EMPLOYEE STOCK PURCHASE PLANS

EMPLOYEE STOCK PURCHASE PLANS: EMPLOYMENT

Labor Concerns

Employee stock purchase plans have not been expressly included in the Danish Stock Option Act (the "Act"). However, if a Plan provides an employee with the right to purchase Stock at some future time (e.g. if certain conditions are met), it will generally be subject to the Act. Accordingly, most Plans will fall within the scope of the Act. The Act generally allows an employee whose employment has been terminated for any reason other than misconduct to retain rights to purchase Stock under the Plan. However, where an employee resigns or their employment is terminated by reason of misconduct, they will forfeit all rights to purchase Stock. Employees' rights under the Stock Option Act may not be waived.

Communications

Employers are required to distribute a separate written statement (in Danish) to participating employees at the time of grant, containing certain basic information regarding the terms and conditions of the Plan.

EMPLOYEE STOCK PURCHASE PLANS: REGULATORY

Securities Compliance

To the extent the ESPP award is deemed to be a stock option and is non-assignable there will be no prospectus requirements under Danish law. To the extent the ESPP award is assignable, the main rule is that any offer of securities to the public in Denmark with an aggregate value of EUR 1,000,000 or more results in an obligation to publish a prospectus. However, a number of exemptions may apply, for example where securities are offered to less than 150 people or an exemption specific to certain employee-participation schemes is applicable. If the ESPP award is not deemed to be a security, it will not be subject to the Prospectus Directive at all.

Foreign Exchange

No exchange control restrictions will apply on the offering.

Data Protection

Normally, the processing of non-sensitive personal data within the EU/EEA in connection with the administration of a Plan does not require consent from the employees or approval from the authorities. Nevertheless, it is generally recommended that the employees' explicit consent to the processing of non-sensitive personal data is obtained prior to such processing. If the processing includes a transfer of personal data (whether sensitive or not) to a country outside the EU/EEA, the employees' explicit consent is required unless prior approval of the transfer has been obtained from the Danish Data Protection Agency.

EMPLOYEE STOCK PURCHASE PLANS: TAX

Employee Tax Treatment

The employee is generally subject to tax (of up to 56% including social insurance contributions) on the spread either on grant or exercise (depending on whether any circumstances exist that postpone taxation and whether the Plan is liable to a Tax-Favored Program). The employee is also taxed on any gain on the subsequent sale at a progressive rate of up to 42%.

Social Insurance Contributions

The employee is subject to social insurance contributions on the spread.

Tax Favored Program

A tax-favored program is available if the Plan contains a favourable discount element for the employee. In such cases, the tax charge can be deferred until exercise of the purchase rights.

Plans entered into on or after 1 July 2016 may qualify for favourable tax treatment if certain conditions are met. Under the favourable tax treatment scheme, which was introduced under section 7P of the Danish Tax Assessment Act, the employee can defer taxation until sale of the shares and will be taxed on the profit as a capital gain (at rates of up to 42%) instead of as personal income (at rates of up to 56%).

Withholding and Reporting

Exercise of the purchase rights triggers reporting requirements for the employer. Withholding is not required.

Employer Tax Treatment

A deduction may be allowed.

Tax Rates

Income tax is charged at rates of up to 56%.

Social taxes are levied on the employee on the amount recognized as income under the Plan.

Any gain made on the sale of shares is taxed at rates of up to 42%.

RESTRICTED STOCK and RSUs

RESTRICTED STOCK and RSUs: EMPLOYMENT

Labor Concerns

Restricted stock and RSU plans have not expressly been included in the Danish Stock Option Act. The Stock Option Act will generally apply if a Plan provides the employee with a right to purchase or be allotted Stock at a later date (e.g. if certain conditions are met). This is generally the case for RSUs. However, if the employee becomes the immediate owner of the Stock but subject to the risk of forfeiture, a sale back obligation or similar, such plans will not be subject to the Stock Option Act. This is generally the case for restricted stock.

RSU Plans (generally subject to the Stock Option Act):

If an RSU plan is subject to the Stock Option Act, an employee whose employment has been terminated for any reason by the employer, other than by reason of misconduct, is generally entitled to retain rights to vested and unvested RSUs. Where an employee resigns or their employment is terminated by reason of misconduct, they will forfeit all rights to vested and unvested RSUs. Employees' rights under the Stock Option Act cannot be waived.

Restricted Stock Plans (generally not subject to the Stock Option Act):

Awards of restricted stock in the employment context have not been expressly regulated under Danish law. However, it is typically expected that grants of restricted stock will be considered to constitute part of the employees' remuneration and consequently will fall under Section 17a of the Danish Salaried Employees Act.

Whilst not beyond doubt, there is a significant risk that restricted stock will be considered to be fully acquired on the date of grant, despite the existence of (i) forfeiture provisions intended to apply upon a subsequent termination of employment, or (ii) conditions relating to past or future performance. Consequently, and by analogy with Section 17a of the Salaried Employees Act, it follows that the automatic forfeiture of an award of restricted stock may not be enforceable upon the termination of employment (whether voluntary or involuntary) and employees will remain entitled to all restricted stock granted. This is so irrespective of any contrary terms in the restricted stock plan/agreement.

However, where employees are required to pay a significant amount to receive restricted stock, such grants may not be considered a part of the employees' remuneration. In such cases it may be possible, to a limited extent (e.g. in bad leaver situations), to enforce reasonable sale back obligations on the termination of employment. However there remains considerable uncertainty under Danish case law on this issue.

Communications

Where the Plan is subject to the Stock Option Act, employers are required to provide a separate written statement in Danish to participating employees, at the time of grant. This statement should contain certain basic information on the terms and conditions of the Plan. Even where the Plan falls outside the Stock Option Act, the employer is under a general obligation to provide information to employees in writing regarding their material entitlements.

RESTRICTED STOCK and RSUs: REGULATORY

Securities Compliance

To the extent the RSU award is deemed to be a stock option and is non-assignable, there will be no prospectus requirements under Danish law. In addition, there are likely to be no prospectus requirements for a restricted stock award which is non-assignable.

To the extent that the restricted stock/RSU award is assignable, the main rule is that any offer of securities to the public in Denmark with an aggregate value of EUR 1,000,000 or more results in an obligation to publish a prospectus. However, a number of exemptions may apply, for example where securities are offered to less than 150 people or where an exemption specific to certain employee-participation schemes is applicable. If the restricted stock/RSU award is not deemed to be a security, it will not be subject to the Prospectus Directive at all.

Foreign Exchange

No exchange control restrictions will apply on the offering.

Data Protection

Normally, the processing of non-sensitive personal data within the EU/EEA in connection with the administration of a Plan does not require consent from the employees or approval from the authorities. Nevertheless, it is generally recommended that the employees' explicit consent to the processing of non-sensitive personal data is obtained prior to such processing. If the processing includes a transfer of personal data (whether sensitive or not) to a country outside the EU/EEA, the employees' explicit consent is required, unless prior approval of the transfer has been obtained from the Danish Data Protection Agency.

RESTRICTED STOCK and RSUs: TAX

Employee Tax Treatment

With regard to restricted stock, the employee is generally subject to tax on the discount value (benefit) of the Stock when the restricted stock is granted. However, where the Plan imposes performance-based vesting criteria and, in certain circumstances, timed-based vesting criteria, this may postpone the point of taxation until such criteria are satisfied. Depending on the circumstances, the employee may obtain a refund of the tax paid on grant if the employee is subsequently required to return the Stock.

With regard to RSUs, the employee will generally be subject to tax on grant. However, performance-based vesting criteria and, in certain circumstances, timed based vesting criteria may postpone the point of taxation until vesting.

Any capital gains realized upon a subsequent sale of Stock will be subject to tax as share income at progressive rates of up to 42%.

Social Insurance Contributions

Employee social insurance obligations apply to both restricted stock and RSUs.

Tax Favored Program

Plans entered into on or after 1 July 2016 may qualify for favourable tax treatment if certain conditions and other reporting requirements are met. Under the favourable tax treatment scheme which was introduced under section 7P of the Danish Tax Assessment Act, the employee can defer taxation until sale of the Stock and will be taxed on the profit as a capital gain (at rates of up to 42%) instead of as personal income (at rates of up to 56%).

Withholding and Reporting

The employer has reporting requirements on the grant of restricted stock. There is some uncertainty with respect to RSUs, however, it is most likely that the employer will have reporting requirements when the conditions imposed on grant have been fulfilled. Withholding obligations do not generally arise.

Tax Rates

Income tax is charged at rates of up to 56%.

Social taxes are levied on the employee on the amount recognized as income under the Plan.

Any gain made on the sale of shares is taxed at rates of up to 42%.

STOCK OPTIONS PLANS

STOCK OPTIONS PLANS: EMPLOYMENT

Labor Concerns

The Danish Stock Option Act generally allows an employee whose employment is terminated for any reason other than misconduct to retain all rights to stock options, whether vested or unvested. Where an employee resigns or their employment is terminated by reason of misconduct, they will forfeit all rights to stock options already granted, whether vested or unvested. Employees' rights under the Stock Option Act cannot be waived.

Stock options granted before 1 July 2004 are not subject to the Stock Option Act and so such stock options are (according to case law) generally considered to be 'fully earned' when granted. Accordingly, on termination of their employment, employees will be entitled to retain all rights to such stock options, whether vested or unvested, and receive a proportionate rate of the future grants that the employee would have received during the accounting year in which employment was terminated. This is so regardless of how and why employment terminated and regardless of any contrary provisions in the Plan.

Communications

Employers are required to distribute a separate written statement (in Danish) to participating employees at the time of grant, containing certain basic information regarding the terms and conditions of the stock options.

STOCK OPTIONS PLANS: REGULATORY

Securities Compliance

To the extent the stock options are non-assignable, there will be no prospectus requirements under Danish law. To the extent they are assignable, the main rule is that any offer of securities to the public in Denmark with an aggregate value of EUR 1,000,000 or more, results in an obligation to publish a prospectus. However, a number of exemptions may apply, for example where securities are offered to less than 150 people or an exemption specific to certain employee-participation schemes is applicable. If the stock option is not deemed to be a security, the option will not be subject to the Prospectus Directive at all.

Foreign Exchange

No exchange control restrictions will apply on the offering.

Data Protection

Normally, the processing of non-sensitive personal data within the EU/EEA in connection with the administration of a Plan does not require consent from the employees or approval from the authorities. Nevertheless, it is generally recommended that the employees' explicit consent to the processing of non-sensitive personal data is obtained prior to such processing. If the processing includes a transfer of personal data (whether sensitive or not) to a country outside the EU/EEA, the employees' explicit consent is required unless prior approval of the transfer has been obtained from the Danish Data Protection Agency.

STOCK OPTIONS PLANS: TAX

Employee Tax Treatment

The employee is subject to tax (of up to 56% including social contributions) on the spread either on grant or exercise (depending on whether any circumstances exist that postpone taxation and whether the Plan is liable to a Tax-Favored Program). The employee is also taxed on any gain on the subsequent sale of shares at a rate of up to 42%.

Social Insurance Contributions

The employee is subject to social insurance contributions on the spread.

Tax Favored Program

A tax-favored program is available if the Plan contains a favourable discount element for the employee. In such cases, the tax charge can be deferred until exercise of the options.

Plans entered into on or after 1 July 2016 may qualify for favourable tax treatment if certain conditions are met. Under the favourable tax treatment scheme, which was introduced under section 7P of the Danish Tax Assessment Act, the employee can defer taxation until sale of the shares and will be taxed on the profit as a capital gain (at rates of up to 42%) instead of as personal income (at rates of up to 56%).

Withholding and Reporting

Exercise of the options triggers reporting requirements for the employer. Withholding is not required.

Employer Tax Treatment

A deduction may be allowed.

Tax Rates

Income tax is charged at rates of up to 56%.

Social taxes are levied on the employee on the amount recognized as income under the Plan.

Any gain made on the sale of shares is taxed at rates of up to 42%.