Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USASweden2. Exchange controlsWhen a payment exceeding SEK150,000 is remitted abroad, the bank makingthe remittance must notify the tax authorities.3. Financial assistance3.1 Swedish company: Under Swedish company law, a Swedish limited liabilitycompany may not provide loans or security to a shareholder, managing directoror director of the company or a group company, or to a person related to such ashareholder, managing director or director. Furthermore, a Swedish limitedliability company may not grant an advance, provide loans or security for thepurpose of financing the acquisition of its shares or shares in a parent companyor a fellow subsidiary in the same group of companies, although there is anexemption for advances, loans and security to employees if certain conditionsare met. 63.2 Swedish subsidiary of non-Swedish company: It appears that a Swedishcompany is not prohibited from providing financial assistance (by way of loan orotherwise) for the purpose of financing the acquisition of shares in a non-Swedish parent company. However, the position is not certain and has neverbeen tested in a Swedish court.6The prohibition against granting advances, providing loans or security for the purposes of financing theacquisition of shares in the company or in a parent company or a fellow subsidiary in the same groupdoes not apply where the borrower is an employee of the company or a group company, provided that:• the value of the offered advance, the loan amount or the security, when added to other advances,loans and security from the company or another company in the same group of companies madefor the purpose of the acquisition of shares, does not exceed SEK 84,800 (2010); and• the offer is addressed to at least half of the employees of the company and, with respect toadvances or loans, entails that the offered amount is to be repaid within five years by regularrepayments.In addition, advances, loans or security may only be granted if there will still be full coverage forrestricted equity and if it is justifiable taking a number of parameters into account.The prohibition against provision of loans or security to a shareholder, managing director or director ofthe company or a group company, or to a person related to such a shareholder, managing director ordirector, described above, would still apply.If a Swedish company makes a loan in SEK with no or low interest to its employees, the employees willbe taxed on the difference between the interest rate for Government borrowing (measured inaccordance with certain provisions) plus 1% and the agreed interest rate. Similar rules apply to loans inother currencies. If the employee receives a cash gift, the gift is taxed as income from employment.UK/1729295/03 182 September 2010