We Offer Strategic Legal Services
Issue Sweet Equity (Founder and Key Employee Share Incentives)
Reward founders, executives, and key employees through a well-structured sweet equity scheme.
Our French corporate lawyers and paralegals manage the entire process — from assessing eligibility and drafting tailored equity instruments, to handling corporate approvals and registry filings — ensuring your incentive plan is fully compliant with French corporate and tax law.
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What Is Sweet Equity
Sweet equity refers to shares or equity instruments issued at a favorable value to founders, executives, or employees who actively contribute to the company’s growth.
It typically rewards their performance and aligns long-term interests between management and investors.
In a French SAS or SASU, sweet equity can take the form of founder shares, performance shares, or share warrants (BSPCE, BSA, AGA). Proper structuring ensures that rewards are linked to measurable results and remain compliant with company-law and tax frameworks.
Sweet equity is commonly used in private equity transactions, start-ups, and scale-ups to attract and retain key talent while preserving the balance between founders and investors.
Advantages of Sweet Equity
Aligns interests: Encourages long-term commitment by linking management rewards to company performance.
Flexible design: Can be structured through different vehicles (BSPCE, BSA, AGA, or founder shares) depending on your corporate setup.
Tax efficiency: If properly structured, gains can benefit from favorable tax regimes under French law.
Retention tool: Motivates key executives to stay through vesting schedules and performance conditions.
Investor confidence: Well-drafted equity plans reassure external investors and professional partners.
Sweet equity is a strategic lever to reward contribution without immediate cash outflow, turning success into shared value.
How to Issue Sweet Equity in France?
Setting up a sweet equity plan requires legal precision and careful coordination between the company, its management, and investors.
Here’s how we guide you through each stage:
Understanding Your Objectives
We identify the goals behind your sweet equity issue — retention, reward, or investment balance — and assess the most suitable legal form (BSPCE, BSA, AGA, or performance shares).
Structuring the Plan
Our lawyers design the equity framework, determine eligibility criteria, vesting conditions, valuation methods, and governance implications.
Drafting Legal Documents
We prepare all required documents: shareholder resolutions, plan rules, subscription agreements, and amendments to the articles of association if needed.
Corporate Approvals and Filings
We assist with board and shareholder approvals, publication in the legal gazette (if applicable), and filing updates with the Registre du Commerce et des Sociétés (RCS).
Issuance and Delivery of Instruments
Once authorized, we coordinate the subscription process, record entries in the share register, and provide confirmation certificates for each beneficiary.
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What We Need From You to Issue Sweet Equity ?
To launch your sweet equity plan efficiently and in compliance with French law, please provide:
Company Details
Basic corporate information (bylaws, latest Kbis, shareholder list).
Beneficiary Information
Identities and roles of the individuals eligible to receive sweet equity (founders, executives, employees).
Plan Objectives and Conditions
Intended performance or vesting criteria, allocation ratios, and eligibility requirements.
Corporate Approvals
Existing shareholder or board decisions (if any) and details on prior equity instruments issued.
And Then?
Once we receive these materials, our lawyers take over: drafting, coordinating corporate approvals, completing filings, and delivering the official documentation certifying the issuance of your sweet equity instruments.
Issue Sweet Equity – Simple Process, Clear Budget
Flat legal fee starting from €1 200 excl. taxes* (includes full legal drafting, filings, and registration follow-up)
Additional mandatory costs: • Legal gazette publication (if required) • Commercial court registry filing fees
No hidden fees, no extras.
Our promise:
No misleading “discounted capital” or unclear valuation schemes
No middlemen or template resellers
Only compliant, performance-based equity
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Why Choose Us?
We Believe in Transparent, Lawyer-Led Equity Incentive Structuring
Tailored equity design: Each Sweet Equity plan is structured around your company’s valuation, governance, and growth objectives.
Legally sound documentation: All share allocations and vesting terms comply with French corporate and tax law.
Balanced protection: Agreements safeguard founders’ control while rewarding key employees’ long-term commitment.
Lawyer-supervised process: Every step is managed by licensed French lawyers, ensuring compliance and fairness for all parties.
Let us structure your Sweet Equity plan — so you can focus on rewarding growth and retaining your key talent.
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Understanding the Issuance of Sweet Equity in a French SAS
What is “sweet equity” in a French company?
Sweet equity refers to shares or equity instruments granted at favorable conditions to founders, executives, or key employees who contribute significantly to a company’s growth.
It rewards entrepreneurial risk, long-term commitment, and performance.
Sweet equity typically appears in SAS (Société par Actions Simplifiée) structures through:
- BSPCE (Bons de Souscription de Parts de Créateur d’Entreprise);
- AGA (Attributions Gratuites d’Actions, i.e. free shares);
- BSA (Bons de Souscription d’Actions); or
- Preferred/founder shares with enhanced rights.
These tools allow management and founders to share future value creation without immediate dilution or heavy tax costs.
Who can benefit from sweet equity?
Eligible beneficiaries depend on the instrument type:
- BSPCE (founders’ warrants) – for employees, executives, and directors of the issuing company (and certain subsidiaries). External advisors or investors cannot receive them.
- AGA (free shares) – for employees and managers; shareholders can also benefit if they hold employee status.
- BSA (subscription warrants) – can be granted to external partners, advisors, or investors.
Preferred/founder shares – can be reserved for founders or specific categories of shareholders.
What are the tax implications of sweet equity?
Tax treatment varies depending on the chosen instrument and the beneficiary’s status:
- BSPCE (most favorable)
- Gains on sale taxed at flat 30% (12.8% income tax + 17.2% social contributions).
- No payroll taxes for the company.
- Gains on sale taxed at flat 30% (12.8% income tax + 17.2% social contributions).
- BSA
- Taxed as capital gains at sale.
- Risk of requalification as salary if issued below market value without corporate justification.
- Taxed as capital gains at sale.
- AGA (free shares)
- Taxed at vesting (as salary) and at sale (capital gains).
- Company contributions (up to 30%) may apply.
- Taxed at vesting (as salary) and at sale (capital gains).
- Founder or preferred shares
Tax depends on structure; often capital gains regime if genuine investment risk exists.
Can foreign employees or non-residents receive sweet equity?
Yes, but under specific conditions:
- BSPCE can be granted to employees of French subsidiaries of foreign groups, provided the issuer meets French eligibility criteria.
- Tax residence: Non-resident beneficiaries are taxed in their country of residence unless the double taxation treaty grants taxing rights to France.
- Currency and exchange controls: For residents outside the EU, certain reporting obligations apply for capital gains and dividends.
In practice, companies often use phantom equity (cash-settled plans) when employees work abroad to simplify compliance.
- BSPCE can be granted to employees of French subsidiaries of foreign groups, provided the issuer meets French eligibility criteria.
Are there risks or drawbacks?
Yes — several:
- Misvaluation may trigger tax reclassification;
- Poorly drafted plans risk civil invalidation;
- Equity dilution for existing shareholders;
- Loss of favorable tax status if BSPCE conditions lapse (e.g., merger or sale to non-eligible parent);
Complexity of accounting treatment for IFRS/GAAP reporting.
Can any company issue sweet equity?
No.
Only certain types of French companies are legally eligible or practically suited to issue sweet equity instruments:
- SAS and SASU (simplified joint-stock companies) — most flexible and widely used;
- SA (société anonyme) — also possible but more formal;
- SARL/EURL — cannot issue equity-based instruments like BSPCE or preferred shares; only profit-sharing mechanisms apply.
To issue BSPCE, the company must meet legal conditions:
- Be a SAS, SA, or SCA less than 15 years old;
- Be unlisted or listed on a small-cap market (Euronext Growth or Access);
- Be independent (no majority ownership by another company);
Have at least 25% of capital held by individuals or qualifying venture investors.
What are the main legal steps to issue sweet equity?
The issuance follows a multi-stage legal process:
- Shareholder authorization
A special resolution empowers the president to issue instruments, specifying terms, beneficiaries, and maximum allocations. - Valuation and structuring
A corporate lawyer or financial expert determines the fair market value of shares to justify favorable conditions and avoid requalification as hidden remuneration. - Drafting documentation
Includes the issuance decision, plan rules (vesting, conditions, exercise price), and subscription agreements. - Filing and publication
The decision is filed with the Commercial Court Registry and, when required, published in a legal gazette (BODACC or JAL).
Issuance and registration
Once completed, beneficiaries receive equity instruments recorded in the company’s shareholders’ register or warrants ledger.
How can a company ensure compliance when issuing sweet equity?
Several safeguards are critical:
- Proper valuation — independent assessment to avoid requalification as disguised remuneration.
- Documented corporate approvals — recorded in minutes and shareholder resolutions.
- Clear vesting and performance conditions — ensure link between contribution and benefit.
- Respect of BSPCE conditions — especially independence and age of the company.
- Tax and accounting follow-up — tracking of exercised warrants and capital increases.
Failure to comply can lead to tax reassessments, invalidation of equity grants, or reclassification as salary subject to social charges.
What are the main advantages of implementing sweet equity?
- Retention and motivation of key people through long-term alignment;
- Deferred cost structure — reward without immediate cash expense;
- Investor comfort — aligns management and shareholder objectives;
- Favorable tax treatment under BSPCE;
- Flexibility in design (performance conditions, vesting periods).
How long does it take to issue sweet equity?
Depending on complexity:
- Standard BSPCE or BSA plan: 2–4 weeks;
- Complex multi-beneficiary or investor-linked schemes: 4–8 weeks (including valuation, approvals, filings).
Set up Your Sweet Equity Plan
Let our French lawyers & paralegals design and implement it for you.
More About Issuing Sweet Equity in France
Who can benefit from a Sweet Equity plan?
Yes. Sweet Equity can be granted to founders, key employees, and managers who create long-term value for the company. It is commonly used in startups, scale-ups, and private equity transactions to align interests and retain strategic talent.
What documents are required?
- Updated bylaws and Kbis extract;
- Cap table and shareholder list;
- Shareholder and board resolutions;
- Valuation report or justification note;
- Draft subscription or allocation agreements;
Proof of publication and RCS filing.
Does it affect existing shareholders’ control?
Not necessarily. Sweet Equity can be structured with performance conditions or non-voting shares to preserve founders’ control while still incentivising key contributors.
Is Sweet Equity subject to tax or social charges?
Yes. Gains realised on Sweet Equity are taxed depending on structure — typically as capital gains rather than salary — provided legal and valuation rules are properly followed.
Can Sweet Equity be offered to non-resident employees or consultants?
Yes, but cross-border tax and securities-law implications must be carefully assessed. Our lawyers handle French and international compliance to ensure lawful implementation.
How long does implementation take?
- Typically 2–4 weeks, depending on company structure, valuation, and shareholder approvals.
Can Sweet Equity be cancelled or modified later?
Yes. Plans can include claw-back or re-purchase clauses if performance targets aren’t met or employment ends, subject to shareholder approval.
How is the value of Sweet Equity determined?
The valuation is based on the company’s fair market value at the time of issuance, often supported by an independent expert report. This ensures compliance with French tax regulations and avoids reclassification as disguised remuneration.
