EU Expands Prospectus Filing Exemption for Employee Share Schemes

Companies headquartered outside the European Economic Area (EEA) that offer shares (or securities) to EEA employees will no longer need to file a full prospectus with local regulators even if the shares are not listed on an EEA-regulated exchange, under a European Union (EU) regulation that takes effect on 21 Jul 2019. 

Currently, the employee share scheme exemption is only available to companies with a registered office in the EEA or with securities listed on an EEA-regulated market. The extended exemption was among rules on prospectuses approved by the EU Council of Ministers in 2017. The change could encourage more multinational companies to offer share-based plans to employees in the EEA.

Employers established outside the EEA that want to offer employee share schemes will no longer be required to have an equivalence decision from the relevant non-EEA regulated market, provided they issue an employee information document detailing the number and nature of the securities and the reasons for the offer or allocation. This document will not require regulatory approval and will be shorter and less costly to produce than a prospectus.

The change was one of the initiatives in the European Commission's program to establish a capital markets union. 

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Amanda Flint
by Amanda Flint

Senior Executive Compensation Consultant

Stephanie Rosseau
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Principal, Mercer’s Law & Policy Group

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