Employee Share Plans in Europe and the USA - Sorainen

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Employee Share Plans in Europe and the USARepublic of LithuaniaRepublic of Lithuania1. Securities law1.1 Offer of securities: In accordance with the Law on Securities of the Republic ofLithuania (Law on Securities), the offer of securities to the public generallyrequires the publication of a prospectus. However, there is an exemption fromthis requirement where securities, which are admitted to trading on a regulatedmarket, are offered, are allotted or are to be allotted to existing or formerdirectors or employees of the issuer or an affiliated group undertaking, providedthat a document is made available containing information on the number andnature of the securities and the reasons for and details of the offer 1 .Under the Law on Securities, there are also other exemptions to the prospectusrequirements, for example, where securities are offered only to professionalinvestors, or the offer is made to fewer than 100 individuals or legal entities ineach EU and EEA member state.1.2 Regulatory issues: There are no other regulatory issues that affect the offeringof securities to employees. However, under the Law on Securities, if anemployee acquires a block of shares in a public company and this results in thecrossing, in either direction, of certain percentage thresholds 2 in relation to thetotal voting shares in the relevant company, then the employee must notify theLithuanian Securities Commission (the Commission) and the company of thetotal number of voting shares which the employee owns 3 .1.3 Disclosure: Under Lithuanian legislation 4 , the head 5 of an issuer (whichincludes members of the board and certain other employees having access tonon-public information) must provide a notice 6 to the Commission and the issuer123456Law on Securities of the Republic of Lithuania (No X-1023, 2007).The threshold percentages are: 5, 10, 15, 20, 25, 30, 50, 75 and 95%.This notification must be made as soon as possible but in any event no later than within four tradingdays of the relevant event.Lithuanian Securities Commission "Rules on Notices by the Head of the Issuer on Transactions of theIssuer’s Securities”, (No 1K-9, 2007).The head of the issuer includes: the head of the company, members of the Board and the SupervisoryBoard and employees having a permanent right to acquire non-public information which is directly orindirectly related to the issuer and to adopt decisions having an impact on the issuer or its activities.The notice must contain certain information set out in the "Rules on Notices by the Head of the Issueron Transactions of Issuer’s Securities”.UK/1729295/03 131 September 2010
Employee Share Plans in Europe and the USARepublic of Lithuaniain relation to the execution of transactions in the issuer’s securities at the head’sexpense 7 .2. Exchange controlsExchange controls are not applicable in Lithuania.3. Financial assistance3.1 Lithuanian company: A Lithuanian company is generally prohibited fromproviding financial assistance (including the provision of security or a loan) forthe acquisition of its own shares. There are no exceptions to this prohibition foremployee share plans.3.2 Lithuanian subsidiary of non-Lithuanian company: There is no directprohibition on the provision of financial assistance by a Lithuanian subsidiary forthe acquisition of shares in the non-Lithuanian parent company.4. Taxation of share acquisitions4.1 Employee tax and social security contributions4.1.1 Tax: As from 1 January 2010, shares granted to employees either bythe employing company or by a group company at a discount to marketvalue or free of charge are treated as taxable "income-in-kind" receivedby the employee. The taxable value is the difference between themarket value of the shares at the time of acquisition and the amountpaid by the employee. Income-in-kind is taxed as employment-relatedincome (subject to personal income tax at a rate of 15%).4.1.2 Social security contributions: Where the grantor of the share awardis the employing company then, as from 1 January 2010, the acquisitionof shares by an employee at a discount to market value or free of chargeis subject to social security contributions (at a rate of 3%) and healthinsurance contributions (at a rate of 6%).However, if the grantor of the share award is a group companyestablished outside Lithuania, then the acquisition of shares is notsubject to social security contributions or health insurance contributions.7Such notice must be submitted as soon as possible but in any event no later than within four tradingdays of the relevant event.UK/1729295/03 132 September 2010
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Employee Share Plans in Europe and the USA - Sorainen

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