Measures to promote employee share ownership

According to a study conducted in February 2023 by DARES(1) (Directorate for Research, Studies, and statistics), only 1.3% of companies with at least 10 employees implemented employee share ownership in 2020. And only 4.3% of all employees had access to it, i.e., about 600,000 employees.

Also, in recent years, the public authorities have adopted various measures to encourage employee share ownership. With this in mind, the recent law to develop value-sharing relaxes the rules on free share allocations, which in 2020 concerned only 460,000 employees.

The overall ceiling on the allocation of free shares

Companies whose shares are listed can allocate shares free of charge to their employees and corporate officers. The total number of these free shares may no longer exceed 15% of the share capital (compared to 10% previously) by the time the allocation is decided by the Board of Directors or the Executive Board.

Note: In unlisted SMEs, this ceiling is increased from 15% to 20% of the share capital. This applies to companies with fewer than 250 employees whose annual turnover does not exceed €50 million or whose balance sheet total does not exceed €43 million.

The overall ceiling for the allocation of free shares is higher when the shares are allocated free of charge to all employees of the company (“democratic allocation”). This ceiling is now set at 40% of the share capital (previously 30%).

New: The overall ceiling is set at 30% when the allocation of free shares benefits at least half of the company’s employees representing at least 25% of gross salaries.

The individual ceiling on the allocation of free shares

A company may not grant free shares to an employee or a corporate officer who already holds more than 10% of the share capital on the date of the decision to allocate the shares by the Board of Directors or the Management Board. The same applies when the allocation leads to increasing the individual shareholding to more than 10% of the share capital. For the government, this ceiling “disadvantages employees and corporate officers who have chosen to be long-term investors in their company.”

Also, this individual ceiling becomes “rechargeable.” Indeed, only shares held directly for less than 7 years by the employee, or the corporate officer are now taken into account in his/her assessment.

(1) Direction de l’Animation de la Recherche, des Études et des Statistiques (DARES)