COMPANIES seeking a listing on the Irish Stock Exchange's proposed Developing Companies Market will qualify for Business Expansion Scheme status following the Budget.
The expansion of the scheme to this sector is designed to support the development of the new DCM, which will help smaller companies, to raise funds for expansion. The DCM is now expected to be launched within weeks.
The BES limits the amount of funds that can be raised by a qualifying company to a maximum of £1 million, with investors allowed to claim tax relief on investment to a maximum of £25,000 a year.
Companies will have to link the investment to job creation targets, and will be required to comply with a certification process administered by the various State job creation agencies.
This initiative was broadly welcomed by the Irish Stock Exchange last night, as a useful measure to assist new and expanding businesses.
There are also measures in the Budget to encourage the Special Portfolio Investment Accounts, marketed by some life assurance companies, into the DCM. It increases investment limits for 10 per cent of these portfolio accounts by £10,000 on investments made in companies trading on the new DCM.
This will apply to investors for the first three years of the market's operation and will be conditional on the SPIA money being put into DCM companies.
Mr Quinn said these concessions were being made in the expectation that the Stock Exchange and its members will set out specific targets for the number and type of firms to be brought to the DCM, and will restrict listing fees to reasonable levels.
Directors and employees of newly floated companies will continue to qualify for tax relief on any loans taken out before flotation to take up shares in the company, the Minister said.
The proposed tax incentives for DCM companies will cost the Exchequer £250,000 this year and £1.5 million in a full Year, he added.
The Irish Stock Exchange has been planning to introduce a developing companies market for small and medium sized companies for the best part of a year.
The exchange has, however, suffered delays in introducing the new market because it was unable to obtain agreement from the Department of Finance on the tax treatment of investors in companies who take a listing on the DCM. Mr Quinn's Budget proposals mean that the DCM should be up and running within a matter of months.
Companies looking for a listing on the DCM will be expected to have a minimum one year trading record and the exchange has already had discussions with Forbairt, Shannon Development and the corporate finance industry aimed at identifying suitable companies for the new market.