French Commercial code
In forceI.-The Extraordinary General Meeting, on the report of the Board of Directors or the Management Board, as the case may be, and on the special report of the company's Statutory Auditors or, if none has been appointed, of a Statutory Auditor appointed for this purpose in accordance with the procedures set out in Articles L. 225-228 or L. 22-10-66, may authorise the Board of Directors or the Management Board to make a free allotment of existing shares or shares to be issued to employees of the company or to certain categories of employees.
The Extraordinary General Meeting sets the maximum percentage of the share capital that may be allocated under the conditions defined in the first paragraph. The total number of free shares allocated may not exceed 10% of the share capital on the date of the decision to allocate them by the Board of Directors or the Management Board. In companies which, at the close of a financial year, do not exceed the thresholds defining small and medium-sized enterprises provided for in Article 2 of the Annex to Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises, the Articles of Association may provide, in the case of free allocations of shares to certain categories of the company's employees only, a higher percentage, which may not, however, exceed 15% of the share capital on the date of the decision by the Board of Directors or the Management Board to allocate the shares. Shares which have not been definitively allocated at the end of the acquisition period provided for in the sixth paragraph of this I, as well as shares which are no longer subject to the retention obligation provided for in the seventh paragraph, are not taken into account in these percentages.
The percentages mentioned in the second paragraph are increased to 30% when the allocation of free shares benefits all of the company's salaried employees. Above the percentage of 10% or 15%, the difference between the number of shares distributed to each employee may not exceed a ratio of one to five.
The Extraordinary General Meeting also sets the period during which this authorisation may be used by the Board of Directors or the Management Board. This period may not exceed thirty-eight months.
Where the allotment relates to shares to be issued, the authorisation given by the Extraordinary General Meeting automatically entails the waiver by the shareholders of their pre-emptive subscription rights in favour of the beneficiaries of the shares allotted free of charge. The corresponding capital increase is definitively completed by the sole fact of the definitive allocation of the shares to the beneficiaries.
The allocation of shares to their beneficiaries is definitive at the end of a vesting period, the minimum duration of which, which may not be less than one year, is determined by the Extraordinary General Meeting. However, the General Meeting may provide for the definitive allocation of shares before the end of the vesting period in the event of the beneficiary's disability corresponding to classification in the second or third of the categories provided for in Article L. 341-4 of the Social Security Code.
The Extraordinary General Meeting may also set the minimum period during which beneficiaries must hold their shares. This period runs from the definitive allocation of the shares. However, the shares are freely transferable in the event of disability of the beneficiaries corresponding to their classification in the aforementioned categories of the Social Security Code.
The combined vesting and holding periods may not be less than two years.
The Board of Directors or, where applicable, the Management Board shall determine the identity of the beneficiaries of the share allocations referred to in the first paragraph. It shall set the conditions and, where applicable, the criteria for the allocation of the shares.
II.-The chairman of the board of directors, the chief executive officer, the deputy chief executive officers, the members of the management board or the manager of a société par actions may be allocated shares in the company under the same conditions as salaried employees and in compliance with the conditions mentioned in article L. 22-10-60.
They may also be allocated shares in an affiliated company under the conditions set out in Article L. 225-197-2, provided that the shares of the latter are admitted to trading on a regulated market and in compliance with the conditions set out in Article L. 22-10-60.
No shares may be allocated to employees or corporate officers each holding more than 10% of the share capital. Nor may a free allotment of shares result in employees and corporate officers each holding more than 10% of the share capital.
As an exception to the foregoing provisions, for shares thus allocated to the Chairman of the Board of Directors, the Chief Executive Officer, the Deputy Chief Executive Officers, the members of the Management Board or the Manager of a société par actions, the Board of Directors or, as the case may be, the Supervisory Board either decides that these shares may not be sold by the interested parties before they cease to hold office, or sets the quantity of these shares that they are required to keep in registered form until they cease to hold office. The corresponding information is published in the report referred to in the last paragraph of article L. 225-37, in the last paragraph of article L. 225-68 or to Article L. 226-10-1.
III.-In the event of a cashless exchange of shares resulting from a merger or demerger carried out in accordance with the regulations in force during the vesting or holding periods provided for in I, the provisions of this article and, in particular, the aforementioned periods, for their remaining term on the date of the exchange, remain applicable to the allotment rights and shares received in exchange. The same applies to an exchange resulting from a public offer, split or reverse split carried out in accordance with the regulations in force which takes place during the holding period.
In the event of a contribution to a company or mutual fund whose assets are exclusively composed of equity securities or securities giving access to equity issued by the company or by a company affiliated to it within the meaning of Article L. 225-197-2, the retention obligation provided for in I remains applicable, for the period remaining on the date of the contribution, to the shares or units received in consideration for the contribution.
