10.3.1 What are growth shares and why are they used?

The term ‘growth shares’ refers to a special class of shares that has no right to participate in the current equity value of a company (i.e. the proportion of the companyʼs value that would be returned to shareholders after debt has been repaid), but only have an interest in the companyʼs future growth.

Example: growth shares

PatCo Limited has two classes of shares, ordinary shares that participate in the whole capital value of the company and ordinary A shares that only participate in that part of the value of the company that exceeds £5m (‘the Threshold’).

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