Rewarding your first employees with BSPCE

The situation

Our support

1. 01

   Checking the eligibility of the company and the beneficiaries

   We first checked that the company met the conditions allowing it to grant BSPCE (founders’ share warrants) and that the first employees concerned could benefit from them.

   BSPCE allow their holders to subscribe later for shares at a price fixed on the date they are granted. They are intended, in particular, for the employees and certain directors of joint-stock companies meeting the conditions set out in article 163 bis G of the CGI.

   Point of attention. BSPCE allow the first team members to share in the company’s future value creation, without immediately becoming shareholders.
2. 02

   Designing a plan suited to the first employees

   We assisted the founders in defining the plan, in particular on:

   • the number of BSPCE granted to each beneficiary;
   • the price at which the shares could be subscribed;
   • the vesting schedule;
   • the continued-employment conditions;
   • the consequences of an employee’s departure;
   • the period during which the warrants could be exercised;
   • the rights attached to the subscribed shares.

   We then coordinated the preparation of the corporate resolutions, the plan rules and the individual grant documents.

   As the subscription price of the shares is fixed in advance, determining and supporting it from the outset is an important element in securing the arrangement.

   Point of attention. A plan intended for the first employees must remain simple enough to be understood, while anticipating future fundraising rounds, departures and liquidity events.
3. 03

   Assisting with the exercise of the BSPCE and the issue of shares

   When some employees wished to exercise their BSPCE, we assisted the company through the various stages of their effective entry into the capital.

   Our work covered, in particular:

   • checking the number of exercisable BSPCE and preparing the subscription forms;
   • determining the real value of the shares on the exercise date, using the valuation method provided for in the documentation;
   • coordinating with the payroll provider to report, in the DSN (the French payroll declaration), the unit price fixed on grant, the real value of the shares on the exercise date and the existence of any exercise gain;
   • preparing the individual statement given to each employee concerned;
   • the President’s acknowledgement of the capital increase and the update of the articles of association;
   • the publication of the legal notice and the filing of the formality on the INPI one-stop shop;
   • updating the share transfer register and the individual shareholder accounts.

   Simplified example: where an employee exercises 10,000 BSPCE at a price of €1 per share, they pay €10,000 to the company. If the share is worth €5 on the exercise date, the €40,000 difference must be identified, documented and passed on to the payroll provider for the purposes of the DSN.