Year-End Reporting Requirements for Employee Stock Plans
France, Italy, Malaysia, Philippines, Saudi Arabia, Thailand and Vietnam
We
would like to remind you of some of the year-end reporting requirements
for employee stock plans offered to employees in France, Italy,
Malaysia, Philippines, Saudi Arabia, Thailand and Vietnam. It is easy
to forget about these requirements, as we are all busy at the end of
the year. That is why we are sending you this reminder alert. If you
need more information or assistance with these filings, please let us
know. Please note that this alert does not address routine year-end tax
reporting obligations.
Please
note that if you listened to our webinar last week, some of the
information in this alert may be slightly different as we have received
clarification on a few of these reporting obligations.
FRANCE - TAX REPORTING FOR QUALIFIED AWARDS
Companies
that grant tax-qualified stock options and/or restricted stock units
("RSUs") to employees in France have reporting obligations in February
in connection with tax-qualified awards.
French-Qualified Options
No later than February 15
of the year following the year of exercise of tax-qualified stock
options, the issuer company's French affiliate must send to each
employee an individual statement providing the following information:
- its
corporate purpose, the place of location of its principal
establishment, and, if different, the place of location of its
registered office;
- the date on which the option was granted and the date of exercise of the option;
- the number of shares acquired and the exercise price; and
- the
excess amount of the discount at the time of grant, if the discount
granted to the employee exceeds 5% of the average trading price for the
20 trading days preceding the date of grant.
In
addition, if the four-year holding period is not complied with, the
local subsidiary must send an individual statement to the employee also
by February 15 with all of the information above plus the date of sale, number of shares sold and the fair market value of shares at exercise.
At
the same time the individual statement is sent, the French affiliate
must send a duplicate of the individual statement to the tax office
("Direction des Services Fiscaux") where it files its tax return.
French-Qualified RSUs
The
issuer company's French affiliate must provide the social security
authorities with the following information on the employer's annual
declaration of salaries filed with the tax and labor authorities before February 1 of the year following the year in which the RSUs vest:
- its
corporate purpose, the place of location of its principal
establishment, and, if different, the place of location of its
registered office;
- the names of the employees and corporate executives who have vested in French-qualified RSUs in the previous calendar year;
- the number of vested shares; and
- the value of the vested shares.
Currently,
there is no required reporting to the tax office (as is required for
French-qualified options), but such reporting requirements may be
enacted in the future.
French-Qualified Options and RSUs: Annual Report to Shareholders
At the time of the French
affiliate's annual shareholders' meeting, a special report should be
distributed to shareholders listing the grant and exercise of
French-qualified options and the issuance of shares pursuant to
French-qualified RSUs to the 10 employees who have received the most
options/shares pursuant to French-qualified options and RSUs and to
corporate executives of the granting company, its affiliates and the
affiliated companies of the consolidated group. Given that the
parent company is likely the French affiliate's sole shareholder, this
report should still be issued but may be kept internally on file by the
French affiliate and/or parent company.
ITALY
SECURITIES REPORT
Although
the new Issuer Regulation implementing the EU Prospectus Directive
No. 2003/71/EC ("EU Prospectus Directive") took effect on January 1,
2006, it has not eliminated the periodic reporting requirements that
were in effect in Italy prior to the implementation of the EU
Prospectus Directive.
Thus,
companies offering stock options or purchase rights under an ESPP in
Italy to 100 (the threshold prior to the implementation of the EU
Prospectus Directive was 200) or more employees in Italy must file a
year-end report for 2009. If options are subject to a cashless sell-all
restriction, however, they will not trigger this reporting requirement.
This year-end report notifies the CONSOB (i.e., the
Italian securities regulator) of the number of shares purchased under
the employee stock plan(s) and the value of the shares purchased during
the calendar year. For 2009, assuming a company offers purchase rights
or options without a cashless exercise restriction, it must file an
annual report with the CONSOB detailing any options exercised and
shares purchased under an ESPP as soon as possible after the end of the 2009 calendar year, but in no event later than January 31, 2010.
Because
a prospectus generally is not required in Italy for RSUs and restricted
stock grants, the reporting requirements do not apply to these types of
awards. Similarly, if an offer of equity awards is exempt from the EU
Prospectus Directive (e.g., the issuer satisfies the employee
share scheme exemption because it is listed on an EU-regulated
exchange), the reporting requirement should not apply.
EXCHANGE CONTROL REPORT
Non-Italian
issuers placing shares in Italy having an aggregate value exceeding
€500,000 in any rolling 12-month period must make a disclosure to the
Bank of Italy. The aggregate value is calculated in reference to the amount employees pay for the shares. RSUs granted free of charge and cashless options do not need to be included in the calculation. However, shares purchased pursuant to an ESPP (and options if not limited to cashless) must be included. The report is due no later than the tenth day of the month following the month in which the issuer exceeds the threshold.
NEW EMPLOYEE TAX REPORTING OBLIGATION
Individuals
in Italy are required to report assets held abroad on their annual tax
returns if the value of such assets exceeds €10,000 at the end of the
calendar year. In two recent circular letters clarifying
the tax amnesty aimed at disclosing assets illegally held abroad, the
Italian tax authorities have taken the position that vested stock
options over shares of stock in a foreign company are considered
"assets held abroad." Therefore, beginning in 2010 (for calendar year
2009), employees must report vested stock options in their annual tax
returns (Form Unico, Schedule RW) if the threshold is exceeded. Although
employers do not have any similar reporting obligations for vested
options, companies should notify employees of this new reporting
obligation.
MALAYSIA - TAX REPORT
Companies
that grant equity awards to employees in Malaysia must report any
option exercises, vesting of RSUs and/or purchases under an employee
stock purchase plan ("ESPP") that took place during the previous
calendar year (i.e., calendar year 2009) on an annual basis. The
report must be made to the Inland Revenue Board on Appendix C of the
Form BT/ESOS/2005 (i.e., the same form used to report the grant
of equity awards). Although an exact filing deadline has not been
established, the Inland Revenue Board has informally indicated that the
report should be filed by January 31st each year. It
may, however, be possible to obtain an extension of the filing
deadline to March 31st. If there have been no option exercises, RSUs
vested or purchases under an ESPP during the previous calendar year, a
report is not required.
Please
note that if you have not filed a Form BT/ESOS/2005 with respect to the
grant of equity incentives, you should contact your normal GES attorney
regarding the advisability of filing the Appendix C. Also, please note
that the filing of Form BT/ESOS/2005 is now legally required, as
opposed to just being recommended, as it was previously.
PHILIPPINES – SECURITIES REPORT
Companies that offer securities in the Philippines (which include stock options, RSUs, ESPPs) generally must obtain an exemption from the Philippines Securities Exchange Commission ("Philippines SEC"). If
the exemption obtained is given pursuant to Section 10.2 of the
Securities Regulation Code, then approval is likely conditioned upon
filing an annual report. The report is due 10 days after the end of the calendar year, which means that the annual report for 2009 is due no later than January 10, 2010. The report should include the names of employees who received grants and the number of shares issued to each employee.
As
we have seen more enforcement from the Philippines SEC recently
regarding employee stock plans, we recommend complying with this
requirement.
SAUDI ARABIA – SECURITIES REPORT
Under
the Offer of Securities Regulations, an offering of securities to
employees (which include stock options, RSUs, ESPPs) will fall under a
limited offering exemption if certain conditions are met. Companies
relying on this exemption must use an authorized dealer to facilitate
the offering and obtain approval from the Capital Market Authority
("CMA"). The approval will cover a one-year offering period. If
approval is obtained, the company must file a report with the CMA
within 10 days of the end of the one-year offering period which
discloses the names of the employees who acquired shares and the total
proceeds of the offer. Also, please note that approval is only valid for one year, so must be renewed each year.
THAILAND - SECURITIES REPORT
Pursuant
to the Notification of the Thai Capital Market Supervisory Board,
non-Thai issuers offering stock options and ESPP rights to more than 35
employees in Thailand with a total value of more than Baht 20 million
are not required to file a prospectus and registration statement with
the Thai Securities and Exchange Commission ("Thai SEC"). However, such companies
must file an annual securities sales report with the Thai SEC, and the
filing must be made on a prescribed form and translated into Thai. In
addition, companies that are able to rely on the "private placement"
exemption (because they are under the thresholds set forth above) are
also required to file the same report.
The report format has changed for reports filed going forward. The
new form is a standardized form that must be translated into Thai with
the Thai entity's corporate seal affixed to the filing (if applicable). Also, an authorized signatory must sign each page of the report.
The
securities sale report must be filed within 15 days of the "closing
date of sale." For stock options, the closing date of sale is the last
day of each calendar year (i.e., December 31) in which options vest or
are exercised. Thus, for any options vested or exercised in 2009, the
closing date of sale will be December 31, 2009, and the report must be
filed no later than January 15, 2010.
In
the case of an ESPP, the closing date of sale is the last day of each
purchase period. Therefore, a report has to be filed within 15 days of
the end of each purchase period. As the form of the
report has changed and new additional formalities are required for the
report, we recommend starting the report as soon as possible if your
report is due before January 15, 2010. If, for example, the last day of a purchase period is December 31, 2009, the report has to be filed no later than January 15, 2010.
Thai
securities law restrictions do not typically apply to RSUs and
restricted stock grants; therefore, no securities reports would usually
have to be filed for these types of awards.
VIETNAM - EXCHANGE CONTROL-POST-IMPLEMENTATION REPORT
Companies
that have obtained exchange control approval from the State Bank of
Vietnam ("SBV") to offer stock options and/or RSUs to employees in
Vietnam are required to file a post-implementation report for each
calendar year. Currently, the SBV is willing to grant approval only for
stock options with a cashless sell-all exercise feature and for RSUs
(and possibly restricted stock), but not for purchase rights under an
ESPP.
The
post-implementation report has to disclose any option exercises and
vesting events of RSUs, and the amount of cash paid to employees in
Vietnam during the prior calendar year. Under the SBV's current policy,
annual post-implementation reports should be made prior to the last day
of the first quarter of the subsequent year. Therefore, any option
exercises and vesting events of RSUs which occurred in 2009 must be
reported to the SBV by March 31, 2010. Please note that this deadline previously was the last day of January of the subsequent year (i.e. January 31).
Please
contact the GES attorney who normally assists you with compliance work
or one of the GES partners with any questions or if you would like our
assistance with the compliance requirements set forth above.
