Employee Share Plans in Europe and the USA - Sorainen

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Employee Share Plans in Europe and the USAFranceFrance1. Securities law1.1 Offer of securities 1 : In principle a public offering 2 will generally require the priorpublication of a prospectus. 3 However, certain offers of securities in France arenot considered to be public offerings and therefore do not require the publicationof a prospectus. These include in particular (but are not limited to):• offers made through a mutual fund (Fonds Commun de Placementd'Entreprise – FCPE) 4 , i.e. an undertaking for collective investments intransferable securities ("OPCVM") dedicated to employee saving schemesand regulated by articles L. 214-39 or L. 214-40 of the French Monetary andFinancial Code. (Note that OPCVMs must still be approved by the AMF,although this is under a different set of rules than those applicable to publicoffers;)1234The Prospectus Directive was implemented into French law in September 2005 by modification of thearticles of the French Monetary and Financial Code relating to public offering and the GeneralRegulation of the Autorité des marchés financiers (AMF).Public offering (offre au public) is defined under article L. 411-1 of the French Monetary and FinancialCode as: (i) a communication made to the public by any way and any form, providing sufficientinformation in relation to the terms and conditions of the offer and on the financial instruments to beoffered in order to make an investor able to decide to subscribe or purchase the financial instrumentsor (ii) an offer of financial instruments by way of a financial intermediary. Financial instruments arelisted in article L. 211-1 of the French Monetary and Financial Code and include: shares (or othersecurities giving access to voting rights or the capital of issuer, which are transferable by book-entry ordelivery), debt securities, shares or units in a collective investment vehicle and certain forward or futurecontracts (including swaps, options etc.).The competent authority for such prospectus will depend on the issuer, the type of securities offeredand the characteristics of the offer. It can either be the AMF or another European authority. Thelanguage of the prospectus will also derive from the characteristics of the offer and the competentauthority and can either be in French or in English (as the usual financial language). The summary willbe in French.An FCPE allows employees to make an investment in the shares of their employer (or a groupcompany) by subscribing for units in the FCPE (which is itself invested in shares of the company). Allshares acquired by the employees through the FCPE are then held within a single vehicle, whichsimplifies their management and administration. Furthermore, as an FCPE has no legal personality, itis a joint co-ownership structure and employees are co-owners of the shares acquired through theFCPE.UK/1729295/03 55 September 2010
Employee Share Plans in Europe and the USAFrance• offers of stock options and free shares provided that they are granted inaccordance with French Commercial Code requirements 5 ;• offers (i.e. the issue or transfer) made to a restricted circle of investors i.e.fewer than 100 persons acting on their own account other than qualifiedinvestors in France (even if the offer is being made to more than 100 personsin a different EU state) 6 ;• offers (i.e. the issue or transfer) of shares or debt securities by Frenchsociétés anonyme or sociétés en commandite par actions or any equivalentforeign corporate structure where the total consideration of the offer is lessthan €100,000 or between €100,000 and €2.5 million (these limits arecalculated over a period of 12 months) provided, in this case, that thesecurities offered do not represent more than 50% of the issuer’s capital;• offers (i.e. the issue or transfer) of shares or debt securities by Frenchsociétés anonymes or sociétés en commandite par actions or any equivalentforeign corporate structure where the securities offered have a nominal valueof at least €50,000 or where the minimum investment by an investor is atleast €50,000.Other offers of securities, although within the scope of the public offeringregulations, are exempt from the requirement to publish a prospectus. Inparticular, an offer of securities to directors, executive officers and to existing orformer employees by their employer (or an affiliated company) where suchsecurities are of the same category as those already admitted to trading on anEU regulated market does not require a prospectus provided that a document ismade available containing information on the number and nature of thesecurities as well as the reasons for and details of the offer. 7567The AMF, in its September 2007 monthly review, stated that it considers that stock options do notconstitute financial instruments (instruments financiers) and therefore do not give rise to anyregistration or approval requirements, provided that such stock options have the usual features ofFrench law-governed stock options, notably that they are not transferable by book-entry or by delivery.The AMF also considers that the offering of shares for no financial consideration (for free) toemployees and/or officers of the company does not fall within the qualification of public offering asprovided by article L. 411-1 of the French Monetary and financial code and is therefore exempt fromthe production of a prospectus. This position is consistent with the CESR position.Articles L. 411-2 and D. 411-4 of the French Monetary and Financial Code implementing article 3 of theProspectus Directive.Article 212-4(5) and 212-5(5) of the AMF regulation. According to AMF Instruction n o 2005-11 dated 13December 2005 and last amended on 21 January 2010, this document should indicate at a minimum:(i) the maximum number of shares to be issued; (ii) the reason for the offer; (iii) whether a demand forUK/1729295/03 56 September 2010
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Employee Share Plans in Europe and the USA - Sorainen

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