Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USAFranceIn addition, the acquisition gain resulting from the exercise of optionsgranted since 16 October 2007 31 is subject to a 2.5% employee socialsecurity contribution.To benefit from the favourable tax regime, it is also necessary to complywith certain filing requirements. Companies offering options to theiremployees are required to issue, on or before 15 February in each year,individual statements in respect of each employee who (i) has exercisedoptions during the course of the preceding calendar year 32 and/or (ii)during the course of a calendar year, has sold or converted into bearershares, shares acquired on the exercise of an option before the end ofthe four-year holding period from the date of grant.5.2 Favourable tax regime for free sharesIn order to encourage employee share ownership in France, the French 2005Finance Act introduced a new regime consisting of the grant of free shares toemployees and executive officers 33 . Prior to this law, the grant of free shareswas not governed by any specific regulation and the tax and social securityregime was not favourable.The favourable tax regime is available for employees of French companies inrelation to free shares granted by their employer or by a domestic or a foreign313233The 2.5% 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 remunerations or gains are subject to a compulsory French social security regime.Where options are granted over the shares of a non-French parent company, these individualstatements must be issued by the French employing company.Two copies of each individual statement must be issued. One copy must be sent to the tax authoritieson or before 15 February. The other copy must be given to the employee and should be filed, togetherwith his tax return (generally around 1 March), at his local tax office.If, in the course of a calendar year, shares acquired on the exercise of an option are sold or convertedinto bearer shares before the end of the four-year holding period, the company must issue an individualstatement (again two copies are required), on or before 15 February of the following calendar year,indicating the date on which the sale or conversion occurred, the date of the grant and exercise of thecorresponding options, the number of shares concerned, the purchase or subscription price of theshares and their value on the date of exercise. In the event of an exchange of shares (as a result of apublic offer of exchange, a merger etc.), the above-mentioned filing obligations are transferred to thecompany whose shares are granted in exchange (or its French subsidiary, if it is a foreign company).Articles L. 225-197-1 to L. 225-197-6 of the French Commercial Code. New provisions were alsointroduced by Law No 2006-1770 dated 30 December 2006 relating to employees' participation andshareholdings.UK/1729295/03 66 September 2010