#Management Package Lawyer in France

A management package is the arrangement through which the executives and managers of a company share in the value created by a leveraged buyout (LBO) or an external growth transaction. It allows them to invest in the target company on preferential terms and to make a significant gain if the performance objectives are met and the exit takes place on good terms.

Structuring a management package is a technical negotiation, both legal and tax. A poorly structured package can expose managers to a tax recharacterisation of their gain, to the loss of their entire investment, or to disputes with the fund at exit.

How a management package works in France

A management package can take several forms, depending on the objectives of the transaction and the profile of the managers involved: investment in ordinary shares or preference shares, share warrants (BSA, bons de souscription d’actions), free share awards (AGA, attributions gratuites d’actions), or a combination of these instruments. In LBOs, a ratchet mechanism allows managers to increase their percentage shareholding if certain performance objectives are met at exit.

Each mechanism has its own legal conditions, its own dilutive effect on the share capital and its own tax treatment. The choice between these instruments depends on the context of the transaction, the existing capital structure and the objectives of the parties.

Negotiating with the investment fund

The relationship between management and the investment fund is structurally unbalanced. The fund generally has an experienced legal team and a detailed knowledge of market practice. Managers, even experienced ones, are often less familiar with the mechanics of the package than with running the business.

We help managers understand the documents put to them, analyse the ratchet and exit mechanisms, negotiate the investment terms and structure their shareholding from a tax perspective. We act both in primary LBOs (a fund coming in) and in secondary LBOs (a change of fund).

Getting the tax treatment right

The tax characterisation of the gain made by managers at exit is a sensitive issue. For disposals made since 15 February 2025, Article 163 bis H of the French General Tax Code (Code général des impôts, CGI) taxes the gain acquired in return for the duties performed under the rules for employment income (traitements et salaires), and therefore at the progressive income tax rates. Only the portion of the gain that meets the conditions and cap set by this provision remains subject to the capital gains regime.

The structure of the package must anticipate this risk from the outset, by making sure that managers take a genuine capital risk, that the investment terms are on market terms and that the documentation is consistent.

What our work covers

We analyse the package proposed by the fund, negotiate the economic and legal terms, structure the managers’ shareholding from a tax perspective, draft or review the investment documents, and follow up at liquidity events (sale, stock market listing, refinancing).

See also our dedicated pages on the BSA lawyer, the free share (AGA) lawyer (in French) and the employee and management incentives lawyer.

When to consult us

As soon as you receive a management package proposal in an LBO or an external growth transaction. Before signing any investment document. When you are negotiating the terms of your shareholding with a fund. When you are anticipating an exit and want to check that your tax position is sound.

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.

How management package gains are taxed in France

This is the point that decides whether a management package is worthwhile, and it has changed. Article 163 bis H of the French General Tax Code now sets out a principle of taxation as employment income: the net gain made on securities subscribed for or acquired by, or awarded to, an employee or a corporate officer is taxed under the ordinary rules for salaries when it is acquired in return for the duties performed in the issuing company, in a company in which the issuer holds, directly or indirectly, a share of the capital, or in a company that holds a share of its capital.

The provision makes an exception. A portion of the gain remains taxed under the capital gains regime for disposals of securities, up to an amount obtained by applying a financial performance multiple to the value of the securities on their acquisition date, minus that same acquisition value. In other words, the part of the gain that reflects the risk taken as an investor can fall outside the salary regime; the part that rewards the duties performed cannot.

The provision sets conditions that older arrangements overlooked: free shares, share subscription or purchase options and BSPCE (French start-up share warrants) must carry a risk of losing their value on their acquisition or subscription date; other securities must carry a risk of losing the price paid and must have been held for at least two years. An instrument with no real risk does not qualify for the exception.

What this changes in the design of the package

• The entry valuation becomes central: it is the basis for calculating the cap, and how well it is documented determines whether the case can be made.
• The risk must be real and demonstrable: a subscription price actually paid, no buy-back guarantee, exposure to a fall in value.
• The link with the duties performed must be kept under control: the more the award depends on continued employment or individual performance, the closer it comes to remuneration.
• The documentation is prepared at issue, not at the time of the sale, when it is too late to establish what was not written down.

We work on this stage with your chartered accountant or a valuer, and we record the method used in the issue decisions. The available instruments are compared on our employee and management incentives page, and the BSPCE, BSA and AGA (in French) comparison sets out the selection criteria.

Official source

• Article 163 bis H of the French General Tax Code (Code général des impôts), taxation of gains on securities held by employees and corporate officers: Légifrance (in French)

Reference checked on 5 October 2026. This page provides general information and does not constitute legal advice: every situation is different.