Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USAFrancelist of such requirements was published in a revenue ruling. The scope of thisruling is not clearly defined but further guidance in particular cases could besought from the tax authorities if required.If the conditions apply, the following tax regime applies:5.1.1 Grant: French employers are subject to a 10% employer social securitycontribution payable on the grant date of qualified stock options (optionsgranted prior to 16 October 2007 are not subject to this charge) 27 .The amount subject to this social security charge is 25% of the fair marketvalue of the underlying shares on the grant date. However, companieswhich report on a consolidated basis under international accountingstandards 28 may instead choose to determine the amount of the employer(b) if the underlying shares are not listed on a stock exchange, the rules are the same asmentioned above under (a) subject to the following exceptions: (i) in the case of anoption to purchase existing shares, the options should be granted only to employees ofthe issuing company, or to employees of a French company at least 10% of whoseshare capital is held by the issuing company and (ii) only executive officers of the issuingcompany may benefit from stock options;• the option holders must not hold more than 10% in total of the issued share capital of the foreignparent company;• if the shares subject to the option are listed on a stock exchange, the price payable under theoption must not be less than 95% of the average share price over the 20 stock exchange dealingdays immediately preceding the date the option is granted;• in the case of options to purchase existing listed shares, the company must acquire the sharesbefore the date on which the options become exercisable. However, the shares cannot be held formore than one year before the grant of the options. The exercise price cannot be less than 95% ofthe average purchase price of the shares owned by the company at the date the options aregranted. Therefore it is advisable to operate French approved plans over newly issued shares only;• if the shares subject to the option are not listed, the option exercise price must be determined inaccordance with objective stock valuation methods;• if the shares of the company issuing the options are listed, no option may be granted duringspecific black-out periods;• the options are not transferable;• the options must be granted for nil consideration.2728The 10% contribution was introduced by Article 13 of the 2008 French Social Security Financing Billand applies to options granted since 16 October 2007. It applies to options granted to beneficiarieswhose remuneration or gains are subject to a compulsory French social security regime.Consolidated financial statements in accordance with Regulation (EC) No 1606/2002 of the EuropeanParliament and of the Council of 19 July 2002.UK/1729295/03 63 September 2010