Employee Share Plans in Europe and the USA - Sorainen

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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
Employee Share Plans in Europe and the USAFranceposition. Information regarding this decision should be communicated to theshareholders of the company on an annual basis 11 .1.3 Disclosure: If an employee share plan requires the publication of a prospectus,the issuing company must disclose any information which may affect the shareprice or shareholders’ rights. Where the issuer is a foreign company, theinformation given in France must be equivalent to the information given in theissuer's home country. With respect to an offer of French tax-approved options 12and free shares 13 , specific reports must be made annually to inform theshareholders of the options and free shares granted.2. Exchange controlsThere are no applicable exchange controls. However, certain filings must bemade for statistical and information purposes.3. Financial assistance3.1 French company: A French company is not permitted to provide funds, makeloans or act as a guarantor to assist a third party in acquiring shares in thecompany 14 . However, there is a specific exemption relating to certain employeeshare plans where the company provides financial assistance to allowemployees of the group to acquire shares in the company or an affiliatedcompany 15 . Only employees benefit from this exemption and a French companycannot make a loan or provide a guarantee to an individual who is a director 16 .3.2 French subsidiary of non-French company: A French employer may makeloans or provide guarantees to enable employees to acquire shares in a non-French parent company.111213141516Articles L. 225-185 and L. 225-197-1 of the French Commercial Code.Tax-approved share option plans are regulated by articles L. 225-177 to L. 225-185 of the FrenchCommercial Code.Tax-approved free shares plans are regulated by articles L. 225-197-1 to L. 225-197-5 of the FrenchCommercial Code.Article L. 225-216 of the French Commercial Code.This exemption is only available for shares offered under a French employee saving plan (Pland'Epargne Entreprise).This covers for example a loan to an administrateur, directeur général, directeur général délégué,representatives of legal entities which are administrateurs, gérants de SARL, membres du conseil desurveillance and membres du directoire.UK/1729295/03 58 September 2010
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Employee Share Plans in Europe and the USA - Sorainen

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