Venture capital opportunities are often limited to those capable of investing a required a minimum amount. With the SISAT contract, it is possible to syndicate up to twenty investors and thus reach the threshold required by the company seeking capital. SISAT boils down to a simple partnership agreement allowing anyone to invest and take a stake as a shareholder in start-ups or more established companies. For entrepreneurs, too, this document represents a major administrative simplification: instead of a multitude of "small" investors, only the syndicate is listed in the shareholders' register.
For investors the procedure is simple: it is sufficient to sign the simple partnership agreement between the interested parties and to appoint one of the syndicate participants as the representative of the syndicate (the lead partner). The icing on the cake is that it is free of charge. The co-signatories hold the shares, syndicated by the SISAT contract, in their own name, without an intermediary. This structure thus allows for transparency in tax matters: each investor declares the number of shares of the company he holds and is taxable according to his personal situation.
The template can be downloaded from a dedicated website. The initiative was launched by BAS. A number of partners has been involved in the drafting process including business angel clubs, law firms and VCs. SISAT is already used by BAS, SICTIC and GoBeyond.
Compliant with financial and tax regulations
The initiators of SISAT have taken the necessary precautions to ensure that the structure of the contract complies with the laws in force on collective investment schemes and money laundering. The simple partnership falls under the definition of an investment club and is exempt from the Collective Investment Schemes Act and the lead partner is not considered a financial intermediary. In order to benefit from these advantages, however, certain rules must be followed:
- Staying below the threshold of 20 investors ;
- Not to delegate investment decisions to the lead partner (decisions are taken individually by each syndicate participant);
- Ensuring that investors have sufficient knowledge to make the necessary investment decisions;
- The lead partner should not hold the shares on its behalf for others ; and
- should not circulate funds through her/his own bank account, at the risk of qualifying as a financial intermediary.
As far as tax matters are concerned, the SISAT has so far obtained the approval of the tax authorities of the canton of Neuchâtel, thereby confirming that the use of this structure does not lead to the qualification of investors as professionals. Non-professional private investors are therefore not required to pay capital gains tax. The initiators are intending to request rulings from Zurich and Geneva for particular cases as the next step. “There is however no reason to believe that other tax authorities outside of Neuchâtel will rule differently, since the tax situation is rather clear.”, explains Matthieu Gueissaz.
The initiators of SISAT will continue to improve their project by creating variations of the contract to cover different types of syndication structures. Their next step is to integrate technological solutions to facilitate the establishment and management of unions. SISAT is an initiative entirely based on the principles of open-source and collective intelligence and seeks to bring together and expand access to venture capital in Switzerland.
(Press release / SK)