market, where prices have been around 6p per kilowatt-hour.
Assuming moderate to high demand, research published by
the UK Government suggests that traded electricity prices
may rise by 5-14% in total between 2010 and 2020 depending
on the level of investment in supply, potentially increasing
revenues to the owners of Solar Power Systems. Both the
Generation Tariff and the Export Tariff are index-linked to the
Retail Prices Index in order to maintain the real value of the
tariff revenue streams over time.
UK 2010 Generation Tariff in pence per kilowatt hour
Installation date: Up to 31.3.2012 1.4.2012-31.3.2013
4kW or less
Over 4kW up to 10kW
Over 10kW up to 100kW
over 100 kW to 5 MW
41.3
36.1
31.4
29.3
37.8
33
28.7
26.8
This table does not show all UK 2010 FITs.
The revenue potentially available to the owner of a Solar
Power System under the UK FITs is calculated by combining
the annual output multiplied by the Generation Tariff (which
is effectively a renewable energy bonus) with the annual
output multiplied by the Export Tariff (the price at which the
electricity will actually be sold).
Is solar power economic, particularly in the UK?
The long-term prices, effectively guaranteed, under the FITs
are deliberately set high enough to provide an attractive
return on investment after taking into account the system
cost, sunlight available and other factors which vary by
location. The potential economic returns to owners of Solar
Power Systems that are properly installed in appropriate
locations are well-documented.
15
Foresight Solar EIS Fund
An Introduction to Solar Power investing
What can we learn from experience in other EU countries?
The potential effect of Feed-in Tariffs is illustrated by the
German experience, where the growth rate of the PV solar
industry averaged 70% per year over several years. In the UK,
research published by the UK Government suggests that spare
supply capacity in other countries both in manufacturing and
installation of Solar Power Systems could be used to meet
rapidly growing UK demand and this means that in the short
term annual UK sales may be able to grow at a significantly
higher annual rate than 70%. For this reason, the UK Solar
Power System industry may install capacity of 50 MW peak
in the first year of the policy, more than five times the rate
achieved previously. During the growth of the solar industry
in Germany, much larger year-on-year increases in sales
occurred in individual years.
Annual PV Uptake (MW per year)
Comparing potential UK uptake of Solar Power
Systems to the German experience
10000
1000
100
Germany –
time shifted
10
UK – predicted
1
2000
UK – actual
2005
2010
2015
2020
This chart was published in the July 2009 report “Design
of Feed-in Tariffs for Great Britain” commissioned by the
UK Department of Climate Change.
How big is the market opportunity?
In the UK, investment of over £170 billion would theoretically
be required at current prices to exploit the potential PV
solar generating capacity of around 70 million kWp as
estimated by Foresight on the basis of advice provided to the
UK Government. Taking into account the various practical
constraints, such as funding, planning permission and resource
availability at equipment manufacturers and installers,
Foresight estimates a funding requirement in 2011/12 of £750
million in the UK.
How long will it take to get the Fund invested?
Foresight plans to invest the Fund by the end of March 2012,
in order to take advantage of the highest UK guaranteed
prices though may extend the investment period by up to
12 months if the Fund is not fully invested by 31 March 2012.
Foresight’s pipeline totalled over £500 million of potential
investment in January 2011.
In order fully to invest the net cash raised by the Fund,
assuming gross funds raised of £20 million, Foresight believes
that it will need to source opportunities with a total investment
volume of between £38 million and approximately £125
million depending on the level of third-party lending used. This
16
Foresight Solar EIS Fund
represents a small part of the financing opportunity that is
expected to be available during the target investment period.
How does Foresight source investments?
Foresight sources solar investment opportunities through
partnering relationships with installers, operators and
developers and from its network of contacts with property
owners and professional advisers. In the UK there are more
than 300 installers accredited under the Microgeneration
Certification Scheme, ranging from large and well-established
companies to smaller and younger businesses. If the UK
market for solar power expands as predicted, installers,
developers and operators have the opportunity to grow
rapidly, a growth that could be constrained by lack of finance
for investment. As a provider of such finance, with a track
record in the solar industry, Foresight can be an attractive
partner for such businesses. Foresight has already worked
effectively with installers and operators in Italy and Spain and
is building similar relationships with installers in the UK.
What returns can be expected from the portfolio?
Foresight aims to achieve returns sufficient to exceed the
target for total return of 130p over six years. In order to
achieve these returns, Foresight will focus on three key
aspects of the selection and management of Solar
Power Systems:
Minimising system cost – one of the main determinants of
returns is the installed cost of Solar Power Systems, the key
element of which is module cost, which fell significantly during
2009/2010. The Fund will seek to minimise installed cost,
subject to obtaining appropriate guaranteed quality.
Selecting locations – Foresight expects returns to be higher
for a Solar Power System located in an area with more
solar radiation than the UK average, for example in southern
England.
Leverage and realisation – calculated returns can be boosted
by leveraging the Fund’s investment with third-party lending
and by selling assets at the end of the planned exit period to
buyers willing to accept a lower future yield on the investment.
Foresight has secured significant levels of banking finance for
solar power investments during and since the credit crisis and
has wide experience of realising investments.
Returns from the Fund’s portfolio will also depend on a
number of other factors, including the timing of deployment
of the funds raised and the level of UK inflation.
How can the Fund realise investments?
Foresight believes that operational solar power assets will
be attractive to utilities, pension funds, insurance companies
and other investors and will be readily marketable within the
planned exit timeframe. Where Foresight does not control
Investee Companies, it typically seeks to agree a timetable
for exit with other stakeholders before investing. Refinancing
potentially offers an alternative route to liquidating part of the
portfolio ahead of exits.
An Introduction to Solar Power investing
What competition will Foresight face?
Foresight has demonstrated its ability to compete successfully
in the solar sector in Spain and Italy and believes that its
in-house sector expertise, track record and entrepreneurial
approach provide a powerful competitive advantage in
many situations. A variety of other investors are or will
become active in the UK, Italy and Spain and may compete to
provide equity finance. In some cases, equity finance for the
installation of Solar Power Systems may be provided by the
owner or occupier of the building or land, by a utility or by the
installer or even the equipment manufacturer.
Will the guaranteed prices fall in future?
Under the UK 2010 FITs, the Generation Tariff applying to each
Solar Power System will increase in line with the RPI each year
from the date of installation for 25 years. The UK Government
has expressed the intention not to change the Generation
Tariff in respect of systems already installed at the time of any
future change in the scheme.
The UK 2010 FITs do reduce over time, but these lower
prices apply to later installations and not to Solar Power
Systems installed in the initial periods. In February 2011 the
Government announced a review of the FIT regime, confirming
that any resulting changes to the FITs would take effect after
31 March 2012 and would not be retrospective. However the
announcement also proposed a separate review of the FIT for
large solar PV systems. Large systems are defined as having
greater than 50kW generating capacity, which is about 20 times
the size of a typical domestic rooftop system. This separate
review could result in changes taking effect during 2011. The
Government’s objective is to prevent large solar PV systems
taking an excessive share of the overall FIT cost and to allow
this overall cost to grow to £360 million annually in 2014/15
instead of £400 million.
The announcement has no immediate relevance for the sub50kW solar opportunity, which in Foresight’s view could absorb
around £1.5 billion of capital investment and supports the
return targets of the Fund. Foresight’s pipeline includes £165
million of opportunity in the sub-50kW size category.
Will the opportunity be affected by cuts in
government spending?
The long-term prices, effectively guaranteed, under the FITs
are not paid by the UK Government. Instead, UK legislation
requires the major electricity suppliers to pay the prices
directly to owners of Solar Power Systems. The costs are
spread among all licensed electricity suppliers, and may
be passed on to consumers as part of the normal bill for
electricity consumption.
What if there’s a double-dip recession?
In Foresight’s view, the drivers of solar power investment are
not related to general economic trends. The financial case
for investment is based on the commitment of the EU to
renewable energy, reflected in legally binding EU directives
under which the UK has committed to source 15% of all
energy from renewable sources by 2020. This target implies
new investment of around £100 billion in the UK alone, some
of which is expected to be directed to solar power.
If some of the investments will be outside the UK, is there
a currency risk?
Foresight has been able fully to hedge currency exposure for
all its solar power investments outside the UK and expects
to do so for investments funded by the Fund in order to
protect investors from currency movements against the
pound sterling. For UK investments, depreciation of the
pound sterling against the US dollar or the Euro would tend
to increase equipment prices, potentially reducing the returns
from investments made after such depreciation.
Is there a shortage of equipment?
Shipments of solar panels reached a record level in the
final quarter of 2009 as suppliers increased production to
serve booming European markets such as Germany, Italy,
France and the Czech Republic. Foresight expects additional
manufacturing capacity coming on stream to increase supply
to the UK market. Solar panel prices have fallen and if growth
in Germany slows in 2011 as some commentators expect there
could be an oversupply of panels.
Is planning permission a problem?
The Town and Country Planning (General Permitted
Development) (Amendment) (England) Order 2008 removed
the need for planning permission in England for domestic
rooftop Solar Power Systems, with limited exceptions.
Non-domestic and ground-mounted installations usually
require planning permission, but Foresight expects planning
authorities to be supportive, on the basis that Solar Power
Systems may have less visual and other impact on the local
environment than other renewable energy technologies (with
the possible exception of ground source heat pumps which
may also have little visual impact).
17
Foresight Solar EIS Fund
Investment Team
Since 2006 Foresight has built a highly-experienced team of 12 investment managers
focused on the environmental sector. Supported by other Foresight partners, this
team invested in environmental projects with a total value of more than £200 million
between 2006 and 2010.
Jamie Richards has led Foresight’s solar energy team
since inception in 2007. He has played a key role in creating
Foresight’s network of lenders, advisers, installation
contractors and asset owners, and has been directly involved
in financing 30 megawatts of solar assets. Jamie is a
chartered accountant with 17 years’ experience across fund
management, banking and asset financing and has worked at
PricewaterhouseCoopers, Citigroup and Macquarie.
Pietro Zerauschek is responsible for operational and technical
oversight of Foresight’s European solar assets. Pietro is a
qualified mechanical engineer with over 15 years’ engineering
experience and has been providing technical advisory and
engineering services for the financing, construction and
operation of solar energy projects for five years. He is a
director of the project companies for all Foresight’s existing
Italian and Spanish solar assets.
Humberto Santillana joined Foresight from Fotowatio
Renewable Ventures, a global solar energy operator with more
than 130 megawatts of installed solar power capacity and
more than €700 million invested in the sector. At Fotowatio,
Humberto led solar investments in Spain and was responsible
for structuring project finance and negotiation of installation
contracts. Humberto has also worked within the solar team at
Babcock & Brown.
Federico Giannandrea trained as a lawyer with Allen & Overy
in Rome before joining Deutsche Bank, London in 2005.
There he was involved in the acquisition of solar and other
renewable energy assets in Poland, Spain, Greece, Belgium
and Italy, structuring and negotiating key elements of a
portfolio with electricity generating capacity of 2 gigawatts.
As a vice-president within the renewable energy team,
Federico led the project financing and installation contracting
for an 8 megawatt solar power plant project in southern Italy
and was involved in several other solar and wind
power projects.
Diomidis Dorkofikis gained a degree in Industrial
Management & Technology and a masters degree in
corporate finance before joining Millennium Bank, Athens as
a project finance analyst. At Millennium Bank he specialised
in renewable energy and other infrastructure and property
investments and was involved in the sale of two wind power
projects with capacity of 48 megawatts and in the appraisal
of a solar power project. He joined Foresight’s Rome office in
September 2009.
18
Foresight Solar EIS Fund
Matt Taylor has an 18-year track record in private equity
investment management, first with 3i Group plc and since
May 2000 with Foresight. Matt’s first experience of
environmental investment came in 1991 when he joined IKB
Deutsche Industriebank AG, a partner for the environmental
support programmes backed by Germany’s Kreditanstalt
für Wiederaufbau.
Andrew Page spent nine years in operational management
roles in industry before starting his career in private equity
management in 2000. Andrew guides engineering procurement
and management activities across all environmental companies
within Foresight’s portfolio. His operational experience in
engineering management allows him to contribute unique
insight to selection and management of project-based
investments.
Nigel Aitchison has a deep understanding of project
management and engineering in the environmental sector. As
managing director of Shanks PFI Investments, Nigel successfully
completed two major project financings and raised over £150
million in bank financing. Nigel is a Chartered Environmentalist.
Giles Whitman has played a key role in the development of
Foresight’s pipeline of UK solar investment opportunities.
Prior to joining Foresight in 2008 he was involved in assessing
potential acquisitions in the energy consultancy and utility
infrastructure sectors for Spice plc. He has also been
responsible, as an equity research analyst for HSBC Investment
Bank, for researching and valuing major wind-turbine
manufacturers. Giles is a Chartered Accountant.
Tom Thorp is a Chartered Accountant with over five years’
experience in financial analysis and due diligence reporting
with KPMG’s Transaction Services and Restructuring teams
both in London and Munich. He has advised on a wide range of
industries, performing acquisition and vendor due diligence as
well as advising on company refinancings and working capital
exercises for demergers and AIM listings.
James Samworth has 10 years’ experience in manufacturing
and commercial roles within Corus (previously British Steel),
helping to improve the performance of large manufacturing
plants and holding responsibility for £100 million sales accounts.
James gained private equity experience through internships at
Lyceum Capital, Actis, NextWave Ventures and Deutsche Bank
before joining Foresight in 2009. James gained an MBA with
distinction at London Business School and a 1st class Natural
Sciences degree from Cambridge University.
Investment Team
Senior Partners
Three further partners of Foresight will play important
roles in relation to the Fund. Bernard Fairman and David
Hughes are members of Foresight’s investment committee,
whilst Gary Fraser heads Foresight’s finance and
administration department.
Bernard Fairman is the chairman of Foresight Group and is
responsible for group business development, strategy and
administration, as well as having final responsibility for all
significant investment decisions made on behalf of funds
managed by Foresight. Over the past 25 years he has led
Foresight’s development into a business that now manages
over £200 million with 28 staff in the UK, Italy and Spain, and
in 1997 launched the best ever performing VCT. For ten years
he was a director of smartcard innovator Gemplus, involved
in its growth from start-up to over $1 billion annual revenues.
David Hughes
Bernard Fairman
Chairman of Foresight Chief Investment
Group & Foresight Solar Officer
Diomidis Dorkofikis
Investment Manager
Matt Taylor
Partner
Early experience as an analyst for the oil industry led Bernard to
grasp the opportunity of renewable energy and, in 2005, to turn
Foresight’s focus towards sustainable environmental investing.
David Hughes is responsible for Foresight’s private equity
investment activities and portfolio management. David has
36 years experience of unquoted investment management,
initially with 3i and subsequently establishing fund management
operations for Framlington Investment Management Ltd, Baltic
plc and Bank Austria AG, London. He has been involved in VCT
management since 2004.
Gary Fraser directs financial management and compliance, a
role he has fulfilled at Foresight for six years. He was previously
company secretary for Baronsmead VCTs and other companies
and funds within ISIS Asset Management plc. He qualified as a
Chartered Accountant with Ernst & Young in 1996 and has been
involved in raising over £1 billion for a range of companies.
Gary Fraser
Partner
Jamie Richards
Partner & CEO
Pietro Zerauschek
Partner & Technical
Director
Humberto Santillana
Investment Director
Federico Giannandrea
Investment Director
Andrew Page
Partner
Nigel Aitchison
Industrial Partner
Giles Whitman
Senior Investment
Manager
Tom Thorp
Investment Manager
James Samworth
Investment Manager
Track Record*
VCTs managed exclusively by Foresight Group
FundTimeframeEffective NetTotal Return*** Issue Price**
Fleming Ventures
Foresight VCT (“O”)
Foresight VCT (“C”)
Foresight VCT (“O”)*
Foresight 2 VCT
Foresight 2 VCT (“C”)
Foresight 3 VCT
Foresight 4 VCT
1985–2001
1997–2007
1999–2007
2007–to date
2005–to date
2007–to date
2004–to date
2004–to date
100p
80p
80p
83p
60p
70p
90.3p
91.2p
400p
221p
92p
53.3p
89.7p
114p
109.7p
125.1p
IRR with initial
tax break****
n/a
23.85%
-3.11%
-5.66%
7.06%
26.24%
23.60%
17.22%
* Foresight VCT O and C shares merged in January 2007 to form new Foresight VCT “O” shares
** Effective Net Issue Price - £1 subscription price less income tax relief where applicable
*** Total Return = Dividend distributions + Net Asset Value as at 14 September 2010
**** Source courtesy of Martin Churchill: www.taxefficientreview.com
NB: Foresight 3 & 4 VCTs were originally managed by Advent. Foresight took over the management of these funds in July 2004.
19
Foresight Solar EIS Fund
20
Foresight Solar EIS Fund
Directory
Fund Manager and Promoter
Foresight Group CI Limited
La Plaiderie House
La Plaiderie
St Peter Port
Guernsey
GY1 4HE
Foresight Group LLP
ECA Court
South Park
Sevenoaks
Kent
TN13 1DU
United Kingdom
T: 01732 471812
F: 01732 471810
Administrator and Nominee
Foresight Fund Managers Limited
ECA Court
South Park
Sevenoaks
Kent
TN13 1DU
United Kingdom
T: 01732 471812
F: 01732 471810
Solicitors and Tax Advisers
RW Blears LLP
125 Old Broad Street
London
EC2N 1AR
T: 020 3192 5691
E: [email protected]
21
Foresight Solar EIS Fund
Risk Factors
Prospective Investors should be aware that the value of investments through the
Fund can fall as well as rise.
Investors should be fully aware of the high risk nature of
this type of investment. In addition, statements concerning
taxation are merely a brief summary and should not be viewed
as constituting tax advice. The information below does not
purport to be exhaustive. Additional risks and uncertainties,
not presently known to the Fund Manager, or which the Fund
Manager currently deems immaterial, may also have an adverse
effect on the Fund and on Investments. Investors should
consider carefully whether an investment in the Fund is suitable
for them in the light of the information in this document and
their personal circumstances. If in any doubt whatsoever,
an Investor should not subscribe. In any case, it is strongly
recommended that Investors seek the advice of their financial
adviser or other appropriately qualified professional adviser.
Risks relating to the Investee Companies
The Investee Companies will be small, unquoted companies.
There is no market, nor is there intended to be a market,
for Investments; as such, an Investment will not be Readily
Realisable. It is not intended that any income or capital will be
returned to Investors during the Three Year Period. After the
Three Year Period, it may still be difficult to realise Investments
or to obtain reliable information about their value as the
market for shares in smaller companies is often less liquid than
that for shares in larger companies, bringing with it potential
difficulties in acquiring, valuing and disposing of such shares.
The performance of the Fund is dependent on the ability of
the Fund Manager to identify appropriate Investee Companies
and on the ability of the Investee Companies to perform in
line with their respective business plans. The income from the
Investee Companies will depend on the revenues generated by
the activities undertaken by such companies, which may be less
than the costs incurred by such companies.
Investment in smaller, unquoted companies, by its nature,
involves a high degree of risk. Proper information for
determining their value or the risks to which they are exposed
may also not be available. Investment in such companies can
offer good investment returns but by its nature is illiquid and
uncertain and consequently involves a higher degree of risk
than a portfolio of quoted shares. Realisation of investments
in unquoted companies can be difficult and may take
considerable time.
Investee Companies may be affected by divergence between
forecast and actual levels of solar radiation, or by changes in
legislation, or by changes in the rates of Feed-in Tariffs, interest,
inflation, foreign exchange or tax, or by changes in prices of
solar panels and other capital equipment, energy, or financing,
or by changes in labour, maintenance, safety or other operating
costs, or by operating and technical risks, including risk of
mechanical breakdown, failure to perform according to design
specifications, failure to obtain accreditation and registration
with Ofgem for Solar Power Systems, unavailability of grid
connection, labour and other work interruptions and other
unanticipated events that adversely affect operations.
22
Foresight Solar EIS Fund
It is expected that major suppliers of solar panels will guarantee
the efficiency of their equipment over long periods. Investments
will only be made in Investee Companies where Foresight
believes that any relevant counterparties are, and will remain,
financially strong, but such judgements on the part of Foresight
necessarily involve risk and uncertainty because they relate to
future events and circumstances which may affect the financial
strength of counterparties. It is possible that counterparties
could be unable to meet guarantee obligations.
The standard UK conditions of electricity supply licences, as
recently modified by the UK Secretary of State, provide that
from the date on which the owner of an eligible Solar Power
System is entered in the register maintained by The Gas and
Electricity Markets Authority in the UK the relevant electricity
supplier must commence Feed-in Tariff payments at the rates
provided for in the FIT Scheme from the next payment cycle
or the date on which standard terms are agreed between the
owner and that electricity supplier. UK electricity suppliers
cannot impose conditions on an owner of a Solar Power
System which are additional to or more onerous than those
that are necessary to enable the electricity supplier to meet its
obligations under the FIT Scheme. This amounts effectively to
a UK government guarantee of the long-term prices provided
for in accordance with the FIT Scheme. However, the UK
government does not guarantee the solvency of electricity
suppliers and if an electricity supplier were to collapse or if its
financial strength deteriorates then its obligations to owners
under the FIT Scheme may become worthless. It is believed that
the same solvency risk is likely to exist in relation to overseas
Feed-in Tariffs.
Investee Companies may incur unplanned costs and delays as a
result of statutory and regulatory requirements, including those
imposed by environmental, safety, labour and other regulatory
and political authorities, or where construction operations do
not proceed as planned, or where insurance is not adequate
or as to which inadequate reserves had been established, risks
arising out of the presence of certain construction materials,
force majeure acts, terrorist events, or other operating risks.
The level of returns from Investments may be less than
expected if there is delay in the investment programme,
such that all or part of the Fund is held in cash or near cash
Investments for longer than expected, or if the returns obtained
on Investments are less than planned, or if Investments cannot
be realised at the expected time and values. There can be
no guarantee that suitable investment opportunities will be
identified in order to meet the Fund’s objectives.
The departure of any of the Fund Manager’s members, partners
or employees or those of its Associates could have a material
adverse effect on the performance of the Fund. Whilst the Fund
Manager has entered into appropriate agreements with its
members, partners, employees and Associates, the retention
of their services cannot be guaranteed. The past performance
of Foresight Group is not necessarily a guide to its future
performance and may not necessarily be repeated. The value
Risk Factors
of Investments and income from them may go down as well as
up and Investors may not get back the amount they originally
invest in the Fund.
Risk Factors
This document should not be considered as constituting legal,
taxation or investment advice by the Fund Manager or its
advisers. Each party to whom this document is made available
must make its own independent assessment of the Fund after
making such investigations and taking such advice as may be
deemed necessary. In particular, any estimates or projections
or opinions contained in this document necessarily involve
significant elements of subjective judgement, analysis and
assumptions and each recipient should satisfy itself in relation
to such matters.
Under HMRC EIS rules, EIS Qualifying Companies are required
to have employed 100% of their net funds (after the deduction
of issue costs) within 24 months after the date of issue of
Shares, except where the qualifying activity consists of
preparing to carry on a trade in which case the time limit is
24 months after the date of commencing the trade. If an
Investee Company fails to employ this level of funds within the
required deadlines, the Investee Company would be in breach
of the EIS regulations and tax relief may be withdrawn.
A sale of Shares in the Investee Companies within the Three
Year Period will result in the 20% income tax relief available
upon subscription for those Shares becoming repayable
to HMRC and in any capital gains on such Shares and any
deferred gain being subject to CGT. It is possible for Investors
to lose their EIS Relief and/or Capital Gains Tax Deferral Relief
and/or Business Property Relief by taking or not taking certain
steps. Investors are advised to take appropriate independent
professional advice on the tax aspects of their investment.
Risks relating to the EIS qualifying status of
the Investor
There are circumstances in which an Investor could cease
to qualify for the taxation advantages offered by the EIS.
For example, Capital Gains Tax Deferral Relief could be lost
if an Investor ceases to be resident or ordinarily resident in
the United Kingdom during the Three Year Period. In
addition, an Investor could cease to qualify for EIS Relief
if he receives value from the Fund or one of the Investee
Companies during the period beginning one year before the
Shares in the Investee Companies are issued and ending
on the conclusion of the Three Year Period. Payment of a
dividend, however, would not typically be regarded as a
receipt of value.
Fund Issues
The Fund Manager reserves the right to cease to manage
the Fund in certain circumstances set out in the Investor’s
Agreement, in which event it will try to transfer the Portfolios
to another fund manager or to terminate the Fund in an
expeditious way, but there is a possibility that the Tax
Advantages may be lost.
Risks relating to the EIS qualifying status of the
Investee Companies
If an Investee Company ceases to carry on business of the
type prescribed for EIS Qualifying Companies during the Three
Year Period, this could prejudice its qualifying status under
the EIS. The situation will be closely monitored with a view
to preserving the Investee Company’s qualifying status, but
this cannot be guaranteed. A failure to meet the qualifying
requirements for EIS could result in:
Generally, the Fund Manager reserves the right to return
a small surplus of cash if it concludes that it cannot be
properly invested.
•Investors being required to repay the 20% income tax relief
received on subscription for Shares and interest on the
same;
• a liability to tax on capital gains on a disposal of the Shares;
and
• any deferred gain crystallising.
Further details of the taxation implications of an investment
in an EIS Qualifying Company are set out in Appendix 1 of
this document.
Although provisional approval will be sought from HMRC that
the Investee Companies and their activities should qualify
under the EIS, there is no guarantee that the formal EIS claims
will be agreed or that such agreement will not be subsequently
withdrawn. In those circumstances, Subscription monies will
not be returned to Investors. If an Investee Company fails to
obtain EIS Qualifying Company status, or if it is subsequently
withdrawn, EIS income tax relief and Capital Gains Tax
Deferral Relief would not be available to Investors or could
be withdrawn.
The Fund Manager will seek to realise Investments and to
terminate the Fund in an orderly fashion over a period of six
years from the final Closing Date but it cannot be guaranteed
that the Investments made can easily be realised within this
period and, even where they can be realised, that this can be
done on an advantageous basis.
Potential Conflicts of Interest
There may arise situations where the interests of the Fund
conflict with the interests of other funds managed by the Fund
Manager or with those of the Fund Manager itself. The Fund
may invest in companies in which other funds managed by the
Fund Manager may invest or may already hold investments.
Decisions made by the Fund Manager may be more beneficial
for one fund managed or advised by the Fund Manager than
for any other.
The Fund may co-invest with third parties or through joint
ventures or other entities. Such co-investing may give rise
to the possibility that a co-investor or partner may at any
time have economic or business interests or goals which are
inconsistent with those of the Fund, or that such person may
take action contrary to the Fund’s investment objectives. The
entitlement of the Fund Manager to the performance fee
referred to in Schedule 2 may create an incentive for the Fund
Manager to make more speculative investments on behalf of
the Fund than it would otherwise make in the absence of such
a performance-based compensation arrangement. The Fund
Manager may enter into fee sharing arrangements with third
23
Foresight Solar EIS Fund
Risk Factors
party marketers, including placement agents, or other advisers
who refer Investors to the Fund, and such marketers may have
a conflict of interest in advising prospective investors whether
to invest in the Fund.
Prospective investors are strongly advised to conduct their
own due diligence including, without limitation, the legal and
tax consequences to them of investing in the Fund.
Conflicts of interest may arise in connection with decisions
made by the Fund Manager that may be more beneficial for
certain Investors than for any other. In making such decisions,
the Fund Manager intends to consider the investment
objectives of the Fund as a whole, not the investment
objectives of any individual Investor.
The investments described in this document may not
be suitable for all investors. Investors are accordingly
advised to consult an investment adviser authorised
under the Financial Services and Markets Act 2000
and an appropriately qualified professional adviser,
prior to investing.
The Fund Manager may provide certain Investors with
the opportunity to co-invest in Investments. Potential
conflicts may be inherent in, or arise from, the Fund
Manager’s discretion in providing such opportunities to
certain Investors. In addition, once such co-investments
are made, the Fund’s interests and those of co-investing
Investors may subsequently diverge.
General Risks
The subscription for Shares in the Investee Companies and
the performance of Shares will not be covered by the Financial
Services Compensation Scheme or by any other compensation
scheme. Prospective investors should not regard the contents
of this Information Memorandum as constituting advice
relating to legal, taxation or investment matters and are
advised to consult their own professional advisers before
contemplating any investment or transaction.
The information contained in this Information Memorandum
makes reference to the current laws concerning EIS Relief,
Business Property Relief and Capital Gains Tax Deferral Relief.
These levels and bases of relief may be subject to change.
The tax reliefs referred to in this Information Memorandum
are those currently available and their value depends on
individual circumstances. Past performance is not necessarily
a guide to future performance and may not necessarily be
repeated. You should be aware that Share values and income
from them may go down as well as up and you may not get
back the amount you originally invested. All statements of
opinion and/or belief contained in this document and all views
expressed and all projections, forecasts or statements relating
to expectations regarding future events or the possible
future performance of the Fund represent Foresight’s own
assessment and interpretation of information available to it
as at the date of this document. No representation is made
or assurance given that such statements, views, projections
or forecasts are correct or that the objectives of the Fund
will be achieved. Prospective investors must determine
for themselves what reliance (if any) they should place on
such statements, views, projections or forecasts and no
responsibility is accepted by Foresight in respect thereof.
24
Foresight Solar EIS Fund
25
Foresight Solar EIS Fund
26
Foresight Solar EIS Fund
Appendix 1: Taxation
EIS Qualifying Companies
Each Investee Company in which the Fund invests must initially
(i.e. at the time of issue of the Shares) not be listed on a
recognised stock exchange (as defined for the purposes of EIS
Relief) and there must be no “arrangements” in place for it to
become so listed. In addition, throughout the Three Year Period,
it must not be a subsidiary of, or be controlled by, another
company. It must either exist to carry on a qualifying trade or
else be the parent company of a trading group and there must
be no “arrangements” in existence for the Investee Company to
become a subsidiary of, or be controlled by, another company.
A trading group is a group in which, directly or indirectly, more
than 50% of the shares of each subsidiary are held by another
member of the group, but any subsidiary employing any of
the money raised by the issue of Shares must be a qualifying
90% subsidiary. Non-qualifying business activities (broadly,
investment activities and non-qualifying trades) must not
comprise a substantial part of the business of the group as a
whole. The qualifying business activity for which the money
is raised by the issue of Shares must be a trade carried on
by a company wholly or mainly in the UK and the trade must
be conducted on a commercial basis and with a view to the
realisation of profit.
The value of the gross assets of the Investee Company and any
subsidiaries must not exceed £7 million immediately before the
issue of Shares and £8 million immediately afterwards.
The maximum fundraising per Investee Company is restricted
to £2 million per year and the maximum number of full-time
employees (or full-time equivalent) in the Investee Company at
the time of Investment is restricted to fewer than 50.
Most types of trades are qualifying trades but the following
are excluded:
•Dealing in land, commodities or futures, or in shares,
securities or other financial instruments;
• dealing in goods otherwise than in the course of an ordinary
trade of wholesale or retail distribution, or acting as a
wholesaler or retailer of goods of a kind which are collected
or held as investments if stock is not actively sold;
• banking, insurance, money lending, debt factoring, hire
purchase financing or other financial activities;
• leasing, except certain lettings of ships, or receiving royalties
or licence fees (subject to certain exceptional cases);
• providing legal or accountancy services;
• farming and market gardening;
• forestry and timber production;
• property development;
• shipbuilding;
• producing coal and/or steel;
• operating or managing hotels or similar establishments;
• operating or managing nursing homes and residential care
homes; and
• providing services to a trade consisting of any of the above
carried on by a “connected person.”
Finance (No 3) Act 2010 which is expect to come into force
in these respects in April 2011 will replace the geographical
restriction to carrying on a trade wholly or mainly in the UK
with a requirement that an Investee Company issuing the
shares under the EIS must have a permanent establishment in
the UK. The same legislation also requires that a company must
not be “in difficulty” when shares are issued. A company will not
be treated as “in difficulty” within three years of its formation
or if it is able to raise funds from existing shareholders or
the market.
Shares only qualify for EIS Relief if they are ordinary shares
which do not, at any time during the Three Year Period, carry
any present or future preferential right to dividends or to an
Investee Company’s assets on its winding up, or any present or
future right to be redeemed. The Accumulator Option will be
structured within the articles of association of each Investee
Company so that future returns are shared (as between those
investors who take their dividends and those who roll up their
dividend entitlements) in proportion to the aggregate of (i) the
amount of each Investor’s initial investment; and (ii) the amount
of dividend entitlements which each Investor has rolled up. Such
rights within the articles of association of an Investee Company
should not constitute preferential rights either as a matter of
law, because Investors will subscribe the same class of Shares
and so other classes of shares will not be effected by the intra
class operation of the Accumulator Option, or as a matter of
fact, notwithstanding that some Investors may repeatedly waive
their dividends given that those who elect for the Accumulator
Option may, at their discretion, switch their election so that they
do not roll up their dividends. No Accumulator Option will be
exercised in respect of any Shares unless an advance assurance
has been obtained from HMRC in relation to an Investment
which sanctions the operation of the Accumulator Option.
If no such advance assurance(s) can be obtained then the
Accumulator Option may not be available for some or all of the
Investments made by the fund.
Fund Status
The Fund has not been approved by HMRC under section 251
of the Income Tax Act. This means that the Investor can obtain
EIS Relief in the tax year in which Investments in EIS Qualifying
Companies are made by the Fund and in the preceding tax year
to the extent that Carry Back Relief is claimed in respect of
the Investments.
The tax year in which the Fund invests may not be the same
as the tax year in which an Investor subscribes to the Fund,
notwithstanding the availability of Carry Back Relief, given
that the Fund Manager anticipates investing the Fund over the
course of the three tax years 2009/10 to 2011/12. Capital Gains
Tax Deferral Relief is also given by reference to the dates on
which the Fund makes its Investments.
When an Investment has been made in an EIS Qualifying
Company and that company has been trading for at least four
months, the Fund Manager will send Investors an EIS 3 Form.
The EIS 3 Form can be used by an Investor to claim EIS Relief in
respect of the amount invested in that company. The EIS 3 Form
will state the amount of the EIS qualifying investment
27
Foresight Solar EIS Fund
Appendix 1: Taxation
the Investor has made through the Fund and is required when
claiming EIS Relief through a personal taxation return. EIS
Relief must be claimed no later than five years after 31 January
following the year of assessment in which the Investment
was made.
Complying fund (non-MiFiD) status
The Fund is a complying fund within the meaning of Article 2 of
the Schedule to the Financial Services and Markets Act 2000
(Collective Investment Schemes) Order 2001 and, pursuant to
clause 15.2 of the Investor’s Agreement, Investors are entitled to
the withdrawal rights prescribed by that Article. Accordingly, the
Fund is not a collective investment scheme within the meaning
of section 235 of the Financial Services and Markets Act
2000. Notwithstanding this, as Investors in the Fund will make
investments together and their investments will be managed by
the Fund Manager on a common basis, the Fund will constitute
a collective investment undertaking within the meaning of the
Markets in Financial Instruments Directive (“MiFiD”), which
came into force in the UK on 1 November 2007. Therefore, by
virtue of the exemption for collective investment undertakings
in article 2.1(h) of MiFiD, the Fund falls outside the ambit of
MiFiD. This means, in particular, that the category of Investors in
the Fund able to participate in the Fund as professional clients is
wider than if the Fund were to fall within the ambit of MiFiD.
Dividends
Under current legislation, no advance corporation tax is payable
by Investee Companies on dividends. Shareholders will receive
a notional tax credit on dividends paid, such that basic rate tax
payers will have no further tax to pay on the dividend received
and higher rate taxpayers will have a liability to pay higher rate
tax equivalent to 25% of the amount of the dividend received.
EIS Tax Reliefs
To obtain the tax reliefs described below, it is necessary to
subscribe for Shares in EIS Qualifying Companies and claim
the relief. The summary below is based on current law, and
gives only a brief outline of the tax reliefs and assumes that
the Investor is a 40% taxpayer. It does not set out all the
rules which must be met by EIS Qualifying Companies and an
Investor. The tax reliefs will only be relevant to Investors who
pay UK income tax and/or wish to defer a capital gain.
(a) Income Tax Relief
Individuals can obtain income tax relief on the amount
subscribed for Shares in EIS Qualifying Companies (up to
£500,000 in each tax year for all EIS investments) provided
they are not connected with any issuing company. Husbands
and wives and civil partners can each subscribe up to
£500,000. To calculate the relief, the lower rate of tax (currently
20%) is multiplied by the amount subscribed. The relief is given
against the individual’s income tax liability for the tax year in
which the Shares are issued unless the individual makes a Carry
Back Relief claim.
(b) Carry Back Relief
Carry Back Relief claims may be made for amounts subscribed
for Shares in EIS Qualifying Companies up to the full amount of
£500,000 multiplied by the lower rate of tax to be set against
28
Foresight Solar EIS Fund
an individual’s income tax liability for the tax year preceding
that in which Shares are issued, save to the extent that income
tax relief has already been claimed under the EIS for the
preceding year.
(c) Capital Gains Tax Deferral Relief
To the extent to which a UK resident Investor (including
individuals and certain trustees) subscribes for Shares, he can
claim to defer paying tax on all or part of a chargeable gain.
The gain may have arisen on the disposal of any asset, or a
previously deferred gain may have been brought back into
charge. Although there is a limit of £500,000 for income tax
relief (see (a) above) and for the exemption from capital gains
tax upon a disposal (see (d) below), there is no limit on the
amount of EIS Investments which can be used to defer a gain.
If the Investor dies whilst still holding Shares, the deferred CGT
liability is extinguished entirely. Shares must be issued within
one year before and three years after the date of the disposal
which gives rise to the gain or the date upon which a previously
deferred gain crystallises. The gain is deferred until there is
a chargeable event such as a disposal of Shares or an earlier
breach of the EIS rules.
(d) Capital Gains Tax Exemption
Any capital gains realised on a disposal of Shares in an EIS
Qualifying Company after the Three Year Period, and on which
EIS relief (see (a) above) has been given and not withdrawn, will
be capital gains tax-free. Any capital gains realised on a disposal
within the Three Year Period will be subject to capital gains tax,
but in respect of gains realised after 23 June 2010 the effective
rate of CGT is 18% and 28% for individuals (the tax rate used
depends on the total amount of the individual’s taxable income).
(e) Loss Relief against Income or Gains
Tax relief is available at any time in respect of any loss realised
upon a disposal of Shares in an EIS Qualifying Company on
which EIS income tax relief (see (a) above) or Capital Gains
Tax Deferral Relief (see (c) above) has been given and not
withdrawn. The amount of the loss (after taking account of
any income tax relief initially obtained) can be set against
the individual’s gains in the tax year in which the disposal
occurs, or, if not fully used, against gains of a subsequent year.
Alternatively, on making a claim, the loss, net of income tax
relief, may be set off against the individual’s taxable income in
either the tax year in which the disposal occurs, or the
previous tax year.
Inheritance Tax – Business
Business Property Relief
Although not an EIS tax relief as such, an investment in an EIS
Qualifying Company should qualify for 100% relief from IHT
under current legislation, provided the investment has been
held for at least two years and is still held at time of death.
There is no upper limit on the amount of IHT Relief which can
be claimed. The combined availability of the reliefs referred to
above can result in significant tax savings.
Appendix 1: Taxation
Trusts
Reliefs are available to UK resident Investors as trustees of
discretionary or life interest trusts.
Apart from being attractive to individual Investors who are UK
resident for tax purposes, the Fund offers excellent tax planning
opportunities to trustees of certain trusts.
Capital Gains Tax Deferral Relief, as described above, can be
claimed on the amount subscribed for Shares in EIS Qualifying
Companies against any chargeable gains if the Investment is
made within one year before and three years after the date of
the disposal which gives rise to the gain or the date upon which
a previously deferred gain crystallises.
Loss Relief is available under the normal capital loss rules
in respect of any losses incurred on Investments made by
the Fund.
Inheritance Tax: discretionary trusts can benefit from Business
Property Relief on EIS Investments made by the Fund, provided
they have been held by the trustees for two years.
Please note that this is only a condensed summary of
the taxation legislation and should not be construed as
constituting advice which a potential Investor should
obtain from his or her own investment or taxation adviser
before applying for an investment in the Fund. The
value of any tax reliefs will depend on the individual
circumstances of Investors.
29
Foresight Solar EIS Fund
Appendix 2: Investor’s Agreement
This Agreement sets out the terms and conditions for the Fund
(a)the Fund Manager undertakes an adequate assessment
of the expertise, experience and knowledge of the Investor
that gives reasonable assurance, in the light of the nature
of the transactions or services envisaged, that the Investor
is capable of making his own investment decisions and
understanding the risks involved;
(b)the Fund Manager has given the Investor a clear written
warning of the protections and investor compensation
rights the Investor may lose; and
(c)the Investor has stated in writing, in a separate
document from this Agreement, that he is aware of the
consequences of losing such protections. Such a statement
is contained within the Application Form.
1.Definitions, Construction and
Interpretation
1.1In this Agreement the definitions contained in the Glossary
set out in Appendix 3 shall apply.
1.2Words and expressions defined in the FSA Rules which are
not otherwise defined in this Agreement shall, unless the
context otherwise requires, have the same meaning in this
Agreement.
1.3 Any reference to a statute, statutory instrument or to rules
or regulations shall be references to such statute, statutory
instrument or rules or regulations as from time to time
amended, re-enacted or replaced and to any codification,
consolidation, re-enactment or substitution thereof as from
time to time in force.
1.4References to the singular only shall include the plural and
vice versa.
1.5Unless otherwise indicated, references to Clauses shall be
to Clauses in this Agreement.
1.6Headings to Clauses are for convenience only and shall not
affect the interpretation of this Agreement.
2.Investing in the Fund
2.1This Agreement comes into force on the date on which an
Investor is notified in writing by the Fund Manager that his
Application Form is accepted in respect of the Fund.
2.2This Agreement enables the Investor to invest in the Fund.
The Fund will be a Complying Fund.
2.3The Investor hereby appoints the Fund Manager, on the
terms set out in this Agreement, to manage his Portfolio(s)
in the Fund as one of a series of similar Portfolios which
together constitute the Fund in which he has invested.
The Fund Manager agrees to accept its appointment and
obligations on the terms set out in this Agreement.
2.4The Fund Manager is authorised and regulated by
the Financial Services Authority for the conduct of
UK business. The Administrator and the Nominee are
Associates of the Fund Manager. The Fund Manager is a
party to this Agreement in its own right and as agent for
and on behalf of the Administrator and the Nominee.
2.5Under the terms of this Agreement, and in accordance with
the FSA conduct of business rules 15.2.1, the Investor does
not have the right to cancel arrangements to which this
Agreement applies.
2.6If an application set out in an Application Form is not
accepted, the Fund Manager will promptly notify the
Investor and return the Subscription enclosed with the
Application Form.
2.7The Investor confirms to the Fund Manager that he wishes
to be treated as a professional client in respect of his
Portfolio(s) in the Fund.
2.8The Fund Manager may provide the Services to the Investor
on the basis that he is an elective professional client if:
30
Foresight Solar EIS Fund
2.9If the Investor has been advised by an authorised
intermediary who is able to advise on EIS investments and
who completes the final section of the Application Form,
the Investor will be treated as having satisfied the above
criteria. However, if the Investor has applied directly he will
have to complete the form on his investment experience
which appears immediately after the Application Form.
The information provided by the Investor will be kept
confidential by the Fund Manager but it is important to
enable the Fund Manager to categorise the Investor as a
professional client as required by the FSA. An application
to subscribe to the Fund will only be accepted from an
Investor if he has been categorised by the Fund Manager as
a professional client.
2.10Once an Investor is treated as a professional client he
will lose the protections applicable exclusively to retail
clients under the FSA Rules. Certain of the FSA Rules will
automatically be limited or modified in their application
to the Investor. Certain of the FSA Rules will be capable of
modification in their application to the Investor in relation
to any business carried out by the Fund Manager under the
terms of the Information Memorandum (“the Business”).
2.11The following protections will not apply to an Investor in
the Fund. The Fund Manager will not be obliged to warn
the Investor of the nature of any risks involved in any
potential Investments in the Fund. The Fund Manager
will not be obliged to disclose to the Investor the basis or
amount of its charges for any services the Fund Manager
provides to the Investor or on his behalf or the amount
of any other income that the Fund Manager may receive
from third parties in connection with such services. The
Fund Manager will not be obliged to set out any of the
prescribed contents, disclosures or risk warnings needed
for retail customers in prospectuses, marketing brochures
and other non real-time financial promotions material, nor
will the Fund Manager be subject to the restrictions that
apply to a retail client in relation to unsolicited real-time
communications with the Investor. The Fund Manager will
not be required to give the Investor the warnings required
for retail clients in relation to material which may lead the
Investor to deal with or use overseas firms which are not
regulated by the Financial Services and Markets Act 2000
nor will the Fund Manager have to satisfy itself that the
overseas firm will deal with the Investor in an honest and
reliable way. The Fund Manager will also not be required to
comply with the FSA Rules relating to restrictions on and
the content of direct offer advertisements.
Appendix 2: Investor’s Agreement
2.12The following rules will be limited or modified in their
application to the Investor. The majority of the FSA Rules
in relation to the form and content of financial promotions
will not be applicable in respect of any financial promotion
communicated or approved by the Fund Manager. The
Fund Manager will not be required by the FSA to provide
the Investor with a periodic statement on the value and
composition of his Portfolio in the Fund where the Investor
has requested the Fund Manager not to do so or where the
Fund Manager has taken reasonable steps to establish that
the Investor does not want it.
2.13The Fund Manager will comply with FSA conduct of
business rule 11.2 and take all reasonable steps to obtain,
when making investments, the best possible result for an
Investor taking into account the following execution factors:
price, costs, speed, likelihood of execution and settlement,
size, nature or any other consideration relevant to making
investments. In doing this, the Fund Manager will take into
account the following criteria for determining the relative
importance of these execution factors: the categorisation
of the Investor as a professional client (rather than
as a retail client), the characteristics and investment
objectives of the Fund as described in the Information
Memorandum, the characteristics of the rules of the EIS
and the characteristics of the normal commercial practice
of the counterparties with which, and the markets in which,
the Investee Companies will do business. In particular, the
provision by counterparties of guarantees of minimum
contractual levels of return may be more important than
price in obtaining the best possible execution result in the
context of achieving the investment objectives set out in
Schedule 1 to this Agreement. If the Investor is reclassified
as a retail client, the Fund Manager shall be entitled to
terminate this agreement pursuant to clause 15.3.
2.14The Investor should note that he will not be covered by
certain protections applicable to retail clients in relation to
custody services because, in subscribing to the Fund, the
Investor will by the written acknowledgment contained in
the Application Form, waive, as he is permitted to do under
the FSA Rules, the protections conferred by the client
money rules in respect of any money and other assets the
Fund Manager holds for the Investor. Accordingly the Fund
Manager will not be required necessarily to segregate the
Investor’s money from that of the Fund Manager. In such
circumstances, in the event of insolvency the Investor
would rank only as a general creditor of the Fund Manager
in respect of any uninvested money. Notwithstanding the
foregoing, it is the policy of the Fund Manager to segregate
an Investor’s money from funds held for or on behalf of the
Fund Manager.
2.15If the Investor has a complaint regarding the Services he
may raise the complaint with his independent financial
adviser or directly with the Fund Manager by writing to the
address shown in the Information Memorandum and the
Fund Manager shall endeavour to resolve the complaint
speedily and efficiently and will reply to the Investor in
writing. As a professional client the Investor may lose the
right to access the Financial Ombudsman Service.
2.16The Fund Manager may have regard to an Investor’s
expertise when complying with the requirements under the
regulatory system that communications must be clear, fair
and not misleading.
2.17Under FSA Rules the Fund Manager has to review its
categorisation of clients at least once a year. As part of
this review procedure the Administrator may write to the
Investor.
3. Subscriptions
3.1The Investor:
(a)must make a Subscription in the Fund of not less than
the amount shown in the Application Form at the same
time as submitting his Application Form to invest in the
Fund;
(b)may make further Subscriptions (in multiples of £1,000)
up to and including the final Closing Date; and
(c) may not make any Subscriptions after the final
Closing Date.
3.2The Investor may make a withdrawal from the Fund and
terminate this Agreement pursuant to Clause 15.2 below.
3.3 Subscriptions received shall be deposited (in an interest
bearing client account) pursuant to Clause 7.8 pending
their investment.
4. Services
4.1The Fund Manager will manage the Fund as from the first
Closing Date on the terms set out in this Agreement. The
Fund Manager will exercise all discretionary powers in
relation to the selection of, or exercising rights relating
to, Investments on the terms set out in this Agreement,
including, in particular the negotiation and execution
of agreements and ancillary documentation relating to
Investments in EIS Qualifying Companies.
4.2The Fund Manager will also arrange for the provision of
administration services in relation to the Fund with the
Administrator and the Nominee.
4.3The Investor hereby authorises the Fund Manager (and
grants to the Fund Manager a power of attorney) to act on
its behalf and in the name of the Investor or its nominee
to negotiate, agree and do all such acts, transactions,
agreements and deeds as the Fund Manager may deem
necessary or desirable for the purposes of making and
managing Investments on behalf of the Investor and this
authority (and power of attorney) shall be irrevocable and
shall survive, and shall not be affected by, the subsequent
death, disability, incapacity, incompetence, termination,
bankruptcy, insolvency or dissolution of the Investor. This
authority (and power of attorney) (subject to clause 7.6) will
terminate upon the complete withdrawal of the Investor
from the Fund.
4.4The Fund Manager, the Administrator and the Nominee
shall not except as expressly provided in this Agreement or
unless otherwise authorised, have any authority to act on
behalf of, or as the agent of the Investor.
31
Foresight Solar EIS Fund
Appendix 2: Investor’s Agreement
5.Investment Objectives and
Restrictions
5.1In performing the Services, the Fund Manager shall have
regard to and shall comply with the investment objectives
and the investment restrictions set out in Schedule 1 to this
Agreement.
5.2In performing the Services, the Fund Manager shall at all
times have regard to:
(a)the need for an Investor’s Portfolio(s) to attract the Tax
Advantages in accordance with the investment objectives
and restrictions set out in Schedule 1 of this Agreement;
and
(b) all Applicable Laws.
5.3In the event of a gradual realisation of Investments prior
to termination of the Fund under Clause 15.1, the cash
proceeds of realised Investments may be placed on
deposit or invested in government securities or in other
investments of a similar risk profile.
6.Terms Applicable to Dealing
6.1In effecting transactions for the Fund, the Fund Manager
will act in accordance with the FSA Rules.
6.2Where relevant, it is agreed that all transactions will be
effected in accordance with the rules and regulations of
any relevant market, exchange or clearing house (and the
Fund Manager shall take all such steps as may be required
or permitted by such rules and regulations and/or by good
market practice) through which transactions are executed
and to all applicable laws so that:
(a)if there is any conflict between the provisions of this
Agreement and any such rules, customs or applicable laws,
the latter shall prevail; and
(b)action may be taken as thought fit in order to ensure
compliance to any such rules, customs or applicable laws.
An Investor should, however, be aware that the Portfolio(s)
of an Investor will be invested in a range of unlisted
securities and there is generally no relevant market or
exchange and consequent rules and customs and there will
be varying practices for different securities. Transactions
in shares of such securities will be effected on the best
commercial terms which can be secured.
6.3 Subject to the FSA Rules, transactions for an Investor will
be aggregated with those for other Investors pursuant to
clause 6.4. They may also be aggregated with transactions
for other customers of the Fund Manager, and of its
members, partners, employees and Associates and their
employees and, if so, any Investments made pursuant to
such transactions will be allocated on a fair and reasonable
basis in accordance with the FSA Rules and endeavours will
be made to ensure that the aggregation will work to the
advantage of each of the Investors, but an Investor should
be aware that the effect of aggregation may work on some
occasions to an Investor’s disadvantage.
6.4Where transactions for an Investor are aggregated with
those for another Investor, the number of Shares in an
Investee Company held as an Investment for the Investor
32
Foresight Solar EIS Fund
shall, as nearly as possible, be in the proportion which the
Investor’s Subscription bears to the total Subscriptions
by all Investors holding Portfolios of the same Set, with
Portfolios of one Set being invested in proportion to other
Sets of Portfolios being invested in the same Investee
Companies provided, however, that depending on the
timing of investments, a Portfolio of a later Set may not
be invested in the same Investee Companies in which a
Portfolio of an earlier Set is invested. Variations may be
allowed to prevent Investors having fractions of Shares
but only in circumstances in which there can be minor
variations. If one or more of the Investors in the Fund is
an accountant, lawyer or other professional person who is
subject to professional rules preventing him from making
an investment in a particular EIS Qualifying Company,
then the number of Shares provisionally allocated to that
Investor or Investors shall not be acquired for any of his
Portfolios in the Fund. Entitlement to Shares will be to the
nearest whole Share rounded down and the aggregate of
fractional entitlements may be held by the Nominee for the
Fund Manager.
6.5The Fund Manager may make use of soft commission
arrangements in respect of transactions undertaken for the
Fund as may be disclosed to the Investor from time to time.
6.6The Fund Manager will act in good faith and with due
diligence in its choice and use of counterparties but,
subject to this obligation, shall have no responsibility for
the performance by any counterparty of its obligations in
respect of transactions effected under this Agreement.
6.7Where an Investor has elected for the Accumulator
Option the Fund Manager will on his behalf, if and to the
extent that an advance assurance is obtained from HMRC
permitting the operation of the Accumulator Option,
waive dividends that would otherwise be paid to him
by an Investee Company if and to the extent that the
articles of association of that Investee Company provide,
as between those Investors who take their dividends and
those on whose behalf dividends are waived, that future
entitlements of Investors to participate in the profits
available for distribution from that Investee Company or
on a sale of Investments in that Investee Company and
to participate in capital returned on a winding up of that
Investee Company will be shared in proportion to the
aggregate of (i) the amount which each Investor invests in
that Investee Company; plus (ii) the amount of all dividends
which, but for his waiver of them, would otherwise have
been paid to him by that Investee Company. An Investor
may at any time by written notice received by the Fund
Manager revoke an election for the Accumulator Option
(though not with retrospective effect) or reinstate an
election previously revoked, or if no election has been
made, make such an election.
7.Custody
7.1The Fund Manager will be responsible for safeguarding
the assets within an Investor’s Portfolio. The Administrator
will be responsible for providing administrative services
in relation to the safe keeping of Investments and cash
Appendix 2: Investor’s Agreement
comprised in the Fund from time to time, including the
settlement of transactions, collection of income and the
effecting of other administrative actions in relation to the
Investments.
(b)otherwise (where appropriate) the Fund Manager will be
sent a summary of the proposal and the required action to
be taken (if any);
(c)if, on a rights issue, no instruction is received from
the Fund Manager, the Nominee will allow the rights to
lapse. Lapsed proceeds in excess of £3 will be credited to
the Investor. Sums less than this will be retained for the
benefit of the Administrator. However, if nil paid rights in
a secondary market are acquired for the Investor, such
rights will be taken up, unless the Fund Manager provides
contrary instructions;
(d)all offers will be accepted upon going unconditional
whether or not any instructions have been received; and
(e)entitlements to Shares will be to the nearest whole
Share rounded down and the aggregate of fractional
entitlements may be held by the Nominee for the
Administrator. If partly paid Shares are held for an Investor
and are the subject of a call for any due balance and no
instruction is received, the Administrator may sell sufficient
of the Investments to meet the call.
7.2Investments will be registered in the name of the Nominee.
Investments within the Investor’s Portfolio in the Fund will
be beneficially owned by the Investor at all times but the
Nominee will be the legal owner of the Investments in the
Fund. The Nominee will not carry on any activity except as
instructed by the Fund Manager.
7.3The Nominee will hold any title documents or documents
evidencing title to the Investments. Individual customer
entitlements are not identifiable by separate certificates
or other physical documents of title or external electronic
records. In the event of a default of the Nominee, those
for whom it holds securities may share in any shortfall
pro rata. The Administrator may deliver or accept delivery
of certificates and/or Crest balances on behalf of the
Nominee. The Nominee holds the Investments pursuant to
a trust under which the interests of customers are created
or extinguished when a customer makes acquisitions or
disposals in accordance with this Agreement. Pursuant to
section 250(1) of the Income Tax Act shares subscribed
for, issued to, held by or disposed of for an individual by
a nominee are treated for the purposes of the EIS as
subscribed for, issued to, held by or disposed of by the
individual Investor. The Nominee shall maintain at all times
a record sufficient to show the beneficial interest of the
Investor in the whole number of Shares allocated to and
the cash within his Portfolio.
7.4Investments or title documents may not be lent to a third
party and nor may there be any borrowing against the
security of the Investments or such title documents.
7.5 An Investment may be realised in order to discharge
an obligation of the Investor under the Agreement, for
example in relation to payment of fees, costs and expenses.
7.6The Administrator will arrange for the Investor to receive
details of any meetings of investors in Investments and any
other information issued to investors in Investments if the
Investor at any time in writing requests such details and
information (either specifically in relation to a particular
Investment or generally in respect of all Investments). The
Investor shall be entitled, as a matter of right, to require
the Nominee to appoint the Investor as its proxy to vote
as the Investor may see fit at any meeting of shareholders
in an Investee Company in which an Investment is held for
an Investor. In the case of an Investor who is not validly
appointed as the Nominee’s proxy for the purposes of a
meeting of the shareholders of an Investee Company in
which an Investment is held for that Investor, and upon
the application of the Fund Manager to the Administrator,
the Nominee may (but is not obliged to) appoint the Fund
Manager as its proxy to vote at that meeting. In the case
of variations in the share capital, receipts of a notice of
conversion, or proposal to wind up, amalgamate or take
over a company in which an Investment is held for the
Investor:
7.7The Investor is responsible for complying with all
requirements under the Takeover Code and to notify the
FSA and the Takeover Panel of dealings in relevant shares
during a takeover or merger.
7.8The Fund Manager will be responsible for holding cash
of the Investor but cash will not be held in accordance
with the client money rules of the FSA. The cash balance
held for an Investor in the Fund will be deposited with an
authorised banking institution in a common account in
the name of the Fund Manager with customer trust status
together with cash balances belonging to other Investors
in the Fund. The Fund Manager may debit or credit the
account for all sums payable by or to an Investor (e.g.
dividends receivable in cash or amounts payable by the
Investor) and make adjustments:
(a)in respect of sums received by the Investor otherwise
than as a result of credits properly made to the accounts
initiated by the Fund Manager under the Investor’s
Agreement; and
(b)to effect settlement in respect of Investments. Share
dividends shall not be receivable under this Agreement
otherwise than in cash. Interest will be payable on all
credit balances on the bank account (including credit
balances arising as a result of realisations of Investments)
at rates published by the Administrator. Where the Investor
forwards a cheque to the Fund Manager for credit to his
account, no interest will be credited until the cheque is
cleared.
7.9The Fund Manager may decide to cease to treat as money
owed to an Investor any unclaimed cash of an Investor if
there has been no movement in the balance in the bank
account in a period of six years (notwithstanding any
payments or receipts of charges, interest or similar items)
and the Fund Manager has taken reasonable steps to
contact the Investor and to return the balance.
(a)a bonus or capitalisation issue will be automatically
credited to an Investor’s holding;
33
Foresight Solar EIS Fund
Appendix 2: Investor’s Agreement
8.Reports and Information
8.1Contract notes will be provided for each transaction for
the Investor.
8.2The Fund Manager shall send the Investor a report relating
to the Fund, complying with the FSA Rules, every six
months, in respect of the periods ending on or around
5 April and 5 October. Reports will include a measure of
performance in the later stages of the Fund once valuations
are available for the Investments. Investments will be
valued in accordance with appropriate IPEVC Guidelines
from time to time prevailing.
8.3Details of dividends which are received in respect of
the Investments will be provided in respect of each tax
year ending 5 April and appropriate statements sent
to the Investor within sections 1105(1), (2) and (3) of the
Corporation Taxes Act 2010.
8.4The Fund Manager and the Administrator shall supply such
further information which is in its respective possession or
under its control as the Investor may reasonably request
as soon as reasonably practicable after receipt of such
request.
8.5 Any contract notes, statements, reports or information
so provided by the Fund Manager or the Administrator
to the Investor will state the basis of any valuations of
Investments provided.
9. Fees and Expenses
The Fund Manager and the Administrator shall receive fees
for their Services, and reimbursements of their costs and
expenses, as set out in Schedule 2 to this Agreement. The
Fund Manager shall be responsible for meeting all fees and
expenses of the Nominee.
10.Management and Administration
Obligations
10.1The Fund Manager and the Administrator shall each devote
such time and attention and have all necessary competent
personnel and equipment as may be required to enable
them to provide their respective Services properly and
efficiently, and in compliance with the FSA Rules.
10.2Except as disclosed in the Information Memorandum
and as otherwise provided in this Agreement (for example
on early termination), neither the Fund Manager nor the
Administrator shall take any action which may prejudice
the tax position of the Investor insofar as it is aware of
the relevant circumstances, and in particular which
may prejudice obtaining the Tax Advantages for the
Fund Investments.
11.Obligations of the Investor
11.1 A Portfolio of an Investor which is established by this
Agreement is set up on the basis of the declaration made
by the Investor in his Application Form which includes
the following statements by the Investor in relation to his
34
Foresight Solar EIS Fund
Subscription:
(a)the fact as to whether or not the Investor wishes
to seek EIS Relief for the Investments in EIS Qualifying
Companies;
(b)that he agrees to notify the Fund Manager if any
Investment is in any company with which the Investor is
connected within the meaning of Section 163 and Sections
166 to 177 of the Income Tax Act;
(c)that he agrees to notify the Fund Manager if, within
three years of the date of issue of Shares by an EIS
Qualifying Company, the Investor becomes connected with
the company or receives value from such company;
(d) that he will provide the Fund Manager with his tax
district, tax reference number and National Insurance
number; and
(e) that he is aware that he is consenting to be treated
as an elective professional investor and that the money
he subscribes is not to be treated as client money in
accordance with the rules of the FSA.
11.2The Investor confirms that the information stated in the
Application Form in these (and all other) respects is true
and accurate as at the date of this Agreement.
11.3The Investor must immediately inform the Fund Manager
in writing of any change of tax status, other material
change in circumstance and any change in the information
provided in the Application Form to which Clause 11.1 above
refers.
11.4In addition, an Investor must provide the Fund Manager
with any information which it reasonably requests for the
purposes of managing the Investments of the Investor
pursuant to the terms of this Agreement.
12.Delegation and Assignment
The Fund Manager (and the Administrator where
reasonable and as may be agreed with the Fund Manager)
may employ agents and subcontractors, including
Associates, to perform any administrative, custodial or
ancillary services to assist the Fund Manager in performing
its Services, in which case it will act in good faith and
with due diligence in the selection, use and monitoring of
agents. Any such employment of agents shall not affect the
liability of the Fund Manager (or the Administrator where
appropriate) under the terms of this Agreement.
13.Potential Conflicts of Interest and
Disclosure
13.1The Fund Manager and the Administrator may provide
similar services or any other services whatsoever to
any customer and neither the Fund Manager nor the
Administrator shall in any circumstance be required to
account to the Investor for any profits earned in connection
therewith. So far as is deemed practicable by the Fund
Manager or the Administrator, the Fund Manager or the
Administrator will use all reasonable endeavours to ensure
fair treatment as between the Investor and such customers
in compliance with the FSA Rules.
Appendix 2: Investor’s Agreement
13.2The Fund Manager, and any Associate may, subject to
FSA Rules and without prior reference to the Investor,
recommend transactions in which it or an Associate has,
directly or indirectly, a material interest or a relationship
of any description with another party, which may involve a
potential conflict with its duty to the Investor. Neither the
Fund Manager, nor any Associate, shall be liable to account
to the Investor for any profit, commission or remuneration
made or received from or by reason of such transactions
or any connected transactions. For example, such potential
conflicting interests or duties may arise because:
(a)the Fund Manager or an Associate may receive
remuneration or other benefits by reason of acting
in corporate finance or similar transactions involving
companies whose securities are held for the Investor;
(b)the Fund Manager may take an equity stake in a
company whose securities are held for the Investor at a
price not below the issue price available to the Investor
subject to subparagraph (c) below;
(c)the Fund Manager’s entitlement to the performance
incentive described in Schedule 2 of this Agreement may
be obtained by subscriptions for Shares by or on behalf of
the Fund Manager and its directors, members, partners,
employees, Associates and others with whom the Fund
Manager may share such entitlement. Those Shares may be
subscribed at a price below the issue price available to the
Investor and may dilute the returns to the Investor but only
to the extent of the value of the performance incentive and
subject to the conditions described in Schedule 2;
(d)the Fund Manager or an Associate provides investment
services for other customers;
(e)any of the Fund Manager’s directors, members, partners,
employees or Associates or their employees, is or may
become a director of, holds or deals in securities of, or is
otherwise interested in any company whose securities are
held or dealt in on behalf of the Investor;
(f) the transaction is in securities issued by an Associate or
the customer of an Associate;
(g)the transaction is in relation to an Investment in respect
of which the Fund Manager or an Associate may benefit
from a commission of fee payable otherwise than by the
Investor and/or it or an Associate may also be remunerated
by the counterparty to any such transaction;
(h)the Fund Manager deals on behalf of the Investor with
an Associate;
(i) the Fund Manager may act as agent for the Investor in
relation to a transaction in which it is also acting as agent
for the account of other customers and Associates;
(j) the Fund Manager may, in exceptional circumstances,
deal in investments as principal in respect of a transaction
for the Investor;
(k)the Fund Manager may have regard, in exercising its
management discretion, to the relative performance of
other funds under its management;
(l) the Fund Manager may effect transactions involving
placings and/or new issues with an Associate who may be
acting as principal or receiving agent’s commission. The
Fund Manager or an Associate may retain any agent’s
commission or discount or other benefit (including
directors’ fees) that accrues to them;
(m) the transaction is in the securities of a company for
which the Fund Manager or an Associate has underwritten,
managed or arranged an issue within the period of 12
months before the date of the transaction; or
(n)the transaction is in securities in respect of which
the Fund Manager, or a member, partner or employee
of the Fund Manager or an Associate or its employees,
is contemporaneously trading or has traded on its own
account or has either a long or short position.
14.Liability
14.1The Fund Manager agrees, for itself and as agent for the
Administrator that each of them will at all times act in good
faith and with reasonable care and due diligence. Nothing in
this paragraph 14 shall exclude any duty or liability owed by
the Investor under the FSA Rules.
14.2The Fund Manager shall not be liable for any loss to the
Investor arising from any investment decision made
in accordance with the investment objectives and the
investment restrictions set out in Schedule 1 to this
Agreement or for other action in accordance with this
Agreement, except to the extent that such loss is directly
due to the negligence or wilful default or fraud of the Fund
Manager or any of its members, partners or employees.
14.3The Fund Manager accepts responsibility for holdings of
Shares in the name of the Nominee and for the acts and
omissions of the Nominee, provided, however, that the
Fund Manager shall not be liable for any loss to the Investor
arising from any action it takes in accordance with this
Agreement, except to the extent that such loss is directly
due to the negligence or wilful default or fraud of the Fund
Manager or any of its members, partners or employees.
14.4Subject to Clauses 6.6 and 12, the Fund Manager shall not
be liable for any defaults of any counterparty, agent, banker,
nominee or other person or entity which holds money,
investments or documents of title for the Fund, other than
where such party is an Associate.
14.5In the event of any failure, interruption or delay in the
performance of the Fund Manager’s or the Administrator’s
respective obligations resulting from acts, events or
circumstances not reasonably within its control (including
but not limited to acts or regulations of any governmental
or supranational bodies or authorities) or breakdown, failure
or malfunction of any telecommunications or computer
service or systems, the Investor acknowledges that neither
the Fund Manager nor the Administrator, as appropriate,
shall be liable or have any responsibility of any kind for any
loss or damage thereby incurred or suffered by the Investor.
14.6The Fund Manager gives no representations or warranty
as to the performance of the Fund. Investments are high
risk investments, being non-Readily Realisable Investments.
There is a restricted market for such Investments and it may
therefore be difficult to sell the Investments or to obtain
reliable information about their value. Investors should
consider the suitability of the investment objectives and
restrictions set out in Schedule 1 of this Agreement carefully
and note the risk warnings set out in the Information
Memorandum. Nothing in this Clause 14 shall exclude the
liability of the Fund Manager for its own fraud.
35
Foresight Solar EIS Fund
Appendix 2: Investor’s Agreement
15Termination
15.1The Fund Manager will seek to realise Investments and
to terminate the Fund in an orderly fashion over a period
of six years from the final Closing Date but it cannot be
guaranteed that Investments made can be easily realised
within this period and, even where they can be realised,
that this can be done on an advantageous basis. On
termination of the Fund, the Fund Manager shall endeavour
to procure that all Shares in the Investor’s Portfolio will
be sold or transferred into the Investor’s name or as
the Investor may otherwise direct. Any cash within the
Investor’s Portfolio will be paid to the Investor.
15.2An Investor is entitled to make withdrawals of Shares in
his Portfolio at any time after the end of the period of
seven years beginning with the date on which the Shares
in question were issued. An Investor is entitled to withdraw
cash in his Portfolio at any time. The Fund Manager will
have a lien on all assets being withdrawn or distributed
from the Fund and shall be entitled to dispose of some
or all of the same and apply the proceeds in discharging
any liability (including for any accrual of the performance
incentive) of the Investor to the Fund Manager. This
Agreement shall terminate upon the completion of the
withdrawal from the Fund of all shares and cash which the
Investor is entitled to receive under this clause 15.2. The
balance of any sale proceeds and control of any remaining
Investments will then be passed to an Investor.
15.3If:
(a)the Fund Manager gives to the Investor not less than
three months’ written notice of its intention to terminate its
role as Fund Manager under this Agreement;
(b)the Fund Manager ceases to be appropriately
authorised by the FSA or becomes insolvent; or
(c)the Fund Manager is no longer able to categorise the
Investor as a professional client under the FSA Rules;
the Fund Manager shall endeavour to make arrangements
to transfer the Investments to another fund manager, in
which case that fund manager shall assume the role of
the Fund Manager under this Agreement, failing which the
Agreement shall terminate forthwith and, subject to Clause
16, the Investments held for the account of the Investor
shall be transferred into the Investor’s name or as the
Investor may otherwise direct.
16Consequences of Termination
16.1On termination of this Agreement pursuant to Clause
15, the Fund Manager will use reasonable endeavours
to complete all transactions in progress at termination
expeditiously on the basis set out in this Agreement.
36
16.2Termination will not affect accrued rights, existing
commitments or any contractual provision intended to
survive termination and will be without penalty or other
additional payments save that the Investor will pay fees,
expenses and costs properly incurred by the Manager and
the Administrator (including a fair amount determined
by the Fund Manager in compensation for accrued
performance incentive not obtained by subscriptions for
Shares) up to and including the date of termination and
payable under the terms of this Agreement.
Foresight Solar EIS Fund
16.3On termination, the Fund Manager may retain and/or
realise such Investments as may be required to settle
transactions already initiated and to pay the Investor’s
outstanding liabilities, including fees, costs and expenses
payable under Clause 9 of this Agreement (including a fair
amount determined by the Fund Manager in compensation
for accrued performance incentive not obtained by
subscriptions for Shares), the details of which are set out in
Schedule 2 to this Agreement.
17Confidential Information
17.1None of the Fund Manager, the Administrator or the
Investor shall disclose to third parties or take into
consideration for purposes unrelated to the Fund
information either:
(a)the disclosure of which by it would be or might be a
breach of duty or confidence to any other person; or
(b)which comes to the notice of a partner or member of or
an employee, officer or agent of the Fund Manager or the
Administrator or of any Associate but properly does not
come to the actual notice of that party providing services
under this Agreement.
17.2Each of the Fund Manager and the Administrator will at
all times keep confidential all information acquired in
consequence of the Services, except for information which:
(a)is in the public knowledge; or
(b)which they may be entitled or bound to disclose under
compulsion of law; or
(c)is requested by regulatory agencies; or
(d)is given to their professional advisers where reasonably
necessary for the performance of their professional
services; or
(e) which is authorised to be disclosed by the relevant
party; and shall use all reasonable endeavours to prevent
any breach of this Clause 17.2.
17.3The Administrator may verify the Investor’s identity and
assess the Investor’s financial standing. In doing so, a
credit reference agency may be consulted which will
record a search.
18Complaints and Compensation
18.1The Fund Manager has established procedures in
accordance with the FSA Rules for consideration of
complaints. Details of these procedures are available from
it on request. Should an Investor have a complaint, he
should contact the Fund Manager.
18.2The protections offered by the FSA do not apply to the
Fund or the Investments of the Investor and compensation
under the UK Investor Compensation Scheme will not
be available.
19Notices, Instructions and
Communications
19.1Notices of instructions to the Fund Manager or the
Administrator should be in writing and signed by the
Investor, except as otherwise specifically indicated.
Appendix 2: Investor’s Agreement
19.2The Fund Manager or the Administrator may rely and act
on any instruction or communication which purports to
have been given by persons authorised to give instructions
by the Investor under the Application Form or subsequently
notified by the Investor from time to time and, unless that
relevant party receives written notice to the contrary,
whether or not the authority of such person shall have
been terminated.
24Rights of Third Parties
19.3All communications to the Investor shall be sent (whether
postal or electronic) to the latest address notified by the
Investor to the Fund Manager or the Administrator and
shall be deemed received by the Investor on the second
day after posting or on the day after dispatch in the case
of electronic communication. All communications by the
Investor shall be made in writing or (save as otherwise
provided) shall be made by telephone to the Fund Manager
or the Administrator, in which case conversations may
be recorded for the avoidance of any subsequent doubt.
Communications sent by the Investor will be deemed
received only if actually received by the Fund Manager
or the Administrator. Neither the Fund Manager nor the
Administrator will be liable for any delay or failure of
delivery (for whatever reason) of any communication sent
to the Investor.
25 Severability
A person who is not a party to this Agreement has no right
under the Contracts (Rights of Third Parties) Act 1999
to enforce any term of this Agreement, but this does not
affect any right or remedy of such third party which exists
or is available apart from that Act.
If any term, condition or provision of this Agreement shall
be held to be invalid, unlawful or unenforceable to any
extent, such term, condition or provision shall not affect
the validity, legality or enforceability of the remainder of
this Agreement.
26 Governing Law
This Agreement and all matters relating thereto shall be
governed by and construed in accordance with English Law
and the parties submit to the non-exclusive jurisdiction of
the English Courts.
20Unsolicited real-time financial
promotion
The Fund Manager may communicate an unsolicited realtime financial promotion (i.e. interactive communications
such as a telephone call or electronic mail promoting
Investments) to the Investor.
21 Amendments
The Fund Manager may amend the terms and conditions
in this Agreement by giving the Investor not less than 10
business days’ written notice. The Fund Manager may also
amend these terms by giving the Investor written notice
with immediate effect if such is necessary in order to
comply with HMRC requirements, in order to maintain the
EIS Relief or in order to comply with the FSA Rules.
22Data protection
All data which the Investor provides to the Fund Manager
and the Administrator is held by that party subject to the
Data Protection Act 1998. The Investor agrees that the
Fund Manager and the Administrator may pass personal
data to each other and to other parties insofar as is
necessary in order for them to provide their Services as set
out in this Agreement and to the FSA and any regulatory
authority which regulates them and in accordance with all
other Applicable Laws.
23 Entire agreement
This Agreement, together with the Application Form,
comprises the entire agreement of the Fund Manager and
its Associates with the Investor relating to the provision of
the Services.
37
Foresight Solar EIS Fund
Appendix 2: Investor’s Agreement
Schedule 1
Investment Objectives and Restrictions
Investment Objectives of the Fund
1
To generate capital gains and to provide Investors
with the Tax Advantages associated with EIS Investments.
2
At least 80% by cost of Investments shall be in Shares
which entitle Investors to the reliefs from taxation available
under the EIS subject to their personal circumstances.
Investment Restrictions of the Fund
1In carrying out its duties hereunder in respect of the Fund,
regard shall be had, and all reasonable steps taken, by the
Fund Manager to comply with such policies or restrictions
as are required in respect of EIS Investments in order to
attract the reliefs from taxation under the EIS as may be
prescribed by HMRC from time to time.
2In particular, but without prejudice to the generality of
the above statements, the restrictions for the Fund are
as follows:
(a)No more than 25% of the Subscription of an Investor
will be invested in any one Investee Company;
(b)Investors should be aware that the Fund’s Investments
will include non-Readily Realisable Investments. There
is a restricted market for such Investments and it may
therefore be difficult to deal in the Investments or to obtain
reliable information about their value;
(c) in the event of a gradual realisation of Investments
prior to termination of the Fund under Clause 15.1, the cash
proceeds of realised EIS investments may be placed on
deposit or invested in fixed interest government securities
or other investments of a similar risk profile. Proceeds will
be paid out on termination of the Fund or in instalments
in advance of termination, as determined by the
Fund Manager.
Schedule 2
Annual trail commission will be paid to the Investor’s
authorised financial adviser, if any, for up to six years and is
capped at 3% of the amount the Investor subscribes to the
Fund. The administration of annual trail commission will be
managed by Foresight Fund Managers Limited which will
maintain a register of advisers entitled to trail commission.
If the Investor changes his adviser, he should inform
Foresight Fund Managers Limited of the details of his
new adviser, who will be entitled to receive the annual
trail commission instead. Advisers should keep a record
of Application Forms submitted bearing their stamp to
substantiate any claim for Annual trail commission.
3Fund Management Charges
Annual management charge 1.5%
Secretarial charge
0.3% (subject to an
index linked minimum of
£60,000 in aggregate)
Foresight will bear any legal, accounting and other
fees incurred by the Fund in connection with potential
Investments which do not proceed to completion and
may retain for its own benefit any arrangement fees
and director’s or monitoring fees which it receives in
connection with Investments.
4 Performance Incentive
Foresight will be entitled to a performance incentive fee,
payable from the proceeds of realising the Fund’s assets.
This fee is only payable once an Investor has received
proceeds of at least £1 per £1 invested. The performance
incentive fee is calculated as 20% of distributions to
the Investor in excess of £1 per £1 invested until total
distributions reach 130p per £1 invested and 30% above
that level.
The performance incentive may be obtained by
subscriptions for Shares by or on behalf of the Fund
Manager and its directors, employees and Associates or
as a charge deducted from realisation proceeds due to the
Investor. In the event of the Investor making a withdrawal of
Shares pursuant to Clause 15.2 the Investor shall be liable
for a charge equal to a fair amount determined by the
Fund Manager in compensation for accrued performance
incentive not obtained by subscriptions for Shares.
1Fees and Expenses in respect of the Fund
The charges described below are payable by Investee
Companies and not directly by the Fund or the Investor
save in the event of a withdrawal as noted in paragraph 4
below. The percentages shown below will be applied to the
amount invested by the Fund in each Investee Company.
The charges will accrue from 1 April 2011 and will be payable
quarterly in advance from the date of investment in the
relevant Investee Company. VAT will be added where
applicable.
5Expenses
2Fundraising Charges
Initial charge
Annual trail commission
6 Interest pending investment
Interest earned on cash balances held for the Investor in
the Fund will be added to the Investor’s Portfolio.
5.5%
0.5%
The Fund Manager will receive the initial charge and
will pay all costs of establishing the Fund, including
introductory commission to authorised financial advisers,
all legal and taxation costs incurred in creating the Fund,
the preparation and issue of this document and any other
direct expenses wholly incurred in establishing the Fund.
38
Foresight Solar EIS Fund
The Fund Manager shall be entitled to charge each Investee
Company a pro-rata proportion of expenses reasonably
incurred by the Manager in respect of the administration
of the Fund.
39
Foresight Solar EIS Fund
Appendix 3: Glossary
In this document these expressions and abbreviations have the following meanings
unless the context otherwise requires.
“Accumulator Option”
the option exercisable by completing the appropriate box on the Application Form or
otherwise by notice in writing to Foresight to authorise Foresight on behalf of the Investor to
waive dividends that would otherwise be paid by an Investee Company if and to the extent
that, with the sanction of an advance assurance from HMRC, the articles of association of
that Investee Company provide, as between those Investors who take their dividends and
those who waive their dividend entitlements, that future entitlements to participate in the
profits available for distribution from that Investee Company or on a sale of Investments in
that Investee Company and to participate in capital returned on a winding up of that Investee
Company will be shared in proportion to the aggregate of (i) the amount which each Investor
invests that Investee Company; plus (ii) the amount of all dividends which, but for his waiver
of them, would otherwise have been paid to him by that Investee Company.
“Administrator”
Foresight Fund Managers Limited or (subject to prior notification to Investors) such other
person as the Fund Manager may appoint to provide, safe custody and, on behalf of the Fund
Manager, administration services in respect of the Fund;
“AIM”
the Alternative Investment Market of the London Stock Exchange;
“Applicable Laws”
all relevant UK laws, regulations and rules, including those of any government or of the FSA;
“Application Form”
an application form to invest in the Fund completed by a prospective Investor in the form
provided by the Fund Manager;
“Associate”
any person or entity which (whether directly or indirectly) controls or is controlled by the
Fund Manager (for the purpose of this definition “control” shall refer to the ability to exercise
significant influence over the operating or financial policies of any person or entity);
“Business Property Relief”
relief from IHT pursuant to sections 103-114 Inheritance Tax Act 1984;
“Capital Gains Tax Deferral Relief” relief by way of deferral of CGT (Section 150C and Schedule 5B of the Taxation of Chargeable
Gains Act 1992);
“Carry Back Relief”Income tax relief for the full amount of an investment in an EIS Qualifying Company up to
£500,000, multiplied by the lower rate of tax and set against an individual’s income tax
liability for the tax year preceding that in which Shares are issued, save to the extent that
income tax relief has already been claimed under the EIS for the preceding year;
“Complying Fund”
a complying fund within the meaning of Article 2 of the Schedule to the Financial
Services and Markets Act 2000 (Collective Investment Schemes) Order 2001;
“CGT”Capital gains tax;
“Closing Date”
a date by which Subscriptions may be accepted by the Fund Manager for the creation of
Portfolios;
“Corporate Venturing Scheme”The Corporate Venturing Scheme as set out in Schedule 15 Finance Act 2000;
“EIS”
Enterprise Investment Scheme, as set out in the Income Tax Act;
“EIS Qualifying Company”
a company that meets the EIS requirements regarding EIS Relief and Capital Gains
Deferral Relief;
“EIS Relief”
relief from income tax under EIS;
“Feed-in-Tariffs”
various government-regulated prices to producers of qualifying renewable electricity for
varying periods (25 years for qualifying Solar Power Systems under the FIT Scheme in the UK);
“Fees and Expenses”
the fees and expenses set out in Schedule 2 to the Investor’s Agreement;
“FIT Scheme”
the UK Scheme for Feed-in-Tariffs introduced in 2010 in accordance with sections 41 to 43 of
the Energy Act 2008;
“Foresight or Fund Manager”
Foresight Group CI Limited (a private company registered in Guernsey under company
number 51471, incorporated on 12 February 2010 and whose registered office is at
La Plaiderie House, La Plaiderie, St Peter Port, Guernsey GY1 4HE) except where the
context refers expressly or by implication to Foresight Group LLP and except where the
acts, obligations and activities attributed to ‘Foresight’ or the Fund Manager are regulated
by the FSA in which event the reference is to Foresight Group LLP;
“FSA”The Financial Services Authority;
“FSA Rules”
the FSA’s rules made under powers given to the FSA by the Financial Services and Markets
Act 2000;
“Fund”The Foresight Solar EIS Fund which describes the aggregate of all the Investors’ Agreements;
40
Foresight Solar EIS Fund
Appendix 3: Glossary
“HMRC”HM Revenue & Customs;
“IHT”Inheritance Tax;
“Income Tax Act”Income Tax Act 2007;
“Individual Roll Over Option”The Individual Roll Over Option described on page 10;
“Information Memorandum”
this document;
“Intermediary”
a person/company who promotes and markets the Fund and arranges the investment for
the Investor;
“Investee Company”
a Company in which the Fund invests;
“Investment”
investment made through the Fund;
“Investor”
an individual (and certain trustees) who complete(s) an Application Form in the form
enclosed with this Information Memorandum which is accepted by the Fund Manager and so
enters into an Investor’s Agreement and invests through the Fund;
“Investor’s Agreement”
an Investor’s agreement to be entered into by each Investor, in the terms set out in Appendix
2 of this Information Memorandum;
“IPEVC Guidelines”The International Private Equity and Venture Capital Valuation Guidelines;
“Loss Relief”
relief in respect of income tax for allowable losses pursuant to section 131 of the Income
Tax Act;
“Net Asset Value”
the value of the net assets attributable to Shares as determined from the audited annual
accounts of the Investee Companies
“Nominee”
Foresight Fund Managers Limited or a wholly owned subsidiary of the Fund Manager or
such other nominee as may be appointed by the Fund Manager from time to time to be the
registered holder of Investments;
“PLUS”
the market for trading in unquoted securities operated by PLUS Markets Group plc;
“Portfolio”
the monies an Investor subscribes to the Fund on or before a Closing Date plus all
Investments made through the Fund which are allocated to an Investor and registered in the
name of the Nominee on his behalf and which are subscribed out of such monies plus all
income and capital profits arising therefrom; and so that, where an Investor subscribes more
than once in the Fund: (i) all Subscriptions made within a single period which falls between
two Closing Dates shall be regarded as part of the same Portfolio; and (ii) Subscriptions
which are made within periods which fall between three or more Closing Dates shall be
regarded as separate Portfolios of that Investor;
“Readily Realisable Investment”
a government or public security denominated in the currency of the country of its issuer
or any other security which is admitted to official listing on an Exchange in an EEA State,
regularly traded on or under the rules of such an Exchange, or regularly traded on or
under the rules of a recognised investment exchange or (except in relation to unsolicited
realtime financial promotions) designated investment exchange, or a newly issued security
which can reasonably be expected to fall within the above categories when it begins to be
traded (this term does not include AIM or PLUS traded investments, nor does it include
unlisted securities);
“Services”
the services provided under Clause 4 of the Investor’s Agreement;
“Set”
portfolios created from Subscriptions accepted by the Fund Manager on or before the same
Closing Date;
“Shares”
shares in an Investee Company subscribed for by the Fund on behalf of Investors;
“Solar Power Systems”
a system which produces electricity from daylight;
“Subscription”
a subscription to the Fund by way of an Application Form pursuant to Clause 3 of the
Investor’s Agreement;
“Tax Advantages”
the various tax advantages, including EIS Relief, arising from Investments in Shares in EIS
Qualifying Companies;
“Three Year Period”
the period beginning on the date the Shares in an Investee Company are issued and
ending three years after that date, or three years after the commencement of the Investee
Company’s trade, whichever is later; and,
“Total Return”
the aggregate value of an investment or collection of investments comprising net asset
value, valued where appropriate in accordance with IPEVC Guidelines, plus the aggregate of
all distributions (both revenue and capital) made.
41
Foresight Solar EIS Fund
Application Forms, Advisor’s Certificate
and Schedule
Application Form and
Important Note
Instructions for Completing this
Application Form
This Application Form incorporates by reference the Information
Memorandum. Unless otherwise stated or as the context shall
otherwise require, defined terms and expressions used in this
Application Form have the meanings ascribed to them in the
Information Memorandum.
Before completing this Application Form, please carefully review
the following documents:
The minimum investment is £10,000.
Then follow the steps listed 1 - 5 below.
Who can apply?
You can apply for an investment in the Foresight Solar EIS Fund
if you can be categorised by the Fund Manager as a professional
client under the rules of the Financial Services Authority.
A prospective investor can be categorised as a professional
client if it is a per se professional client within the meaning
of the FSA’s conduct of business sourcebook rule COBS 3.5.2
or if Foresight is satisfied that the prospective investor can
be treated as an elective professional client in accordance
with the FSA’s conduct of business sourcebook rule COBS
3.5.3 and thus as a person who is capable of making its own
investment decisions and understanding the risks involved, has
received a clear written warning of the protections and investor
compensation rights it may lose and has stated in writing, in
a separate document, that it is aware of the consequences
of losing such protections. Confirmation by an authorised
intermediary will normally be sufficient to satisfy Foresight.
Alternatively, the prospective investor will need to provide
evidence of his or her investment experience.
Independent Financial Advice, Assessment
and Customer Due Diligence Procedures
You must arrange for an independent financial adviser,
authorised by the Financial Services Authority, to carry out:
• the Information Memorandum; and
• the Investor’s Agreement.
1.Please complete the form in type or use BLOCK CAPITALS
(save for your signature) in black/blue permanent ink, and
sign any changes you make. Do not erase any text or use
white-out. If you have any queries, please contact Foresight
on 01732 471812.
2. Arrange for an independent financial adviser, authorised
by the Financial Services Authority, to carry out the
assessments and customer due diligence measures
referred to above and to execute the certificate on
page 47. If you do not have an independant financial
advisor, please complete the assessment form on page 43
so that we can satisfy ourselves that you are elegible to be
categorised as a professional client.
If you are not applying through an independent financial
adviser and your application is for the Sterling equivalent
of Euro 15,000 or more (or is one of a series of linked
applications the value of which exceeds the amount)
the verification requirements of the Money Laundering
Regulations will apply and verification of the identity of
the applicant (and if a cheque is drawn by a third party)
is required and you must ensure that the following
documents are enclosed with your Application Form:
• A certified copy of either the passport or the driving
licence of the applicant (and cheque payer if different);
and
• An original bank or building society statement or utility
bill (no more than 3 months old), or recent tax bill, in the
name of the applicant (and cheque payer if different).
Copies should be certified by a solicitor or bank. Original
documents will be returned by post at your own risk.
(i) the assessment required to enable you to be categorised as
an elective professional client (unless you can be categorised as
a per se professional client); and
(ii) the customer due diligence procedures required by The
Money Laundering Regulations 2007 within the guidance for
the UK Financial Sector issued by the Joint Money Laundering
Steering Group.
Your independent financial adviser must provide the certificate
requested on page 47.
3. Execute and date this Application Form on page 43
or page 45.
4. Send the entire Application Form by post to Foresight using
the following address:
Foresight Group LLP
ECA Court, South Park
Sevenoaks, Kent, TN13 1DU
5.Retain a copy of the completed Application Form.
42
Foresight Solar EIS Fund
Application Form
Private Investors
Before completing this Application Form you should read the Acknowledgements and Representations and make the appropriate
deletion in the first bullet point in paragraph ‘n’ over the page. Once completed in full, please attach your cheque made payable
to ‘Foresight Group LLP’ and send by post to Foresight Group LLP, ECA Court, South Park, Sevenoaks, Kent, TN13 1DU.
Foresight will decide, in its absolute discretion, to accept or reject the application and will notify you of its decision. No
Application Form will be accepted by Foresight until it has issued a written confirmation of acceptance.
Please complete the following
Title:
Forenames:
Surname(s):Date of Birth:
Nationality:Town & Country of Birth:
Permanent Residential Address:
Post Code:
Daytime Phone:Tax District:
National Insurance No:Tax Ref No:
Length of occupation at the above address:
If the length of occupation is not more than 3 years then please provide your previous residential address:
Post Code:
Please tick the appropriate Box
Accumulator Option
Income Option
invest In the Foresight Solar EIS Fund
I hereby apply to invest £
(In figures) in the Foresight Solar EIS Fund
£
(In Words)
Signature:Please print name:Date:
By completing and signing this Application Form, you confirm that your identity may be verified by electronic means such as
the use of data held by specialised data agencies.
Foresight Solar EIS Fund
43
Acknowledgements
and representations
aIf your application is accepted, you agree to observe,
perform and be bound by the provisions of the
Investor’s Agreement.
b You confirm that you personally possess sufficient
knowledge, experience and expertise in financial and
business matters (including experience with investments of a
similar nature to an investment in the Fund) to be capable of
evaluating the merits and risks of an investment in the Fund.
c You, if investing as an elective professional client, confirm
that you wish to invest as an elective professional client
under the rules of the FSA and that you are aware of
the consequences of losing the protection and investor
compensation rights that you lose by participating in the
Fund as an elective professional client.
d You waive the protections conferred by the client money
rules in respect of any money the Fund Manager holds for
you. In doing so you acknowledge that the Fund Manager
will not be required necessarily to segregate your money
from that of the Fund Manager and that in the event of
insolvency you would rank only as a general creditor of
the Fund Manager in respect of any uninvested money.
Notwithstanding the foregoing you acknowledge that it is the
policy of the Fund Manager to segregate Investors’ money
from funds held for or on behalf of the Fund Manager.
e You represent and warrant that (a) if it is a trust, it is duly
authorised and qualified to invest in the Fund and the
individual or individuals signing this Application Form on its
behalf have been duly authorised by it to do so or; (b) if you
are an individual, that you have reached the age of majority
under the laws of your country of nationality or domicile;
and, in the case of a trust or an individual, this application,
upon acceptance by the Fund Manager, will be its or your
legal, valid and binding obligation, enforceable against it or
you in accordance with the terms of the Investor Agreement.
f You acknowledge that this Application Form is not
transferable or assignable.
g You confirm your agreement that this Application Form be
governed by and construed in accordance with the laws
of England and Wales and that the courts of England and
Wales shall have exclusive jurisdiction to hear and determine
any suit, action or proceedings and to settle any disputes
which may arise out of or in connection with this Application
Form and, for such purposes, you irrevocably submit to the
jurisdiction of such courts. In addition, you irrevocably waive
any objection which you might now or hereafter have to the
courts of England and Wales being nominated as the forum
to hear and determine any such suit, action or proceedings
and to settle any such disputes, and agree not to claim that
any such court is not a convenient or appropriate forum.
h You confirm that you will, at the request of the Fund
Manager, forthwith enter into and execute such formal deeds
of adherence whereby you will agree to observe, perform
and be bound by the provisions of the Investor’s Agreement
as the Fund Manager may require.
44
Foresight Solar EIS Fund
i You agree that by the execution of this Application Form,
you grant to the Fund Manager a power of attorney to
make, execute, sign, acknowledge, swear to, deliver, record
and file as your attorney and on your behalf: any other
business certificate or other instrument or document of any
kind that the Fund Manager deems necessary or desirable
to accomplish the business, purpose and objectives of
the Fund, and that is required by any applicable law; any
agreement or instrument which the Fund Manager deems
appropriate to (i) admit you as an Investor in the Fund in
accordance with the terms of the Investor’s Agreement;
(ii) effect the addition, substitution or removal of the Fund
Manager pursuant to the Investor’s Agreement; or (iii) effect
an amendment or modification to the Investor’s Agreement
adopted in accordance with the terms of the Investor’s
Agreement; provided always, to the fullest extent permitted
by law, this power of attorney is irrevocable and shall
survive, and shall not be affected by, your subsequent death,
disability, incapacity, incompetence, termination, bankruptcy,
insolvency or dissolution. This power of attorney will only
terminate upon your complete withdrawal from the Fund.
j You agree that the foregoing representations, warranties,
agreements and acknowledgments shall survive the date of
your admission to the Fund and this Application Form shall
be binding upon and inure to the benefit of the parties and
their successors and permitted assignees.
k You agree that if this application is made by more than
one person, your obligations shall be joint and several
and the representations, warranties, agreements and
acknowledgments herein shall be deemed to be made by
and be binding upon such persons and their successors
and assignees.
l You agree that any term or provision of this Application
Form which is invalid or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this
Application Form or affecting the validity or enforceability of
any of the terms or provisions of this Application Form in any
other jurisdiction.
m You undertake to notify the Fund Manager immediately if
there are ever relevant circumstances of which the Fund
Manager should be aware in relation to managing your
Portfolio(s).
n You confirm, in relation to your investment in the Fund, that:
• you wish / do not * wish to seek EIS Relief;
( *delete as appropriate)
• you are applying on your own behalf;
• you will notify the Fund Manager of any Investment with
which you are connected within section 163 and sections
166 to 177 of the Income Tax Act; and
• you will notify the Fund Manager if, within three years of
the date of issue of Shares by an EIS Qualifying Company,
you become connected with that EIS Qualifying Company
or receive value from it.
Application Form
Trustees
(“The Company”)
Before completing this Application Form you should read the Acknowledgements and Representations over the page. Once
completed in full, please attach your cheque made payable to ‘Foresight Group LLP’ and send by post to Foresight Group LLP,
ECA Court, South Park, Sevenoaks, Kent, TN13 1DU.
Foresight will decide, in its absolute discretion, to accept or reject the application and will notify you of its decision. No
Application Form will be accepted by Foresight until it has issued a written confirmation of acceptance.
IF YOU DO NOT RECEIVE AN ACKNOWLEDGEMENT OF YOUR APPLICATION WITHIN 10 DAYS OF
SENDING IT TO FORESIGHT, PLEASE CONTACT FORESIGHT ON 01732 471812.
Trusts If the application is by a trust, please provide the following information:
Full Name:
Nature and purpose of the trust (e.g. discretionary, testamentary, bare):
Country of establishment:
Names of all trustees:
Name and address of any protector or controller:
Post Code:
Name and address of any protector or controller:
If the trustees are regulated in the UK, please state the name of the regulator: (Otherwise please provide a Certified Copy of the trust deed)
Signature:
Please provide:
•A Certified Copy of the mandate form or trustee resolution listing the trustees (or equivalent) with authority to give the Fund
Manager instructions concerning the use or transfer of assets; and
• Constitutional documents for any corporate trustee.
invest In the Foresight Solar EIS Fund
You hereby apply to invest £
(In figures) in the Foresight Solar EIS Fund
£
(In Words)
Signature:Please print name:Date:
45
Foresight Solar EIS Fund
Acknowledgements
and representations
aIf your application is accepted, you agree to observe,
perform and be bound by the provisions of the Investor’s
Agreement.
b You confirm that you personally possess sufficient
knowledge, experience and expertise in financial and
business matters (including experience with investments of a
similar nature to an investment in the Fund) to be capable of
evaluating the merits and risks of an investment in the Fund.
c You, if investing as an elective professional client, confirm
that you wish to invest as an elective professional client
under the rules of the FSA and that you are aware of
the consequences of losing the protection and investor
compensation rights that you lose by participating in the
Fund as an elective professional client.
d You waive the protections conferred by the client money
rules in respect of any money the Fund Manager holds for
you. In doing so you acknowledge that the Fund Manager
will not be required necessarily to segregate your money
from that of the Fund Manager and that in the event of
insolvency you would rank only as a general creditor of
the Fund Manager in respect of any uninvested money.
Notwithstanding the foregoing you acknowledge that it is the
policy of the Fund Manager to segregate Investors’ money
from funds held for or on behalf of the Fund Manager.
e You represent and warrant that (a) if it is a trust, it is duly
authorised and qualified to invest in the Fund and the
individual or individuals signing this Application Form on its
behalf have been duly authorised by it to do so or; (b) if you
are an individual, that you have reached the age of majority
under the laws of your country of nationality or domicile;
and, in the case of a trust or an individual, this application,
upon acceptance by the Fund Manager, will be its or your
legal, valid and binding obligation, enforceable against it or
you in accordance with the terms of the Investor Agreement.
f You acknowledge that this Application Form is not
transferable or assignable.
g You confirm your agreement that this Application Form be
governed by and construed in accordance with the laws
of England and Wales and that the courts of England and
Wales shall have exclusive jurisdiction to hear and determine
any suit, action or proceedings and to settle any disputes
which may arise out of or in connection with this Application
Form and, for such purposes, you irrevocably submit to the
jurisdiction of such courts. In addition, you irrevocably waive
any objection which you might now or hereafter have to the
courts of England and Wales being nominated as the forum
to hear and determine any such suit, action or proceedings
and to settle any such disputes, and agree not to claim that
any such court is not a convenient or appropriate forum.
h You confirm that you will, at the request of the Fund
Manager, forthwith enter into and execute such formal deeds
of adherence whereby you will agree to observe, perform
and be bound by the provisions of the Investor’s Agreement
as the Fund Manager may require.
46
Foresight Solar EIS Fund
i You agree that by the execution of this Application Form,
you grant to the Fund Manager a power of attorney to
make, execute, sign, acknowledge, swear to, deliver, record
and file as your attorney and on your behalf: any other
business certificate or other instrument or document of any
kind that the Fund Manager deems necessary or desirable
to accomplish the business, purpose and objectives of
the Fund, and that is required by any applicable law; any
agreement or instrument which the Fund Manager deems
appropriate to (i) admit you as an Investor in the Fund in
accordance with the terms of the Investor’s Agreement;
(ii) effect the addition, substitution or removal of the Fund
Manager pursuant to the Investor’s Agreement; or (iii) effect
an amendment or modification to the Investor’s Agreement
adopted in accordance with the terms of the Investor’s
Agreement; provided always, to the fullest extent permitted
by law, this power of attorney is irrevocable and shall
survive, and shall not be affected by, your subsequent death,
disability, incapacity, incompetence, termination, bankruptcy,
insolvency or dissolution. This power of attorney will only
terminate upon your complete withdrawal from the Fund.
j You agree that the foregoing representations, warranties,
agreements and acknowledgments shall survive the date of
your admission to the Fund and this Application Form shall
be binding upon and inure to the benefit of the parties and
their successors and permitted assignees.
k You agree that if this application is made by more than
one person, your obligations shall be joint and several
and the representations, warranties, agreements and
acknowledgments herein shall be deemed to be made by
and be binding upon such persons and their successors and
assignees.
l You agree that any term or provision of this Application
Form which is invalid or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this
Application Form or affecting the validity or enforceability of
any of the terms or provisions of this Application Form in any
other jurisdiction.
m You undertake to notify the Fund Manager immediately if
there are ever relevant circumstances of which the Fund
Manager should be aware in relation to managing your
Portfolio(s).
Application Form
IFAs
To be completed by the Investor’s Financial Adviser
We certify to Foresight Group LLP in the terms of paragraphs 1 and 2 below:
1.We have undertaken an adequate assessment of the Investor’s expertise, experience and knowledge such as to give
reasonable assurance to Foresight Group LLP in the light of the nature of the transactions or services envisaged that the
Investor is capable of making its own investment decisions and understanding the risks involved in a participation in the Fund.
2.We have applied customer due diligence measures on a risk-sensitive basis in respect of the Investor to the standard required
by The Money Laundering Regulations 2007 within the guidance for the UK Financial Sector issued by the Joint Money
Laundering Steering Group and we certify that we have:
(a) identified and verified the identity of the Investor on the basis of documents, data and information obtained from a reliable
and independent source;
(b) identified, where there is a beneficial owner who is not the Investor, the beneficial owner and have taken adequate
measures, on the basis of documents, data and information obtained from a reliable and independent source, to verify his
identity so that we know who the beneficial owner is, including, in the case of a legal person, trust or similar arrangement,
measures to understand the ownership and control structure of the person, trust or arrangement and the identity of the
beneficial owner and details of the ownership and control structure are set out in the Schedule hereto; and
(c) obtained information on the purpose and intended nature of the Investor’s proposed investment in the Foresight Solar EIS
Fund, as the case may be, which information is set out in the Schedule hereto.
Email:
We
consent to Foresight relying on this certificate
Firm Name:
Contact Name:
Address:
Post Code:
Telephone:
Fax:
Email:
FSA registration no:
Signature:Date:
47
Foresight Solar EIS Fund
Application Form
IFAs
Schedule: To be completed by the Investor’s Financial Adviser where the Beneficial
Owner is not the Investor
Please complete:
We have applied customer due diligence measures on a risk-sensitive basis in respect of the Investor to the standard required by
The Money Laundering Regulations 2007 within the guidance for the UK Financial Sector issued by the Joint Money Laundering
Steering Group and we certify that we have identified that the beneficial owner is:
and (in the case of a legal person, trust or similar arrangement), the ownership and control structure of the person, trust or
arrangement is:
The purpose of the investment is:
Professional Client Assessment Form: Private investors
In order for you to participate in the Fund, we must undertake an assessment of your expertise, experience and knowledge so as
to give us reasonable assurance, in light of the nature of investments in complying funds such as The Foresight Solar EIS Fund,
that you are capable of making your own investment decisions and understanding the risks involved.
Please answer the following questions providing details, where required, in the space provided.
1.Please give your most current/most recent occupation
2.Please give details of any university degrees or professional qualifications which you hold
3.Please list any current company directorships you hold/have held in the last five years
Current:
Last Five Years:
4.Do you hold a portfolio of shares? Are these shares in listed or unlisted companies?
5.Please describe the type of investments you have made within the last five years. (e.g. EIS, VCT, FTSE 100)
6.Have you been in a network or syndicate of business angels for at least six months prior to today’s date? Please give details
7.Please provide any further information (e.g. details of your wider experience or background) which you think might be
relevant to our assessment of you as a professional client in relation to investments, particularly in EIS or similar funds
48
Foresight Solar EIS Fund
F
S
EIS
Corporate Information
Directors (Non-executive)
John Maples (Chairman)
Mike Liston
Tim Dowlen
Registered Office and
Head Office
ECA Court
24-26 South Park
Sevenoaks
Kent TN13 1DU
Investment Manager
and Promoter
Foresight Group LLP
ECA Court
24-26 South Park
Sevenoaks
Kent TN13 1DU
Auditors
Foresight
Solar
EIS Fund
Ernst & Young LLP
1 More London Place
London SE1 2AF
Company Registration Number
7289280
Website
Solicitors and VCT Tax Advisers
RW Blears LLP
125 Old Broad Street
London EC2N 1AR
www.foresightgroup.eu
Broker
Telephone Number
01732 471 800
Singer Capital Markets Limited
1 Hanover Street
London W15 1YZ
Company Secretary and
Accountant
Sponsor
Information Memorandum with Application Form
Foresight Fund Managers Limited
ECA Court
24-26 South Park
Sevenoaks
Kent TN13 1DU
Registrars
Computershare Investor Services PLC
P.O. Box 859
The Pavilions
Bridgwater Road
Bristol BS99 1XZ
BDO LLP
125 Colmore Row
Birmingham B3 3SD
Receiving Agent
The City Partnership (UK) Limited
Thistle House
21-23 Thistle Street
Edinburgh EH2 1DF
Bankers
Barclays Bank plc
54 Lombard Street
London EC3P 3AH
45
Foresight Solar VCT PLC
Foresight Group
ECA Court
24-26 South Park
Sevenoaks
Kent
TN13 1DU
United Kingdom
t:+44 (0) 1732 471800
f:+44 (0) 1732 471810
www.foresightgroup.eu
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