Awards of qualified free shares by companies in France are now subject to two new limits. There is a welcome increase in the proportion of share capital that can be granted as free shares but the spread of awards between employees is now restricted. The new rules came into effect from 2 April 2014 and apply to awards made from that date, even under existing plans.

  • On the plus side, the proportion of share capital that can be used for free shares awards has increased to 30%. This higher limit only applies where awards are offered to all company employees. If awards are discretionary or limited to certain categories of employees, the limit remains capped to 10% of share capital.
  • However, free share plans that are open to all employees must now limit the gap between the smallest and largest awards. An allocation ratio of 5 to 1 has been specified, meaning that if the minimum award is 100 shares, the maximum award is limited to 500 shares.

The new rules do not affect qualified share options and non-qualified share plans.