Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USAFrance1.2 Regulatory and corporate governance issues: No regulatory problemsshould arise in relation to employee share plans. However, the French ruleswhich apply to the solicitation of investments must be considered on a case-bycasebasis 8 .In relation to corporate governance, according to the French Commercial Code,no stock options or free shares may be granted to executive officers of a Frenchlisted company, unless the company implements, for the benefit of all itsemployees and 90% of the employees of its affiliated companies in France, aqualifying stock option or free share plan 9 or a profit-sharing scheme (accordd'intéressement or accord de participation). 10Furthermore, the management body of a French listed company must decideeither (1) that the exercise of the stock options must be deferred, or the disposalof the underlying shares or the free shares must be deferred, until thetermination of the executive officer's position with the company or (2) to fix thenumber of shares (resulting from the exercise of the stock options or the freeshares) which must be held by the executive officer until the termination of hisadmission to listing on a regulated market or a multilateral system of negotiations will be addressed inrespect of these shares; (iv) the nature and the category of shares offered; (v) the rights attaching tothe shares, including any applicable restrictions and the modalities of exercising these rights; (vi)subscription price or modalities of determination of the subscription price; (vii) the amount of the offer;(viii) subscription period. This document should be addressed to the beneficiaries by letter or be keptat their disposal at the company's head office. Furthermore, if the company has an intranet site, thedocument should be made available on it. Should the issuing company apply for the newly issuedshares to be admitted to trading, this document must be made available on the company's website inthe form of a press release on the date on which the management body of the company makes theoffer (or if the offer provides for a reservation period, at the latest on the start date of such a reservationperiod).8910Solicitation activities are regulated under French law and can only be exercised by specific entities andin compliance with rules aimed at protecting investors. A partial exemption, however, applies to Frenchemployee share plans but since this exemption is aimed specifically at an employee share plancomplying with Part III Book III Title III of the French Labour Code, employee share plans governed byforeign law may not benefit from it. With respect to stock options plans and free shares plans, it may beargued that the solicitation rules do not apply since solicitation is defined under French law as anyunsolicited contact by any means with an individual or corporate entity with a view to obtaining itsconsent on financial and banking transactions, whereas in the case of a grant of stock options or freeshares to employees the latter’s consent is, in principle, neither required nor sought.I.e. plans which fulfil conditions provided for under articles L. 225-177 to L. 225-186-1 of the FrenchCommercial Code for stock option plans and L. 225-197-1 to L. 225-197-6 for free share plans.Articles L. 225-186-1 and L. 225-197-6 of the French Commercial Code.UK/1729295/03 57 September 2010