The so-called ‘Macron law’ enacted on 6 August 20151 significantly changes the rules governing Restricted Stock Units (RSUs).
Major changes are designed to make RSUs more attractive for employees. This is in contrast to the stock-options regime, which has not changed and has therefore become of much less interest.
The Macron law eases the condition concerning the one-to-five ratio of shares granted between different employees. Until the entry into force of the law, the difference between the number of shares distributed to each employee could not exceed a ratio of one to five. This ratio applies only where the percentage of share capital allocated exceeds 10 per cent (or 15 per cent in the case of non-listed companies that meet the EC definition of SMEs2).
The Macron law provides also for significant changes concerning the duration of the vesting and lock-in periods. The minimum duration of the vesting period cannot be less than one year, compared to two years currently, and the lock-in period is now optional. In any event, the total of both periods cannot be less than two years, compared to four years currently.
The major point of the reform lies in the change of the tax and social security regime of RSUs.
The taxation of the acquisition gain may benefit from the ownership duration rebate which starts as from the vesting date (previously the ownership duration rebate was only applicable to the capital gain).
The employee contribution is withdrawn and will not apply anymore, whereas the company contribution is reduced from 30 per cent to 20 per cent of the value of the shares. Subject to certain conditions, SMEs which have never distributed dividends since their creation would be exempted from this contribution. The payment of this contribution will now take place the month following the vesting date, instead of the month following the granting date currently. This avoids the ludicrous situation where an employer company paid a social security contribution on a share which may never be vested in the employee.
All these new measures shall be applicable to RSUs granted by the Extraordinary General Meeting (or the legal body authorised for foreign companies) after the publication of the law (i.e. 7 August 2015).