Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USAFrance6. Employee savings plan (PEE)French employees may subscribe for/acquire shares issued by their employer orits parent company (including a non-French parent company) 43 , whether directlyor through a FCPE), within the scope of an employee savings plan (Pland'Epargne d'Entreprise or PEE), which benefits from favourable terms such asan employer contribution (abondement) and/or a discount on thesubscription/acquisition price (either in the form of cash or free shares). Afavourable tax and social security regime applies if a number of conditions aremet 44 , including the requirement that the PEE is offered to all employees, that43The parent company is defined under the provisions of the French Commercial Code on the issue ofconsolidated accounts. According to these provisions, the parent company has to comply with one ofthe following conditions:• it holds directly or indirectly the majority of the voting rights in the employer company;• it has appointed the majority of the directors or the executives of the employer company during thetwo previous tax years;• it shares the control of the employer company with a restricted number of shareholders, so that thedecisions taken by the employer company are derived from the agreement of the controllingshareholders.44The main conditions are as follows:• the PEE is offered to all employees (a minimum service period of no more than three months and/ora minimum investment amount can be specified);• the employer’s contribution (abondement) does not exceed three times the employee’scontributions and is in any event limited to 8% of the annual social security ceiling (i.e. 0.08 x34,620 = €2,769.60) per year for 2010). However, to the extent that the employee’s contributionsare invested in the employing company’s shares or the shares of an affiliated company within themeaning of Article L. 225-180 of the French Commercial Code, this limit is increased to 14.4% ofthe annual social security ceiling (i.e. €4,985.28 for 2010);• the employee's annual contribution to the PEE (which normally comes from his after-tax income)cannot exceed 25% of his annual gross salary; and• the shares acquired through the PEE are held over a 5-year period, subject to the followingexception, listed in Article R. 3324-22 of the French Labour Code:- marriage or a Pacte Civil de Solidarité (PACS) (solidarity civil agreement). PACS is anagreement entered into between two individuals over 18 years, having the same sex or adifferent sex, in order to organise their everyday life within the meaning of Article 515-1 of theLaw n° 99-944 dated 15 November 1999;- birth or arrival at home for adoption of a third and any subsequent child;- divorce or termination of the PACS (if the employee retains the custody of at least one minorchild);- disability of the employee, his/her spouse, his/her child or the person with whom he/she hasconcluded a PACS;UK/1729295/03 70 September 2010