Under UK law, most people cannot lawfully be invited to invest in early-stage companies. This page explains why, who can, and what those who can give up when they sign. We publish it because these rules are widely relied on and rarely explained.
Early-stage shares are the riskiest mainstream asset there is. Most young companies fail, the shares usually cannot be sold for years, dividends are rare, and later funding rounds shrink your slice. Parliament’s response is section 21 of the Financial Services and Markets Act 2000: an invitation or inducement to invest may only be communicated by a firm authorised by the Financial Conduct Authority, or with such a firm’s approval. Communicating one any other way is a criminal offence carrying up to two years’ imprisonment.
The law then carves out narrow groups of people who may receive such invitations without the usual protections. Two of these groups work by self-certification: you sign a statement about yourself, and it is the statement, not your bank balance, that changes your legal position.
You may sign the high net worth statement if, in the financial year immediately before the date you sign, at least one of these was true:
· You had annual income of £100,000 or more; or
· You held net assets of £250,000 or more throughout that year.
Net assets exclude your home (and any loan secured on it or equity released from it), your pension rights, and rights under insurance contracts. The test is what you actually had in that specific year.
You may sign the sophisticated investor statement if at least one of these is true:
· You have been a member of a network or syndicate of business angels for at least the last six months;
· You have made more than one investment in an unlisted company in the last two years;
· You have worked in the last two years in a professional capacity in private equity, or in the provision of finance for small and medium-sized enterprises;
· You have been, in the last two years, a director of a company with annual turnover of at least £1 million.
There is a third, less common route: a certificate signed within the last three years by an FCA-authorised firm confirming you are knowledgeable enough to understand the risks (article 50).
The statement you sign says this in terms, and it means it: promotions you receive under these exemptions may not comply with FCA rules, and you can expect no protection from the FCA, the Financial Ombudsman Service, or the Financial Services Compensation Scheme in respect of them. You are stepping outside the fence the law builds around ordinary investors. You could lose every pound you invest, and the ordinary routes to complaint and compensation will likely not be open to you.
It is a legal document. It must be dated, it requires you to say which criterion applies to you, and it is valid for twelve months. If no criterion applies to you, the law’s answer is simple: you must not sign. And nobody may lawfully help you find a way to. Treat anyone who offers to coach you through certification as the warning, because the regulator does.
The thresholds were raised on 31 January 2024 and reversed on 27 March 2024, so figures you find elsewhere may describe a regime that lasted eight weeks. The FCA is reviewing the exemptions again (Discussion Paper DP25/3, December 2025), including its concern that some firms coach visitors into self-certifying. The criteria above may change.
Last checked against the Financial Promotion Order 2005 (SI 2005/1529, as amended): 18 September 2026.
Sources: Financial Services and Markets Act 2000, ss 21 and 25 · The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, articles 48, 50, 50A and Schedule 5 (legislation.gov.uk) · The Financial Services and Markets Act 2000 (Financial Promotion) (Amendment and Transitional Provision) Order 2024 · FCA, DP25/3 (December 2025) · FCA, financial promotions guidance
Investment in early-stage companies involves significant risks including illiquidity, lack of dividends, and potential total loss of capital. SEIS tax reliefs mitigate but do not eliminate this risk. Tax treatment depends on individual circumstances and may change. Please seek independent professional advice before investing. This page is general commentary and operational disclosure. It is not investment advice, a recommendation, or a financial promotion.