Much has been written about the benefits of offering employee share purchase plans (ESPPs). These plans can improve employee retention, engagement and productivity as people feel they have a vested interest in the success of the company through ownership. As ESPPs continue to increase in popularity, more organizations are recognizing the need to offer such plans to remain competitive and recruit top talent.
While companies may be offering plans in Canada and the United States, legislation has made it difficult for North American organizations operating globally to offer stock plans in Europe. The good news is there are changes coming effective July 21, 2019 that will make this easier.
Previous legislation
If we take a step back, the legislation governing stock purchase plans was the European Union Prospectus Directive (EUPD). This stipulated that non-EU companies (those with headquarters or securities listed outside the EU) wanting to offer stock plans in European jurisdictions had to issue an EU prospectus if they did not meet minimum exemption thresholds. Preparing this type of documentation is expensive and time-consuming – it covers detailed information about the company and investments, and can run a hundred pages or more.1 As a result, many companies, especially smaller ones, chose not to do it.2
There were also inconsistencies in the way EU member countries implemented the directive. To make it easier to implement and improve consistency across EU countries, the EU Commission developed new legislation.3
EUPR
The European Union Prospectus Regulation (EUPR) was introduced on July 20, 2017 and will come into full force on July 21, 2019. Under this new legislation, non-EU companies will no longer be required to prepare and file an EU prospectus when offering shares to employees in the EU. This will make it easier for companies outside EU member countries to extend their employee share plans to their European locations.4
Preparing for July 21, 2019
In a webinar hosted by Computershare, Carla Walsham and Sally Blanchflower, both managing associates of Tapestry Compliance LLC, outlined steps companies can take.
- If you are a non-EU issuing company relying on the minimum exemption to not produce a prospectus, now is a good time to review your situation based on the new rules.5
- If your company is not currently offering stock plans in Europe, you may want to expand your plan. Consider which countries you will include and how many employees are in each.6
- If your company is currently offering stock plans in Europe, you may want to review the plans to see if you can increase your financial limits, expand into additional countries, or offer new types of plans.7
The clear trend is that EU countries are moving towards a more relaxed EUPR in July this year, and no one would need to produce a prospectus anymore.
Computershare has experience establishing and administering global and country-specific plans, as well as promoting participant communications. Through its global network of 20 locations and 1,000 equity plan specialists, Computershare supports all types of employee plans for 1,500 clients with 3.7 million participants in 190 countries. Our technology, services and people come together to offer an integrated solution for the lifespan of your equity plans.
Sources:
1 European Commission: What is a prospectus?
2, 5, 6, 7 Offering stock plans in Europe: A new opportunity
3, 4 April 2018: Tapestry Alert: EU Prospectus Regulation – the exemptions will change soon!
The material contained herein is provided for general informational purposes only and does not constitute legal or other professional advice or opinion. Computershare does not warrant or guarantee the accuracy or completeness of the material contained herein and such material should not be relied upon. "Computershare" refers to Computershare Canada Inc. and its affiliates.
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