stella98
1 post
Oct 08, 2026
12:57 AM
|
We are looking at ways to give senior hires meaningful equity and I wanted to actually understand how a growth share scheme works before assuming it is basically the same as an EMI option scheme with a different name. Here is what I have pieced together so far, would appreciate anyone correcting me or adding context.
A growth share scheme creates a new class of shares that only have value above a certain threshold, usually set close to the company's current valuation, meaning the holder only benefits from growth in the company's value from that point forward rather than participating in the value already built before they joined. Growth shares can be useful when a company does not meet the eligibility criteria for an EMI scheme, whether because of company size, the type of trade, or because the recipient does not meet the working hours requirement.
They can also be structured for people who are not employees, such as non executive directors or consultants, who would not be eligible for EMI options in the first place. The valuation and threshold setting seems to be one of the trickier parts, since setting the threshold too low can create an unexpected tax charge for the recipient, while setting it too high can make the shares feel worthless if the company does not grow quickly enough.
What I am still trying to understand is how founders typically decide between a growth share scheme and EMI when a company is actually eligible for both.
Has anyone here actually set up a growth share scheme for someone at their company? Curious how the valuation and threshold were decided, and whether it caused any friction with HMRC or during a later funding round.
Found a fairly clear explanation of this on Entrepreneur Plus while I was reading around the topic, helped me understand the founder side of it a bit better.
|
