Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USAGermanyshares in an affiliated company of the employer. However, in practice, thisexemption may be construed more broadly.• A company considering the use of a "short-form prospectus" (see furtherparagraph 2.1 on pages 1-3 of this guide) should discuss this in advancewith BaFin.1.2 Regulatory issues: Provided the offering of securities to employees by theemployer does not include the provision of banking business to the employees 4 ,no German banking licence requirements apply. When offering securities toemployees under an employee share plan, general rules under German civil lawregarding the way in which securities are offered must be observed. In particularthere are doorstep-selling restrictions, which in certain circumstances also applyto offers of securities and related services made in person to employees at theirworkplace.Furthermore, even if no prospectus is published, any written selling materialwhich is provided to an actual or potential investor (i.e. employees) and whichcontains information on an investment can qualify as a prospectus which canlead to a general civil law prospectus liability in Germany (i.e. a liability for false,missing or misleading information may be incurred). 51.3 Disclosure: Disclosure and publication requirements apply for German and, inprinciple, also to non-German companies which are listed on an organisedmarket in Germany (or to which admission has been applied for) in relation toinsider information and directors' dealings. Furthermore, registers must bemaintained by companies listed on a German exchange, or acting uponinstruction or on account of such a company, of persons having knowledge orinsider information in the course of their business.Employees who are in possession of inside information at the time ofsubscription under an employee share plan are not permitted to participate in the45Such as e.g. safe custody business or lending business (if the company extends loans to its employeesto enable them to take part in the employee share plan, this would constitute licensable bankingbusiness in Germany and a German banking licence would be required). There is no exemptionavailable for a licensable banking businesses. However, for certain brokerage activities an exemptionis available if the licensable services are provided by a company for the sole purpose of administeringa participation scheme for the benefit of their employees and/or the employees of their affiliatedcompanies.Under the scope of the WpHG, the offer of shares (and derivatives) is subject to certain specificinformation and advisory obligations in order to avoid liability (see article 19 of Directive 2004/39/EC onmarkets in financial instruments and article 31 of Directive 2006/73/EC implementing Directive2004/39/EC.UK/1729295/03 78 September 2010