What is a family investment company?

A private limited company used to hold family investments, typically property or a portfolio, with different classes of shares held by different family members. It allows the founder to keep control through voting shares while passing economic value, often through growth shares, to children or grandchildren, and to direct dividends between family members.

What are growth shares?

Shares that participate only in the value of a company above a hurdle fixed when they are issued. Because the hurdle is set at the current value, the shares are worth little at the outset and so can be given to family members or employees with limited immediate tax cost, while capturing future growth.

Do growth shares reduce inheritance tax?

They can, because the future increase in value accrues to the holders of the growth shares rather than to the founder's estate. The founder's existing shares keep their current value. Whether and how far this works depends on the structure and on the family's circumstances, so it should be designed with a tax adviser.

Turning a property company into a family investment company: growth shares for the next generation

Redesignating shares and adopting new articles so that a Birmingham property company could pass future growth to the owner's children

By Malcolm Zoppi18 October 2026Property

Key facts

Deal type: Corporate restructuring
Acting for: The company and its owner
Business: Property holding company, Birmingham
Sector: Property
Deal value: Not applicable
Structure: Redesignation of existing shares, creation of growth shares for the children, new articles setting out the class rights
Timescale: A few weeks, working alongside the family's tax adviser
Completed: Late 2025
Lead solicitor: Malcolm Zoppi

At a glance

The owner of a Birmingham property holding company wanted to bring his children into the ownership of the company in a way that passed future growth to them, gave the family flexibility over dividends, and reduced the inheritance tax exposure on the properties over time. Working with the family's tax adviser, we restructured the company into a family investment company: the existing shares were redesignated, growth shares were created for the children, and new articles were adopted setting out the rights of each class. The work completed in late 2025.

The client and the objective

The owner wanted to keep control of the company and its properties during his lifetime, while ensuring that the increase in value from now on accrued to his children rather than to his own estate. He also wanted to be able to pay dividends to different family members in different amounts.

The structure

The owner's existing shares redesignated into a class carrying the voting rights and the existing value of the company.
New growth shares issued to the children, participating only in the value of the company above a hurdle set at the current value.
Separate dividend rights on each class, so that distributions can be directed as the family decides.
New articles of association setting out the class rights, the hurdle, the voting position and what happens on a sale or winding up.

Key legal points

Growth shares and the hurdle

Growth shares work by giving the holder a share in value above a threshold. The threshold has to be set at the current value of the company so that the shares are worth little when issued, and the articles have to define precisely how value is measured and distributed. Getting that drafting right is what makes the planning effective.

Keeping control

The owner kept the voting rights through his own class, so that bringing the children in as shareholders did not hand them control of the company or the properties.

Working with the tax adviser

The structure was designed by the family's tax adviser to meet HMRC's requirements, and our role was to implement it in the company's constitution and records: the resolutions, the new articles, the allotments, the registers and the Companies House filings, with the valuation evidence kept on file.

Outcome

The company is now a family investment company. The owner retains control, the children hold growth shares that will capture the future increase in value, and dividends can be paid flexibly across the family.

What this deal shows

A family investment company is an ordinary limited company with carefully drafted articles; the articles are where the planning lives.
Growth shares let the next generation share in the future without the current owner giving up control or current value.
Tax design and company law implementation have to be done together, and the valuation at the date of issue should be documented.

“The owner wanted his children to benefit from where the company goes next without handing over the keys. Growth shares and well-drafted articles did exactly that.”
Malcolm Zoppi

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Frequently asked questions

: A private limited company used to hold family investments, typically property or a portfolio, with different classes of shares held by different family members. It allows the founder to keep control through voting shares while passing economic value, often through growth shares, to children or grandchildren, and to direct dividends between family members.
: Shares that participate only in the value of a company above a hurdle fixed when they are issued. Because the hurdle is set at the current value, the shares are worth little at the outset and so can be given to family members or employees with limited immediate tax cost, while capturing future growth.
: They can, because the future increase in value accrues to the holders of the growth shares rather than to the founder's estate. The founder's existing shares keep their current value. Whether and how far this works depends on the structure and on the family's circumstances, so it should be designed with a tax adviser.

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