Allocation of Free Shares

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Very few companies have the resources to pay their teams high salaries in their early years. However, in order for these companies to develop, the entrepreneurs in charge will often require the skillset of qualified and experienced employees. A potential solution to this problem could be a ‘Share Warrant for Entrepreneurs’ (BSPCE), which could allow you to retain and motivate your employees and managers without impacting your cash flow.

‘Share Warrants for Entrepreneurs’, known as ‘Bons de souscription de parts de createur d’entreprise’ in France, apply to shares that can be freely allocated and they entitle the main beneficiary to subscribe to stocks whose price is set when these BSPCE’s are allocated, for a certain period.

“These warrants open up the option for buyers to purchase Company shares at a fixed price, well in advance,” says Patrick Maupard, founding partner of Maupard Fiduciaire, and member of France DEFI . “In this way, beneficiaries can expect to enjoy the Company value gain at a later stage”.

Unlike a salary bonus, where the employer and employee expenses amount to 50% of the sum in question, BSPCE’sare exempt from payroll taxes. With BSPCE’s, the beneficiary must simply take advantage of this purchase option whilst being sure to mention it in his/her yearly tax return. Consequently, their mandatory contributions will decrease to 34.5% of the sum in question, which is then considered as a capital gain.

In terms of accessibility, BSPCE’s are available to corporations that are less than fifteen years old, which are not listed as an SME, whose capital is held at (at least) 25% by individuals, or is held by legal persons who in turn are owned at 75% by individuals. Since the introduction of the Macron law, a company may under certain conditions, allocate BSPCE’s to the staff of its subsidiaries.

“This law has also opened up the possibility of creating merit criteria for the allocation of BSPCE’s subject to certain conditions,” says Patrick Maupard. “We can therefore mould the use of these warrants, not only to the beneficiary of the Company, but to business goals and sale deadlines too, for example”.

In addition to these fiscal benefits, BSPCE’s offer true flexibility during their application. “Nevertheless, it is important to be in contact with a lawyer who is specialized in company law to ensure that you stay within the rules – avoid setting success objectives that could be considered as discriminatory, for example – and to stay away from any litigation risks, in general, “advises Patrick Maupard.

If you are wondering how you can implement a BSPCE in your organization, or which factors you should consider before you apply for a warrant, do not hesitate to contact us. Here at Maupard we would be more than happy to advise you on this matter, and show you the best way forward.

Contact us via telephone +33 (0) 1 53 93 94 20 or [email protected]. Our team of experts will happily assist you with any queries you might have.