All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

One of the particularities of mergers and acquisitions operations lies in the negotiation and granting of management packages (or Manpacks) to those recognized as the "key people" of the company. Indeed, the acquirers of the target have every interest in retaining these management teams who possess a very detailed knowledge of the company and the tools necessary to maintain or even increase its pr …

Incentive mechanisms.

PUBELLIER and BERTREL, How to organize access to capital for management teams in LBO operations? Actes prat. ing. sociétaire 2011, No 119, 5; FOURNIER DE SAINT JEAN and KAEPPELIN, Management packages: overview of new developments and issues in 2020, Dr. sociétés 2021, 1; GROSSI, BRIGNON, FILIPPI, RENAULT, and WELLER, Management packages or how to share and secure growth, Actes prat. ing. sociétaire 2021, No 175, 1; COURSIER, Employee shareholding - The allocation of free shares, Actes prat. ing. sociétaire, 2022, No 182, 4; PAGNERRE, Employee shareholding - Stock purchase options, Ibid., 3; KEREBEL, Management packages: a structure under pressure, Actes prat. ing. sociétaire 2023, No 4, 4.

One of the particularities of mergers and acquisitions operations lies in the negotiation and granting of management packages (or Manpacks) to those recognized as the "key people" of the company. Indeed, the acquirers of the target have every interest in retaining these management teams who possess a very detailed knowledge of the company and the tools necessary to maintain or even increase its profitability rate. These incentive mechanisms constitute important loyalty factors.

The Manpacks can be structured in several ways: they may consist of granting executives free securities giving access to capital, notably business creator share warrants (BSPCE)  and free shares . Granted free of charge to employees, free shares are particularly attractive as they allow them to obtain all the rights traditionally attached to shares, such as political, financial, and proprietary rights. The entire cost of granting these shares is borne by the company, effectively limiting the beneficiary's risk.

But profit-sharing can also involve offering executives paid profit-sharing tools such as common shares or any other forms of securities such as preference shares, stand-alone warrants (BSA)....

Beyond the allocation of marketable securities, profit-sharing can also involve the promise of sharing capital gains, governed by Articles L. 23-11-1 to L. 23-11-4 of the Commercial Code. According to these rules, any holder of a company's securities can commit to sharing a portion of the capital gains from the sale or repurchase of their securities with all the company's employees on the day they sell or repurchase all or part of them. In practice, the associate commits to paying the promised amounts to the company, which holds them in the company savings plan and then distributes them to the employees after deducting the related social and tax charges.

Introduced by Law No 97-1269 of 30 December 1997.

Established by Law No 2004-1484 of 30 December 2004 and governed by Articles L. 225-197-1 et seq. of the Commercial Code.

Company Law (en cours)

246. Incentive mechanisms.(1)

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Les notions juridiques connexes

246. Incentive mechanisms.(1)

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