Employee and management incentive plan lawyer in France

Incentive plans give employees, directors and key managers a share in the value the company creates. Share warrants, known as BSAs (bons de souscription d’actions), are among the most flexible tools. Our firm structures these mechanisms from a legal, tax and social security standpoint. We assist start-ups, SMEs, mid-sized companies and investment funds in designing and managing their plans. Every situation is different and calls for an analysis tailored to your objectives and your company form.

What is a share warrant (BSA) in France?

How a BSA works

A share warrant is a security giving access to the company’s share capital. It gives its holder the right to subscribe for shares in the company, at a price set on issue, during a set period. The holder is under no obligation to exercise this right. The holder exercises it if it is worthwhile, usually when the value of the shares exceeds the agreed subscription price. A BSA therefore works like a call option on the company’s future shares.

The BSA is governed by Articles L. 228-91 et seq. of the French Commercial Code (Code de commerce), on securities giving access to the share capital. The issue is authorised by the extraordinary general meeting of shareholders (Article L. 228-92), which may delegate its authority or its powers to the management body (Articles L. 225-129 to L. 225-129-6). This decision sets or frames the number of warrants, the exercise price, the conversion ratio and the term. It entails the shareholders’ waiver of their preferential subscription right to the shares to which the warrants give entitlement (Article L. 225-132). Reserving the warrants themselves for named beneficiaries also requires removing the preferential subscription right on the warrants (Article L. 225-138). This framework protects the rights of existing shareholders.

Where the beneficiary is neither an employee nor a director but an outside adviser, practitioners speak of a BSA Advisor (in French). The mechanism is the same; it is the valuation of the warrant and its link with the engagement that call for particular care.

Key features of a BSA

A BSA is highly flexible. It can be issued by any joint-stock company, whether a public limited company (SA) or a simplified joint-stock company (SAS). It can be granted to any category of beneficiary: employees, directors, investors or outside partners. This openness sets it apart from BSPCEs, which are reserved for a narrow range of companies and beneficiaries.

The exercise price is set freely on issue, in line with the real value of the share. A BSA can be subject to continued-service or performance conditions. It then follows a gradual acquisition schedule, often called vesting. The warrant can provide for a discount or a valuation cap when it serves a seed investment purpose. Its lifetime is set in the issue agreement. At expiry, an unexercised warrant lapses.

How the gain on a BSA is taxed

The tax treatment of a BSA depends on the context of its grant. Where the warrant is acquired as an investment, at market price, the gain on sale falls in principle under the rules on capital gains on securities. This gain can be subject to the flat tax (PFU, prélèvement forfaitaire unique), with an option for the progressive income tax scale.

An employment context calls for particular care. The gain on a BSA granted to an employee or a director can be recharacterised as salary by the French tax authorities. Recharacterisation occurs when the terms of the grant reveal consideration for work rather than a real, risk-bearing investment. The gain is then taxable as salary and may, where applicable, be subject to social security contributions. Acquiring the warrant at its real value and a genuine element of risk reduce this exposure. How the plan is structured is therefore decisive.

BSA-AIR: fast-track seed financing

The BSA-AIR, short for Accord d’Investissement Rapide (rapid investment agreement), combines a share warrant with a prior investment agreement. The investor pays in funds immediately. Exercise of the warrant will lead to the issue of shares at a price set at the next funding round, with a valuation cap and a discount. This tool speeds up seed financing by deferring the negotiation on valuation. It rests on the same legal basis as the BSA, Articles L. 228-91 et seq. of the Commercial Code. Our BSA-AIR page explains the mechanism.

BSPCE in France: eligible companies, beneficiaries and taxation of the gain

BSPCEs (bons de souscription de parts de créateur d’entreprise, French start-up share warrants) are reserved for certain joint-stock companies. Their conditions are set out in Article 163 bis G of the French Tax Code (Code général des impôts) (in French), in the version in force since 21 February 2026. The company must be liable to corporate income tax in France and registered with the Trade and Companies Register (RCS) for less than fifteen years. At least 15% of its share capital must be held directly and continuously by individuals. Holdings of certain private equity funds and companies are not counted in this calculation. A listed company is eligible only if its market capitalisation remains below €150 million.

A company formed through a merger, a restructuring or a takeover of pre-existing activities is excluded, subject to the exceptions set out in the text. The warrants can be granted to employees, to directors taxed as employees and to members of the board of directors or supervisory board. In an SAS, members of any equivalent body created by the articles of association are also covered. Staff and directors of subsidiaries at least 75% owned can also benefit. The warrants are non-transferable.

The extraordinary general meeting authorises the issue, on the report of the board of directors or management board and on the special report of the statutory auditor. It sets the exercise period of the warrants. The acquisition price of the shares is set on the grant date. If the company increased its share capital in the previous six months, this price is at least equal to the issue price used at that time. A discount remains possible in the cases exhaustively listed in the article.

For warrants granted on or after 1 January 2026, the gain is split into two parts. The employment-related gain is the difference between the value of the shares on the exercise date and the acquisition price. It is taxed at the flat rate of 12.8% (Article 200 A of the French Tax Code (in French)), unless the holder opts for the salary regime. The rate rises to 30% if the beneficiary has worked in the company for less than three years on the date of sale. This tax is due for the year in which the shares are sold. The gain above the value on exercise falls under the capital gains regime of Article 150-0 A.

Our dedicated BSPCE lawyer page explains how to set up a plan, from the eligibility check to the plan rules.

Free share awards (AGA): key points

A free share award (attribution gratuite d’actions, AGA) gives existing or new shares to the beneficiary without any payment. Article L. 225-197-1 of the French Commercial Code (in French) sets the framework. The extraordinary general meeting authorises the management body to award these shares, for a maximum period of thirty-eight months. An SAS can use the scheme, as it follows the compatible rules of the public limited company (Article L. 227-1 of the French Commercial Code (in French)).

• Beneficiaries: employees or certain categories of employees, and the corporate officers covered by the text.
• Ceiling: 15% of the share capital on the date of the award decision. The articles of association of an SME can raise it to 20% for certain categories of employees. It rises to 30% or 40% for a broad-based award.
• Individual limit: no award to an employee or corporate officer holding more than 10% of the share capital.
• Periods: a vesting period of at least one year; combined vesting and holding periods of at least two years.

The acquisition gain is the value of the shares on their vesting date. Article 80 quaterdecies of the French Tax Code (in French) taxes it as employment income (traitements et salaires). Up to €300,000 a year, it is taxed after a 50% allowance (paragraph 3 of Article 200 A of the same code). The excess follows the ordinary rules for salaries. The tax is due for the year in which the beneficiary sells or otherwise disposes of the shares. The later capital gain falls under Article 150-0 A.

The employer pays a 30% contribution on the value of the shares on vesting (Article L. 137-13 of the French Social Security Code (in French)). It is payable in the month following vesting. SMEs and mid-sized companies that have never paid dividends are exempt, within a per-employee limit set by the text. Our free share award lawyer (in French) page covers this scheme in detail.

Management packages in France: capital gain or salary?

A management package is not a legal instrument in itself. The term covers all the shares and warrants subscribed or received by managers, sometimes alongside financial investors. It can combine ordinary shares, preference shares, BSAs, AGAs or BSPCEs. Each instrument keeps its own regime. The difficulty lies in how the final gain is classified: income from capital or remuneration for work.

The Conseil d’État set out an analytical framework in three decisions of 13 July 2021 (No. 428506 (in French), No. 435452 (in French) and No. 437498 (in French)). A preferential subscription price reveals a benefit taxable as salary where it stems essentially from the duties performed. The gain on the sale of BSAs falls in principle under capital gains, even for a director or an employee. It becomes salary if the conditions under which it arises show that it rewards the duties rather than the holder’s status as an investor.

The legislature has since laid down a specific regime in Article 163 bis H of the French Tax Code (in French). In its current version, it applies to sales made on or after 15 February 2025. The net gain on securities acquired in return for duties as an employee or director is taxed as employment income. It is nevertheless taxed as a capital gain up to a ceiling linked to the company’s financial performance. This regime requires a risk of loss and, for securities other than AGAs, stock options or BSPCEs, a holding period of at least two years. The excess is taxed as salary, for the year of the sale.

The choice between BSAs, BSPCEs, free shares and a management package depends on your objectives, your company form and your beneficiaries. Our guide BSPCE, BSA, AGA: which tool for which objective helps you compare these schemes. For a management equity arrangement, see our management package lawyer page. Every situation is different and calls for a tailored analysis.

How we assist you

Our firm designs each plan around your objectives and your company form. We draft the corporate resolutions, the plan rules and the individual agreements. We calibrate the exercise price and the vesting schedule. We safeguard the tax and social security treatment to limit the risk of recharacterisation. We handle the day-to-day follow-up of exercises and exits. Our team also advises directors and senior executives (in French) on their status. Every situation is different.

FAQ

What is a BSA (share warrant)?
A share warrant (BSA) is a security that gives the right to subscribe for shares at a price set on issue, during a set period. It is governed by Articles L. 228-91 et seq. of the French Commercial Code (Code de commerce).

What is the difference between a BSA and a BSPCE?
A BSA can be issued by any joint-stock company and granted to any beneficiary. A BSPCE is reserved for companies that meet the conditions of Article 163 bis G of the French Tax Code (CGI) and for certain beneficiaries (employees, directors taxed as employees, board members); it follows a specific tax regime.

Is the gain on a BSA taxed as a capital gain or as salary?
It depends on the context. Where the warrant is acquired as an investment at its real value, the gain falls under the rules on capital gains on securities. In an employment context, it can be recharacterised as salary if the grant reveals consideration for work.

Who decides to issue BSAs?
The extraordinary general meeting of shareholders authorises the issue and may delegate its authority to the management body. It sets or frames the number of warrants, the exercise price, the conversion ratio and the term. Its decision entails the shareholders’ waiver of their preferential subscription right to the shares issued on exercise of the warrants; reserving the warrants for named beneficiaries requires removing that right on the warrants themselves.

Official sources

• Articles L. 228-91 et seq. of the French Commercial Code (securities giving access to the share capital, share warrants) – Légifrance (in French)
• Article L. 228-91 of the French Commercial Code (issue of securities giving access to the share capital by joint-stock companies) – Légifrance (in French)
• Article 163 bis G of the French Tax Code (BSPCE, start-up share warrants) – Légifrance (in French)

Every situation is different: the information on this page is general and does not replace legal advice tailored to your case. The firm makes no promise of outcome; it commits to the means it deploys.