Employee Share Plans in Europe and the USA - Sorainen

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Employee Share Plans in Europe and the USACzech RepublicCzech Republic1. Securities law1.1 Offer of securities 1 : Although the offer of securities to the public generallyrequires the publication of a prospectus, there is an exemption from thatrequirement where securities which are (i) issued by the employer or by acompany in the same group as the employer; (ii) offered by a person in the samegroup as the employer; and (iii) admitted to trading on an EU regulated market,are offered to employees or to members of the "statutory body" (an executivebody of the company), executive directors or persons who otherwise actuallymanage the activities of the employer, provided a document containinginformation about the number and the type of securities and the reasons for, anddetails of the offer are delivered to the Czech National Bank and are madeavailable to the addresses of the offer.There is also an exemption for an offer to fewer than 100 individuals in theCzech Republic (even if the offer is being made to more than 100 individuals in adifferent EU state).1.2 Regulatory issues: There are no other regulatory issues which affect theoffering of securities to employees assuming that no third party intermediary isinvolved in the offering.1.3 Disclosure: Extensive disclosure obligations exist under the EU Market AbuseDirective as implemented in Czech law, in particular in relation to dealings inshares by persons discharging managerial responsibilities within the issuer andcertain other persons closely associated with them. 22. Exchange controlsThe employee must notify the Czech National Bank of any acquisition ordisposal of securities or related payments if certain thresholds are met and theCzech National Bank requires the information. The thresholds are met, in broad12The Prospectus Directive was implemented into Czech law in March 2006.Persons discharging managerial responsibilities within a company include members of the statutorybody, the statutory body, executive directors or persons who otherwise actually manage the activities ofthe company, supervisory board or other supervisory bodies, members of the supervisory board or ofother supervisory bodies, persons that make decisions within an issuer which may influence the futuredevelopment and business strategy of the issuer and which have access to inside information.UK/1729295/03 21 September 2010
Employee Share Plans in Europe and the USACzech Republicterms, if the transactions amount to at least CZK 1 million or if an employeeacquires 10% or more of the share capital of a non-Czech company. 33. Financial assistance3.1 Czech company: A Czech company is allowed to provide financial assistance(including the provision of security or a guarantee) to acquire its own shares orshares in its parent company provided certain conditions are met. Theseconditions are less onerous for employee share plans.3.2 Czech subsidiary of non-Czech company: A Czech subsidiary is allowed toprovide financial assistance (including the provision of security or a guarantee) toacquire its own shares or shares in its parent company provided certainconditions are met. Such conditions are less onerous for employee share plans.4. Taxation of share acquisitions4.1 Employee tax and social security contributions4.1.1 Tax: An employee who acquires shares in his employing company or itsparent company free of charge or at a discount to market value willnormally be liable to pay income tax. The tax charge is on the differencebetween the market value of the shares at the time of acquisition and theamount, if any, paid for the shares. For the 2010 tax year the incometax rate is 15%.4.1.2 Social security contributions: An employee will only be subject tosocial security contributions if the cost of the share plan is borne by theemployer (e.g. if a recharge payment is made to a parent company). Ifsocial security contributions are payable, these are charged on anamount equivalent to the cost of the share plan borne by the employerper employee at a rate of 11% for the 2010 tax year. There is a cap ofCZK 1,707,048 on the amount which is subject to employee socialsecurity contributions for the 2010 tax year.3When an employee acquires, disposes of or makes payments in relation to securities, an obligation tonotify the Czech National Bank may arise in circumstances where payments to or from the employee(in connection with the relevant securities) amount to CZK 1,000,000 or more. In these circumstances,an employee may also be required by the Czech National Bank to notify it of any payment made asconsideration for securities for the purpose of establishing, acquiring or expanding a permanenteconomic relationship abroad (i.e. if the employee acquires 10% or more of the share capital of thenon-Czech parent company).UK/1729295/03 22 September 2010
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Employee Share Plans in Europe and the USA - Sorainen

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