This guide covers designing a Growth Share scheme, and issuing the growth shares
Once you have made sure that your Articles of Association are suitable for Growth Shares, and Authorised a Growth Share Pool, you are almost ready to issue those Shares.
The first step, is to ensure that you have a Hurdle Rate set up on the platform. While you are not able to have a Valuation pre-approved by HMRC before issuing Growth Shares, you may be asked for one retrospectively, so it is best to have one done.
We can carry out a Valuation for you in-house, drop a line to firstname.lastname@example.org and we can kick off the process.
If you already have a Hurdle Rate you want to use, you just need to update the platform. It is important that the Hurdle represents a small premium to the existing value of the business, in order to minimise the risk of any tax liability.
Log onto the platform and go to your Dashboard in the top left:
Then under Valuation, click View all:
On the Valuations page, click Add new Hurdle valuation:
Where you will be asked to enter the Hurdle price per share, and the date of the Valuation:
Clicking Save as draft will take you back to the Valuations page, where you will now be able to see your new Hurdle rate valuation:
First step done! Now, go back to your Dashboard (top left of the screen) and, under Growth Shares, click View & Distribute:
That will take you to the following page, where you will see how many Growth Shares you have Authorised. If you already have a Growth Share scheme set up, you will also see these here.
Click the "Create a new growth share scheme button" to begin designing the scheme (If this button is not there, you need to Authorise some Growth Shares):
First, just choose a name for the scheme. The next section down will show you the Hurdle rate you entered earlier, and will ask you to enter some criteria:
One of the Criteria sections does need to be populated. Once you are setting up the individual distributions later on you will be able to give people personalised criteria, so what you enter here can be fairly general, something as simple as "Recipient must remain an employee of the company" will do just fine here.
Almost there! Now you need to set the Vesting Schedule (if you want to set one).
If you choose not to use one and not to have the shares vest automatically, vesting of the options will be entirely manual, and in your control.
You will still need to set a vesting duration, this is the date by which all of the Growth Shares will have to vest (become unconditional), if conditions are met.
If you do choose to use a vesting schedule, the page will look slightly different:
The Cliff Date and Cliff Shares part might sound confusing. All it means is this: the Cliff Date is the date on which the recipient will have their first set of Growth Shares vest. The Cliff Shares percentage defines what percentage of their total shares becomes available on the Cliff Date. The Vesting Frequency is how often the Shares vest after that: Monthly, Quarterly, Half-Yearly, or Yearly.
If you choose for the shares to not vest automatically, you will need to do so manually as they become due.
Once this is done, just click Save at the bottom of the screen, and:
Congratulations! You are now ready to start adding recipients.
First, select the Authorised pool you want to issue the shares from, whether you want them to be voting (Vv) or non-voting (Vn), and a start date for the vesting schedule.
Next, if the recipient is an individual you will need to provide a name, email, number of shares, and, if they are a UK employee, an NI number.
Clicking "Save as draft and add another" will create a draft of that distribution, you still get to review and modify everything before anything gets sent out. Once you click Save as draft and add another, the recipient's name will appear at the bottom of the page:
Click on the recipient's name to go to their Agreement Summary page.
Go through the details here, if you need to change anything just click the Edit button to the right of the recipient's name, which will take you to a page where you can adjust all of the parameters of the grant, and add personalised criteria. You can also upload additional documents by clicking the Upload links on the right of the page.
This Agreement summary page will also show you the vesting schedule:
The platform will automatically split the shares remaining after the Cliff Shares into equal tranches until the Final Vesting Date.
You can, however, customise each tranche. Just click Edit on the tranche you want to change:
And it will take you to this page.
Here, you will be able to change the number of shares, and the date this tranche will vest.
Once you are happy, click Send Invite on the Agreement Summary page, and you're all done!
Provided you haven't yet sent the invite, if its all gone wrong and you want to start again, just click Delete at the bottom of the page and try again: