Employee Share Plans in Europe and the USA - Sorainen

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Employee Share Plans in Europe and the USAFinlandFinland1. Securities law1.1 Offer of securities 1 : The Prospectus Directive has been implemented in Finlandand the exemption regarding employee offerings under the Prospectus Directiveis therefore available where an employer offers securities to employees inFinland. 2There is also an exemption for an offer to fewer than 100 individuals in Finland(even if the offer is being made to more than 100 individuals in a different EUstate).Where the total consideration of the offer is less than €2.5 million (calculatedover a period of 12 months) the offer falls outside the scope of the ProspectusDirective. In these circumstances Finnish regulations will apply. These providefor an exemption from a prospectus requirement where securities are onlyoffered to directors or employees of the issuer or a group company. 3 Employeesmust be given information on anything that may significantly affect the value ofthe securities being offered. The information required is not prescribed.However, at a minimum, employees should be provided with details of theissuing company (including recent financial information) and information on thetax implications of acquiring the securities. 41234The Prospectus Directive was implemented into Finnish law on 1 July 2005.The employee share plan exemption at Article 4(1)(e) of the Prospectus Directive was incorporated intothe Securities Market Act (SMA). No further requirements have been set out in Finnish law ascompared to the requirements of Article 4(1)(e). Therefore there should not be any furtherrequirements in Finnish law in addition to those set out in the CESR Recommendations.The marketing and advertising of securities in Finland (even if carried out by a foreign company) isregulated by the SMA which implements the EU Prospectus Directive and which regulates, amongother things, the public issue and trading of securities. The SMA does not expressly define the term“public” but an offer of securities to people who are part of a pre-selected group of investors notexceeding 99 persons will not constitute a public offer for the purposes of the SMA, provided that onlythe named, pre-selected investors can participate in the offer. Under the SMA, a company whichpublicly offers its securities must publish a prospectus (which meets the requirements of the SMA) andsubmit it to the Financial Supervisory Authority (the FSA). The Ministry of Finance issued the Decreeon Certain Offer Documents (which became effective as of 1 September 2007), applicable to offeringsfalling outside the scope of the EU Prospectus Directive, following which the offer of securities by anemploying company (or by a company which is related to that company) to existing or former directorsor employees of the employing company is not subject to the prospectus requirements under the SMA.The financial information could be provided on the company's website, provided that this is accessibleto employees. The employee documents can be drafted in any language (not necessarily Finnish orSwedish) provided that the recipient employees have sufficient understanding of the language used.UK/1729295/03 47 September 2010
Employee Share Plans in Europe and the USAFinlandEmployee offerings should normally be exempt from the Finnish prospectusrequirements if employees are granted non-transferable options which do not, bydefinition, qualify as securities under Finnish Law.1.2 Regulatory issues: There are no other regulatory issues which affect the offerof securities to employees.1.3 Disclosure: Employees must continuously be provided with all information thatmay significantly affect the value of the securities concerned.2. Exchange controlsThere are no applicable exchange controls.3. Financial assistance3.1 Finnish company: Finnish company law prohibits all forms of financialassistance by a Finnish limited liability company in connection with theacquisition of its own shares or shares in its parent company.3.2 Finnish subsidiary of non-Finnish company: Under the Finnish CompaniesAct only domestic entities qualify as parent companies. Therefore, theprohibition referred to in paragraph 3.1 above would not appear to prevent aFinnish subsidiary of a non-Finnish company from providing financial assistancein connection with the acquisition of shares in e.g. its foreign parent company.However, this is only possible if doing so is in the best commercial interests ofthe company at a company level (group level is not sufficient).3.3 Employees of Finnish company: The prohibition referred to in paragraph 3.1above does not apply to the provision of financial assistance for the purpose offacilitating the acquisition of shares by employees of the company or of a relatedcompany (including loans to certain qualifying personnel funds) up to an amountcorresponding to the distributable assets of the company. 54. Taxation of share acquisitions4.1 Employee tax and social security contributions4.1.1 Tax: If an employee is offered the opportunity to acquire shares free ofcharge or at a discount to market value and if the offer is attributable tothe employment relationship, the discount will normally be construed asearned income and subject to progressive income tax. The taxable5The managing director is not regarded as an employee of the company but as an appointed official. Itis therefore unclear whether this exemption also applies to the managing director.UK/1729295/03 48 September 2010
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Employee Share Plans in Europe and the USA - Sorainen

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