French law creates a new incentive for companies granting Restricted Stock Units or Performance Shares to all their employees in France.
The French Commercial Code provides that companies may grant RSUs or Performance Shares to their employees and corporate officers of up to 10% of their share capital. Since the introduction of a new law dated 29 March 2014, this percentage has increased to up to 30% for companies, listed and unlisted, which grant such type of awards to all their employees. Where grants are made only for the benefit of certain categories of employees, the limit remains at 10% of the share capital for listed companies and at 15% for unlisted companies.
The difference between the number of awards made to each employee is capped
The same law limits the maximum difference between the number of grants made to employees to a ratio of 1 to 5. For example, if the number of RSUs granted to one employee is 100, no other employee may receive more than 500 RSUs. As is usual, no explanatory comments were issued on these provisions at the time, and some questions remain.
Scope of the new provisions
Although these provisions came into force on 2nd of April 2014, it remains unclear whether the cap relating to the differing level of grants mentioned above applies to all grants or only to grants in plans where all employees participate. It is also not clear if it applies in respect of all awards from successive grants, although Parliamentary discussions indicate that the provision will only apply in the case of plans where all employees are eligible to participate and without regard to previous grants under the same or any other plan.
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.
Circular 230 disclosure
To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.