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

Company Law (en cours)

The objective of the law on employee savings  was to promote one of the modalities of employee savings, namely employee shareholding, by allocating all or part of the new shares resulting from a capital increase to employees. In fact, when the company employs employees, Article L. 225-129-6, para. 1, of the Commercial Code requires the extraordinary general meeting to decide, during any decision t …

Mechanism

The objective of the law on employee savings  was to promote one of the modalities of employee savings, namely employee shareholding, by allocating all or part of the new shares resulting from a capital increase to employees. In fact, when the company employs employees, Article L. 225-129-6, para. 1, of the Commercial Code requires the extraordinary general meeting to decide, during any decision to increase capital by cash contribution, unless it results from a prior issue of securities giving access to capital, on the possibility of reserving this increase for employees.

Articles L. 3332-18 to L. 3332-24 of the Labor Code, which govern the terms of the operation, imply that it is reserved for members of an employee savings plan (PEE) . However, practice considers that companies not equipped with a PEE before the capital increase are not excluded from the mechanism, provided that the management team establishes one before proceeding with the operation . These provisions also determine the pricing methods, depending on whether the securities are admitted to trading on a regulated market.

When the securities are admitted to trading on a regulated market, the transfer price is set based on stock market prices. The decision setting the subscription date is made by the board of directors, the executive board, or their delegate. Furthermore, when the capital increase coincides with an initial listing on a regulated market, the subscription price is determined by reference to the admission price on the market, provided that the decision by the board of directors, the executive board, or their delegate occurs no later than ten trading sessions after the date of the first listing.

When the securities are not admitted to trading on a regulated market, the transfer price is determined according to the objective methods used for share valuation, taking into account, with appropriate weighting for each case, the net book position, profitability, and business prospects of the undertaking. Failing that, the transfer price is determined by dividing the revalued net assets based on the most recent balance sheet by the number of existing securities. This is determined each fiscal year under the supervision of the statutory auditor.

Even though the mechanism is primarily incentive-based, the legislator attaches a strong sanction to it. Indeed, Article L. 225-149-3 provides for the invalidity of decisions made in violation of these provisions.

The PEE refers to a collective savings plan that allows employees to invest amounts locked in for five years, intended to build a portfolio of securities.

Rép. min. 34056 to MARINI: JO Senate, 22 November 2001, 3718. – Rép. min. 62446 to CHOSSY: JOAN, 10 December 2001, 7123.

Company Law (en cours)

495. Mechanism

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Les notions juridiques connexes

495. Mechanism

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Les notions juridiques connexes

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