Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USAFrancethe employee's annual contribution to the PEE is not in excess of 25% of hisannual gross salary and that the investment of the employee is kept in the planover a minimum five-year holding period.6.1 Tax free discount: Employees may invest in shares at a discount to marketvalue of up to 20% if the shares are either listed on a stock exchange or notlisted 45 and subject to a 5-year holding period without a liability to income tax orsocial security contributions arising for the employee or employer (the earlyrelease of shares within the holding period is permitted in a number ofcircumstances, including termination of employment for any reason). Thisdiscount may amount to up to 30% if the shares are subject to a holding periodof 10 years. The discount may however be subject to social taxes at thecombined rate of 12.1% (2010 income) 46 as part of the capital gain when theemployee disposes of his investment (see paragraph 6.3 below).French companies may deduct an amount equal to the difference between thevalue of the shares issued on the date of the increase in share capital and theirsubscription price, in the case of an increase of share capital reserved to theemployees participating in a PEE.- termination of the employment contract for whatever reason (termination, dismissal, retirement,resignation);- acquisition or extension of the employee's main home or reparation of the employees' mainhome following an act of God recognised as such by an act of authority;- bankruptcy (situation de surendettement) of the employee as determined by any localcompetent authority;- death of the employee or of his/her spouse or of the person with whom he/she has concluded aPACS; and- creation or takeover by the employee, his/her spouse, his/her child, or the person with whomhe/she has concluded a PACS of an industrial, commercial, craft or agricultural enterprise or adecision to undertake a non-salaried profession.4546Article L. 3332-21 of the French Labour Code states that companies whose shares are not listed on astock exchange, can also benefit from the capital increase regime. The subscription price is determinedby objective methods (It is necessary to weigh the net equity, the profit return and the future prospectsof the company’s activity. It is also important to take into account the investments in the significantsubsidiaries). If it is impossible to determine such a price with the above methods, the subscriptionprice is calculated in dividing the number of existing shares by the revaluation of assets.For companies whose shares are not listed on a stock exchange, the subscription price cannot behigher than the subscription price or lower than 20% of the subscription price (30% if the shares aresubject to a 10-year holding period).CSG at the rate of 8.2%, plus CRDS at the rate of 0.5%, plus social levy at the rate of 2%, plus anadditional contribution of 1.4% (2010 income declared in 2011).UK/1729295/03 71 September 2010