How to draft and issue Growth Shares
.
What are Growth Shares?
Growth Shares are a UK equity instrument primarily used by PE-backed companies to give employees and management a share in future company growth. Unlike options (such as EMI or CSOP), Growth Shares are actual shares issued directly to the holder ā there is no exercise step.
š The key feature of Growth Shares is the hurdle value: the company's fair market value at the time the shares are granted. The holder only participates in the company's value above this hurdle. If the company's value at a future liquidity event is below the hurdle, the shares have no economic value. If it is above, the holder receives a portion of the growth.
Growth Shares are an alternative to EMI and CSOP for companies where employees don't qualify for those schemes or where the company has reached its EMI limit.
Navigate to Essentials ā Issue equity and click the Growth shares tab.
Click New growth shares draft set or select an existing draft set.
Give the set a name and select Create new draft set.
Complete the required fields, including the Hurdle value: the company's fair market value at the grant date (per an HMRC-approved valuation)
When you're finished entering drafts information, click Review.
On the Review page, click Download to export the draft set data or review a cap table report.
Click Collect signatures to notify company signatories.