© Copyright 2009-2011 Equalis Capital France - Legal information and terms of use
The teams at Equalis Capital carry out such analyses themselves: they conduct their own due diligences and take part in the structuring of the investment
3. Passive financial management
Unlike listed companies, non-listed companies are not covered by financial analysts. The employees of non-listed companies are thus deprived of the market infrastructure and independent analyses to appraise the appropriateness of investing in their company
Equalis Capital provides an additional liquidity option through its private equity fund FCPR Equalis Capital which can purchase securities held by the ESOP
2. Liquidity
All ESOPs invested in company shares must be backed by a liquidity mechanism to enable them to honour the employees' redemption requests:
- at any time in certain circumstances stipulated by law (termination of employment contract, marriage, third child…)
- at the end of the 5-year lock-in period (except for a buy-back ESOP, see below)
Two liquidity options are possible:
- company buy-back commitment covering 10% of its share capital
- one third of ESOP assets must permanently consist of liquid securities
Equalis Capital has all the required skills in-house
Equalis Capital's services solely concern non-listed companies
Equalis Capital has negotiated the best terms with the best service providers
The teams at Equalis Capital know the contact persons within the supervisory authorities as well as their position on key issues
1. Set-up costs
The set-up of an ESOP requires numerous skills involving knowledge of labour laws as well as financial and monetary laws
Asset management firms licensed to manage company savings plans prefer to concentrate on the set-up of ESOPs in listed companies
The management of an ESOP requires the involvement of several players: asset management firm, custodian, accountants, statutory auditor, independent appraiser, account holder
The French supervisory authorities, AMF and DDTEFP (Department of labour, employment and occupational training) have procedures which may give rise to long processing delays and numerous interchanges
Employee stock ownership is governed by specific rules concerning public offerings
- In France, broad-based employee stock ownership is governed by the legal framework of a company savings plan (PEE).
- The Act of 30 December 2006 for the development of employee share ownership created an appropriate framework by improving the operating terms and conditions of Employee Stock Ownership Plans (ESOPs, in French FCPE - Fonds commun de placement d'entreprise).
- An ESOP is a UCITS which is approved by the AMF (French financial market authority) and managed by an asset management firm which is also approved by the AMF.
- The ESOP is open to all employees.
- The value of each unit is appraised by an expert at least one a year.
- Employees must hold their units at least 5 years (except in the event of early release).
- An ESOP can sign a shareholders agreement.
The ESOP benefits from a favourable tax and social security status
- In France, employees may invest up to 25% of their annual wages in an ESOP, as well as any amounts stemming from profit-sharing and employer contributiions.
- Investments in the ESOP can also include matching contributions from the company (up to €5,000 per employee).
- In addition, they can include shares, notably those stemming from bonus share allocation programs.
- The only taxes payable are CSG/CRDS social security contributions.
- The employer's matching contributions, as well as any broad-based allocation of bonus shares or discounts in the event of a capital increase are tax-deductible expenses for the company.
- ESOPs are also open to employees who do not reside in France.
Equalis Capital provides a solution to the three obstacles which have long impeded the development of employee share ownership in non-listed companies
