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  • Restricted stock and RSUs

    Securities

    As long as:

    • The offer is not advertised or publicized
    • The stock is not traded in Argentina
    • The offer is limited to employees
    • The offer is intended to compensate employees and not to raise capital, no securities law requirements apply

    Foreign exchange

    There are no foreign exchange restrictions applicable to restricted stock or RSUs.

    Tax

    Employee

    The employee is taxed on restricted stock upon grant and on RSUs upon vesting (may include personal assets tax).

    The employee is subject to a flat tax of 15% on any net gain resulting from the sale of the shares by Argentine Tax residents, or, alternatively, 13.5% on the gross sale price.

    Employer

    Witholding & reporting

    Tax withholding and reporting are required upon grant for restricted stock and upon vesting of RSUs.

    Deduction

    Argentine subsidiaries are allowed to deduct the amount reimbursed to the parent company for the cost of the benefits if a Reimbursement or Recharge Agreement is in place.

    Social insurance

    Social insurance contributions are generally payable by the employee and employer.

    Data protection

    Obtaining an employee's written consent for the processing and transfer of his or her personal data is the most common approach to comply with certain aspects of data protection requirements. The employer also is required to register any database that includes an employee's personal data with the Argentine privacy authorities.

    Labor

    Benefits received from restricted stock or RSUs may be considered part of the employment relationship and included in a severance payment if the awards are repeatedly granted to an employee. Upon involuntary termination of employment, an employee may be entitled to continued vesting and other rights with respect to his or her award. In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that vesting of restricted stock or RSUs ceases upon termination of employment, and that the plan and any awards under it are discretionary.

    Communications

    Although plan materials are not required to be translated into Spanish, it is recommended, to ensure that employees understand the terms of their awards. Award materials should be addressed to individual employees in order to avoid securities law requirements.

  • Stock options

    Securities

    As long as:

    • The offer is not advertised or publicized
    • The stock is not traded in Argentina
    • The offer is limited to employees
    • The offer is intended to compensate employees and not to raise capital, no securities law requirements apply

    Foreign exchange

    There are no foreign exchange restrictions applicable to option plans.

    Tax

    Employee

    The employee is taxed on the spread upon exercise (including personal assets tax, if applicable). 

    The employee is subject to a flat tax of 15% on any net gain resulting from the sale of the shares by Argentine Tax residents, or alternatively 13.5% on the gross sale price.

    Employer

    Withholding & reporting

    Tax withholding and reporting are required upon exercise.

    Deduction

    Argentine subsidiaries are allowed to deduct the amount reimbursed to the parent company for the cost of the benefits if a Reimbursement or Recharge Agreement is in place.

    Social insurance

    Social insurance contributions are generally payable by the employee and employer when an option is exercised.

    Data protection

    Obtaining an employee's written consent for the processing and transfer of his or her personal data is the most common approach to comply with certain aspects of data protection requirements. The employer is also required to register any database that includes an employee's personal data with the Argentine privacy authorities.

    Labor

    Benefits received from an option may be considered part of the employment relationship and included in a severance payment if options are repeatedly granted to an employee. Upon involuntary termination of employment, an employee may be entitled to continued vesting and other rights with respect to his or her option. In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary.

    Communications

    Although plan materials are not required to be translated into Spanish, it is recommended, to ensure that employees understand the terms of their awards. Award materials should be addressed to individual employees in order to avoid securities law requirements.

  • Stock purchase rights

    Securities

    As long as:

    • The offer is not advertised or publicized
    • The stock is not traded in Argentina
    • The offer is limited to employees
    • The offer is intended to compensate employees and not to raise capital, no securities law requirements apply

    Foreign exchange

    There are no foreign exchange restrictions applicable to stock purchase rights.

    Tax

    Employee

    The employee is taxed on the spread upon purchase.

    The employee is subject to a flat tax of 15% on any net gain resulting from the sale of the shares by Argentine Tax residents, or, alternatively, 13.5% on the gross sale price.

    Employer

    Withholding & reporting

    Tax withholding and reporting are required upon purchase.

    Deduction

    Argentine subsidiaries are allowed to deduct the amount reimbursed to the parent company for the cost of the benefits if a Reimbursement or Recharge Agreement is in place.

    Social insurance

    Social insurance contributions are generally payable by the employee and employer when the shares are purchased.

    Data protection

    Obtaining an employee's written consent for the processing and transfer of his or her personal data is the most common approach to comply with certain aspects of data protection requirements. The employer also is required to register any database that includes an employee's personal data with the Argentine privacy authorities.

    Benefits received from a purchase right may be considered part of the employment relationship and included in a severance payment if purchase rights are repeatedly granted to an employee. Upon involuntary termination of employment, an employee may be entitled to continued participation in the plan. In order to reduce the risk of employee claims, the offer document signed by an employee should provide, among other things, that participation in the plan ceases upon termination of employment, and that the plan and any awards under it are discretionary.

    In light of restrictions on payroll deductions, alternative arrangements may be necessary for contributions to the plan.

    Labor

    Not applicable.

    Communications

    Although plan materials are not required to be translated into Spanish, it is recommended, to ensure that employees understand the terms of their awards. Award materials should be addressed to individual employees in order to avoid securities law requirements.

  • Key contacts
    Dean Fealk is the global contact for Global Equity.
    Dean Fealk is the global contact for Global Equity.
    dean.fealk@dlapiper.com View bio

Stock purchase rights

Securities

Argentina

As long as:

  • The offer is not advertised or publicized
  • The stock is not traded in Argentina
  • The offer is limited to employees
  • The offer is intended to compensate employees and not to raise capital, no securities law requirements apply

Australia

The grant of purchase rights may trigger registration and disclosure requirements unless an exemption applies or specific relief is obtained. In addition to statutory exemptions from disclosure requirements, specific class order relief (Class Order 14/1000 for listed companies and Class Order 14/1001 for unlisted companies) may be able to be relied upon. Where class order relief is relied upon, a filing must be made with the corporate regulator and payroll deductions collected from the employees must be held in a segregated bank account with an approved bank.

Austria

The EU Prospectus Directive has been implemented into Austrian law. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the 150-person exemption or other exemptions).

Belgium

The EU Prospectus Directive has been implemented into Belgian law. Even if stock purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the 150-person exemption).

Brazil

The grant of purchase rights generally is not subject to securities law requirements.

Canada

In most instances, there should be no federal securities restrictions applicable to the offer of purchase rights due to applicable exemptions. However, the issuer must ensure the requirements of applicable securities laws and exchange policies are satisfied, and that exemptions from the prospectus requirements are available.

Chile

As long as the offer of purchase rights constitutes a private offer, generally no affirmative securities law requirements are implicated.

China

Approval from the China Securities Regulatory Commission (CSRC) for the offer of stock awards by China listed companies is required. However, the Chinese securities laws are silent as to whetherthe offer of stock awards by overseas listed companies is subject to approval by CSRC, and there are no procedures for foreign issuers to obtain such approval. Although the CSRC has informally stated that the offer of purchase rights is not subject to approval requirements, given the CSRC's guidance is informal and non-binding, a company offering purchase rights should nonetheless consider measures to reduce the risk in the event that such an offer is deemed subject to CSRC approval.

Czech Republic

The EU Prospectus Directive has been implemented into Czech law. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the 150-person exemption). Additional notification requirements may be imposed.

Denmark

The EU Prospectus Directive has been implemented into Danish law. Even if employee stock purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements if one or more prospectus exemptions apply (eg, the 150-person exemption).

Ecuador

Purchase rights generally are not subject to any securities regulations.

Egypt

In order to avoid securities law requirements, the underlying shares must not be listed on the Cairo or Alexandria Stock Exchanges.

Finland

The EU Prospectus Directive has been implemented into Finnish law. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the 150-person exemption).

France

The EU Prospectus Directive has been implemented into French law. Generally, purchase rights are considered transferable securities. Accordingly, unless an offer of purchase rights is otherwise exempt (eg, the 150-person exemption), a prospectus is required.

We understand that Stock Purchase Rights must be assimilated to a non-qualified Stock option plan in France.

Germany

The EU Prospectus Directive has been implemented into German law. Purchase rights can qualify as transferable securities or an offer to purchase transferable securities (eg, shares). Accordingly, unless an offer of a purchase right is otherwise exempt (eg, the 150-person exemption), a prospectus is required.

Greece

The EU Prospectus Directive has been implemented into Greek law. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the exemption concerning shares offered, allotted or to be allotted by an employer to its employees, or the 150-person exemption). A notification to the Hellenic Capital Markets Commission may nevertheless be required.

Hong Kong

Schemes related to securities listed on the Main Board and the Growth Enterprise Market (GEM) of The Stock Exchange of Hong Kong Limited shall comply with Chapter 17 of the Main Board Listing Rules and Chapter 23 of the GEM Listing Rules respectively.

Hungary

The EU Prospectus Directive has been implemented into Hungarian law. As a general rule, non-transferable purchase rights are not considered a security subject to the Prospectus Directive. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the 150-person exemption). The Hungarian securities authority must be informed of each securities offer by the employer within 15 days of the grant date.

India

There generally are no affirmative securities law requirements associated with the grant of stock purchase rights.

Indonesia

A registration statement is required if the value of shares underlying the purchase rights granted within a 12-month period is Rp 1 billion or more and either:

  • Shares are sold to over 50 Indonesians worldwide
  • The offer is made to more than 100 Indonesians worldwide

Ireland

The EU Prospectus Directive has been implemented into Irish law. As a general rule, nontransferable securities are not considered a security subject to the Prospectus Directive. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg the 150-person exemption).

Under the provisions of the Irish Companies Law, directors may be subject to additional reporting requirements.

Israel

Purchase rights generally are subject to securities restrictions. However, in most cases, exemptions are available.

Italy

The EU Prospectus Directive is effective in Italy. Generally, non-transferable purchase rights are considered a security subject to the Prospectus Directive. Accordingly, unless an offer of purchase rights is otherwise exempt (eg, the 150-person exemption), a prospectus is required. In addition, an Italian financial intermediary must be provided by the company to consult with participants on their rights under the plan.

Japan

Where the nature of the purchase rights is similar to a "stock option," regardless of the total number of employees and total value of the shares or units, offers to employees or directors who belong toissuing companies, wholly and directly owned first-tier subsidiaries or wholly and directly or indirectly owned second-tier subsidiaries are not subject to securities filing requirements.

In all other cases, securities filing requirements may be triggered depending on the number of offerees and the aggregate value of the shares. Offers to fewer than 50 employees generally are not subject to filing requirements. For offers to 50 or more employees which consist of a share value in excess of ¥100 million, a detailed notification is required before offering to employees and it will be publicly disclosed. An annual report may be also required after the offering.

For offers to 50 or more employees which consist of a share value of more than ¥10 million but less than ¥100 million, a summary notification is required.

Mexico

The offer of purchase rights is generally exempt from affirmative securities law requirements.

Netherlands

The EU Prospectus Directive has been implemented into Dutch law. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the 150-person exemption).

New Zealand

Offers of stock purchase rights will require compliance with securities law. Reduced compliance may be available under certain exemption provisions. If the employee share exemption can be utilised, compliance obligations are fairly light (including, providing the offeree with the prescribed warning statement and the financial statements of the offeror). Alternative exemptions may be available under certain circumstances.

Norway

As part of the European Economic Area, the EU Prospectus Directive has been implemented into Norwegian law. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the 150-person exemption).

Philippines

Securities restrictions typically apply. However, exemptions for employee stock purchase rights are available.

If a request for exemption is submitted to the Philippines Securities Authority, and an exemption fee is paid, the offer of purchase rights will be exempt from securities registration requirements.

A grant-specific notice filed for offerings to fewer than 20 employees may no longer be available.

Poland

The EU Prospectus Directive has been implemented into Polish law. Generally, purchase rights are considered transferable securities. Accordingly, unless an offer of purchase rights is otherwise exempt (eg, the 150-person exception), a prospectus is required.

Portugal

The EU Prospectus Directive has been implemented into Portuguese law. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the 150-person exemption).

Russia

Generally, employee stock purchase rights in public companies are subject to securities law restrictions and currently there is no special exemption for the offering to the employees. Special rules and additional restrictions exist for offering of securities and other financial instruments by non-Russian issuers.

Stock awards in Russian private companies is not common and may be subject to different securities law restrictions depending on the nature of such private companies.

Saudi Arabia

Any securities offer, including the grant of purchase rights, may be subject to securities law requirements. In many cases, exemptions to such requirements are available, if filings are made with local securities authorities.

Singapore

Offers of purchase rights are generally exempt from securities registration requirements.

Slovak Republic

The EU Prospectus Directive has been implemented into Slovak law. As a general rule, nontransferable purchase rights are not considered securities subject to the Prospectus Directive. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the 150-person exemption).

South Africa

Public offers of securities are subject to prospectus requirements, but exemptions are available under certain circumstances.

South Korea

As long as purchase rights are only offered to employees or officers of a Korean affiliate, for purposes of "promoting their welfare" in accordance with an employee stock purchase plan, there are no specific securities restrictions.

Spain

The EU Prospectus Directive has been implemented into Spanish law. As a general rule, nontransferable purchase rights are not considered securities subject to the Prospectus Directive. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the 150-person exemption).

Sweden

The EU Prospectus Directive has been implemented into Swedish law. As a general rule, nontransferable purchase rights are not considered securities subject to the Prospectus Directive. Even if purchase rights are considered securities that require a prospectus, they may nonetheless be exempt from the prospectus requirements (eg, the 150-person exemption).

Switzerland

There are generally no specific securities requirements, so long as purchase rights are awarded only to employees and the shares issued are not listed on a Swiss exchange or issued by a Swiss company.

Taiwan

Purchase rights are not subject to specific securities restrictions.

Thailand

Non-Thai companies wishing to grant stock awards to employees or directors in Thailand must report certain details of the grant to the Thai SEC.

Turkey

There are no specific securities law requirements, as long as the offer is not a public offer and the underlying shares are not listed on the Turkish Stock Exchange.

United Kingdom

The EU Prospectus Directive has been implemented into UK law. As a general rule, nontransferable purchase rights are not considered transferable securities subject to the Prospectus Directive. However, it is uncertain whether the Prospectus Directive applies to employee stock purchase rights.

Venezuela

As long as the award options are not deemed to be a public offer, securities requirements generally do not apply. Awards addressed to individual employees should not be deemed public offers.

Vietnam

Prior to the granting of an employee stock purchase right under the stock award plan, the overseas issuer of the stock award plan (through its Vietnam entity, representative office or branch in Vietnam, collectively called the "Implementing Entity") must register such plan with the State Bank of Vietnam (the SBV). Within 15 days from the receipt of valid registration documents, the SBV will issue an approval letter or objection letter (in which the reason for such objection is exposed). In practice, it takes about 1-2 months.