Directive threatens pan-European share plans

Share scheme security laws introduced last year have led many employers to consider removing their employee share plans. The Prospectus Directive was intended to free up capital to move into the European Union and between member states, to harmonise rules across the EU and provide investors with a minimum level of protection. Most member states, however, have implemented local interpretations of the rules, which has made it difficult for employers to offer pan-European share plans.

Janet Cooper, head of global employee incentives at Linklaters, said that many organisations may decide to remove their share schemes altogether as complying with the different rules could be deemed too onerous. "For the end user, the risk may be that they will lose the real value of having a share scheme. It is wealth that they could never get through their salary and it really is the last thing we want to see happen." She added that some organisations may still be unaware of what is required of them under the new laws. "Some organisations literally have no idea that these rules exist, as they have operated under UK laws for so long, but the laws have changed and the exemptions that previously existed no longer do. "

It is vital that companies operating in the EU take advice on this because the consequences of running a sharesave scheme outside the new laws are fines or even imprisonment." Before the Prospectus Directive was introduced many employers issued brochures and information linking to their financial statements as good practice, but under the new laws they are legally required to do so.