LexInter | August 9, 2017 | 0 Comments


The “stock options” constitute rights which are granted free of charge to certain employees, under certain conditions to allow them to acquire shares of the company of which they are employees at a determined price. The company is generally a listed company.

The employee benefiting from the stock options has an option which can be exercised, and which it will be in his interest to exercise if the price is higher than the option price. Stock options constitute an incentive remuneration method, associating the employee with the increase in the market capitalization of the company.

There are subscription options and purchase options. In the subscription options the company carries out a capital increase, in the purchase options the company holds shares and sells the shares corresponding to the rights of the option holder. The “stock option” is a purchase option (” call “) the underlying of which is the share of the company concerned.

Stock options can be reserved for all employees or, which is most frequently the case, for some of them, in particular for management staff, but also for corporate officers of joint-stock companies. 

The system allows officers and employees of a company to purchase shares of the company at a predetermined date and price.

Being able to buy at a much lower price than the market most of the time  allows a large profit to be made through a quick resale. However, legislation and practice now tend to set more stringent conditions leading in particular to setting the exercise price of the option at a sufficiently high level.

Critics of the system denounce the absence of risk and the incentive for managers to act to increase the price of their company through short-term management, involving risks for the company, and to engage in accounting practices artificial if not to price manipulation. The system of stock options has the effect of linking the interests of managers to those of investors in their search for ” shareholder value “.

Stock options are governed in particular by the French Commercial Code ( articles L225-177 to L225-186 )

Options are generally part of stock option plans. A document called “plan regulations” drawn up between the company and the beneficiary determines the terms of the option plan, their allocation price and during which period the beneficiary can exercise his subscription right. 


The price of the exercise of the option is set, depending on the type of governance of the company, by the  Board of Directors or the  Management Board in accordance with procedures which are decided by an extraordinary general meeting . It is also this meeting which determines the period within which the options can be exercised and within which the shares which are held can be sold.

In a company whose securities are admitted to trading on a regulated market, options cannot be granted:

  1. within ten trading days preceding and following the date on which the consolidated accounts, or failing that the annual accounts, are made public;

  2. within the period between the date on which the company’s corporate bodies become aware of information which, if made public, could have a significant impact on the price of the company’s shares, and the date of ten meetings after from the stock exchange to the one where this information is made public.

These restrictions are explained by the desire to minimize the risk of insider trading . The window of a few weeks after the publication of the accounts is a period in which the market is deemed to be as knowledgeable as the leaders. The second series of windows is that which corresponds to cases where, precisely, the corporate bodies (or corporate officers) of the company benefit from inside information that puts them at risk of insider trading due to an asymmetry of information. momentarily irreducible information.


Options giving the right to subscribe to shares may be granted “  for the benefit of the members of the Company’s employees or of some of them  ”.

The following can also benefit from stock option plans ( article L225-180 of the French Commercial Code):

  • employees and managers of companies which hold more than 10% of the capital of the issuing company.
  • employees and managers of companies in which the issuing company holds more than 10% of the capital.
  • employees and managers of sister companies if they hold more than 50% of the capital.

Discount limitation

The discount is the original potential capital gain that results from the difference between the share grant price (i.e. the price at which the option gives the right to buy the share) and its real value at the same time (that is to say, for a listed share, the stock market price on the day of the grant). There are two cases:

  1. in the case of a listed company, the maximum discount in relation to the stock market price on the day of the allocation of options is 20% in the case of a subscription plan and 5% in the case of a share buyback plan.

  2. in the case of an unlisted company, the amount of the rebate is left to the discretion of the managers.

 Stock options are not transferable.

Tax treatment of stock options

The stock options are subject to triple taxation:

  • on the rebate, which is integrated into income tax.

  • on the acquisition capital gain , calculated as the difference between the value of the share on the day on which the option is exercised and the value of the share on the day on which the option was granted: the rate varies depending on whether ‘you will have sold your shares before four years, between four and six years or beyond six years. Taxation is carried out according to the regime of specific capital gains.

  • on the capital gain on the sale (difference between the sale price of the share and the purchase price of the latter), taxation is carried out according to the regime of ordinary capital gains.

For stock option plans issued from June 20, 2007, any donation transaction is equivalent to a disposal, the taxation being that indicated above.

Provisions of the CGI Taxation of stock options

Social system of stock options

Stock options are subject to a triple deduction for the benefit of social security:

  • the discount when this is greater than 5% and up to 20%, is subject to salary as regards both social security contributions and the CSG and CRDS.
  • the capital gain on acquisition, in the event of non-compliance with the four-year unavailability period, is subject to social security contributions, CSG and CRDS as salary. If the deadline is met, it is excluded from the basis for social contributions.
  • the capital gain on the sale is subject to CSG and CRDS as income from the assets.

In addition, the 2008 social security financing law introduced two new contributions on stock options, one payable by employers (10%), the other payable by beneficiaries (2.5%). . The proceeds of these two contributions are allocated to compulsory health insurance schemes.

The possibility offered to the employees of the company to acquire shares of the parent company of the group at a preferential price being necessarily linked to their belonging to the company, the court, before which the assessment of the reassessment was not in question. itself discussed, deduced from it exactly that the discounts granted constituted benefits subject to contributions ( Cass. civ. 2, January 28, 2010 )

Capital gains realized by an employee of the lifting of measures , even if they are subject to social security contributions pursuant to Article L. 242-1 of the Code of Social Security, not a compensation paid in return work entering into the basis for calculating compensation for dismissal without real and serious cause Cass. soc. March 30, 2011 )

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