TAX NEWS - January 2010

European Union: Additional changes proposed regarding relaxation of EUPD requirements

Background

Further to our October and November Global Rewards Updates (GRUs) on the proposed amendments to the EUPD, the Council of the European Union ("Council") now intends to extend the employee share plan exemption to companies listed on a "Multilateral Trading Facility", such as the Alternative Investment Market (AIM) in the UK.

Consequently, if passed, the proposed revised employee share plan exemption, will apply to:

- Companies listed on a "Regulated Market" within the European Economic Area (EEA);
- Companies listed on a "Multilateral Trading Facility" within the EEA; and
- Companies listed on markets outside the EEA that have standards equivalent to those which apply to EEA Regulated Markets

A "Multilateral Trading Facility" is a market covered by the EU's Markets in Financial Instruments Directive. The current list of markets covered by this directive, which is maintained by the Committee of European Securities Regulators (CESR), includes over 130 markets, such as AIM in the UK, NASDAQ OMX Europe and various NYSE Euronext markets. Regarding the markets on this list, the Council has commented that "it is important to progress swiftly on the regulatory harmonization in the EU of disclosure and on-going information requirements."

Where a company satisfies one of these eligibility requirements, their exemption from the EUPD full Prospectus filing requirement will still be subject to the condition that an "information document" is filed. As previously discussed, the information document should be made available to all employees and contain details on the number and the nature of the securities underlying the share plan awards, as well as the reason for and details surrounding the offer. With respect to companies who seek an EUPD exemption on the basis that they are "listed on an equivalent market outside the EEA", the information document must be in a "language customary in the sphere of international finance."

We will continue to monitor the status of the proposed amendments to the EUPD, and will release details of any further developments as they arise.

Pending formal adoption of the EUPD amendment, companies that are not listed on an EU Regulated Market should keep their proposals to offer share plans to their employees in the EU in the future under review.