Revenue Releases Important Guidance On Growth Shares

Revenue has issued a guidance note on Growth shares dated July 2021. This note is of relevance in terms of providing equity participation to key management.

What is a Growth Share?

Revenue describes growth shares as: a special class of ordinary shares that generally have a low or nil value until a certain target or hurdle is reached by the business. The hurdle is specified by the employer when the shares are issued and it can refer to:
  • Company performance,
  • Individual’s performance, and
  • Leaver provisions, among others”. 

Valuation Aspects:

The guidance note gives an indication of how Revenue perceives growth shares and how they should be valued. They comment that an award of growth shares can be beneficial for: 
  • Employers as they can reward participants by providing a ‘hope equity’ for short to medium-term growth without diluting current equity
  • Employees as they own shares in the company from day one normally free of charge or for a discounted value. Growth shares are also known as ‘hurdle’, ‘ratchets’ or ‘flowering shares’.
In terms of valuation Revenue state the following: The value of a shareholding in an unquoted company depends on many factors. For example, the value will depend on the business sector/industry, the net assets of the business, the profitability of the business and its future prospects in the marketplace. Revenue expects that in valuing the shares the company should use a valuation method which complies with relevant accounting standards. Revenue will not provide an opinion regarding company specific share valuations.  Employers should retain their relevant valuation records in support of their calculations. The reference to “hope equity” is significant and important in the context of valuation. In our view a robust valuation is the cornerstone of any share participation plan. This valuation must not just be a backward or present valuation – it must also look forward to identify hope value.


At Cooney Carey our Tax Team structure bespoke share participation plans to assist in driving the commercial objectives of the business by aligning and focusing the relevant stakeholders. Our Corporate Finance Team have the expertise to provide robust valuations that complements and supports the structures designed by our Tax Team. We are here to support you and your business in these unprecedented times. We would encourage you to reach out to us if you would like to discuss any of the matters referred to above. Equally feel free to call if you would like to discuss matters generally.  Please accept this communication as our interpretation of the subject matter. Always take tax advice specific to your fact pattern. You are encouraged to contact us if you are unclear or would like to discuss the content.