clause_id: asa-longstop-conversion practice_area: fundraising-asa-termsheet title: ASA longstop & conversion (SEIS/EIS-aware) trust_score: 60 cites: [hmrc-vcm-seis-eis, bvca-model-early-stage-docs] last_verified: 2026-08-09 status: active ---

Rule#

For an Advance Subscription Agreement to preserve SEIS/EIS eligibility, the longstop/conversion window should be short — HMRC generally expects conversion within ~6 months; long windows risk the ASA being treated as a loan and losing relief. At longstop, convert at the valuation-cap price with no discount (a discount at longstop is "value received" and can break relief).

Lesson captured#

QENEX's first AI-drafted term sheet + Form ASA used an 18-month longstop — internally consistent but a likely SEIS/EIS problem. This clause exists so drafting defaults to a compliant window.

Drafting default#

Longstop: <= 6 months (confirm current HMRC position via cited source before use). Longstop conversion: valuation-cap price, no discount.