BVCA recommendations to government

The British Private Equity and Venture Capital Association (BVCA) has responded to government on its financial packages and commented on additional measures that it believes will support businesses at this time.

While the feedback is based on information provided by the BVCA’s members in the private equity and venture capital industry, it is of relevance to a large number of companies in the UK.


The situation is dynamic, and the BVCA’s concerns about the wrongful trading regime, championed as well by R3 and the CBI, have resulted in confirmation that there will be a temporary suspension of wrongful trading provisions for company directors to reduce the threat of personal liability during the Covid 19 pandemic.

This change will be applied retrospectively from 1 March 2020, but does not remove all risk of personal liability. Safeguards for stakeholders’ interests remain, although the BVCA would additionally like to see amendments to directors’ duties legislation. Currently, directors’ must continue to comply with their statutory duties (owed to a company’s creditors in an insolvency situation) and must observe the rules relating to fraudulent trading and the directors’ disqualification regime.

A further change, building on previous reforms, includes a temporary moratorium for businesses undergoing a restructuring process, during which time creditors will not be able to exercise enforcement rights against them or put them into liquidation as they explore options for rescue, and will continue to be able to access supplies to continue trading.

Note that whilst the government plans to bring forward legislation to this effect “at the earliest opportunity” exact timing remains uncertain. Parliament is currently in recess until 21 April.

Government funding

The BVCA has highlighted funding concerns for companies, that fall between the gaps of the original government measures. Its recommendations include:

  • The need for additional funding for early stage companies.

    A £500m British Business Bank (“BBB”) funding facility focussed on short term venture loans, designed for the needs of innovative early stage companies in sectors such as digital/tech, biotech and life sciences. Early stage companies will not benefit from BBB Coronavirus Business Interruption Loan Scheme (“CBILS”) as they do not meet banks’ eligibility criteria - there is almost no bank debt involved in the capital structures because they lack a track record to underpin, or collateral to secure, any such lending.

  • Remove obstacles to BBB CBILS specific to PE/VC investee companies.

    The turnover of all companies in a PE/VC fund should not be aggregated when assessing the £45m turnover criteria. PE/VC funds are not conglomerates and do not operate as typical corporate groups as portfolio company operate independently of each other.

    The EU SME definition used in UK tax law should not prevent SMEs backed by PE/VC funds from qualifying for Covid-19 funding, as it does in respect of reliefs such as R&D tax credits and EMI options.

  • Close the funding gap.

In addition to its original measures, the government subsequently introduced a large BBB CBILS scheme for companies with revenues between £45m and £500m. The large BBB CBILS loan guarantee programme should help to close the funding gap through which 9,600 companies would fall if they do not qualify for either the Covid Corporate Finance Facility (CCFF) and their turnover is in excess of that permitted by BBB CBILS. The BVCA understands that the Term Funding Scheme for SMEs and is not available for larger, sub-investment grade PE deals.

Tax matters

The BVCA welcomes the deferral of income tax and VAT payments. It additionally suggests faster payments of R&D tax credits which support the viability of businesses claiming them and an extension of business rates relief to all businesses unable to operate because of government restrictions.

Support is additionally provided to feedback from the VCT Association to relax state aid rules. The existing VCT rules are preventing firms from providing essential and immediate additional investment to businesses in their portfolios where they no longer meet the qualifying criteria.

We will continue to monitor and comment on future recommendations from the BVCA and how they, and subsequent changes to legislation, might impact on your business. If you have any questions please do get in touch with your usual Shoosmiths contact.


This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2024.



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