For years, Europe watched from the sidelines as American companies grew to dominate the technology landscape. Unlike many recent economic developments, this one had a clear reason \u2013 Europe\u2019s strict (and increasingly old-fashioned) attitude towards equity compensation.<\/p>\n
America\u2019s startup successes have largely been driven by the rise in popularity of employee share plans. The startups benefit from freeing up their cash and resources, leveraging their future potential to gain more capital and better employees. And the employees benefit from owning shares in their company \u2013 profiting directly from their hard work and innovation. Share options were once a benefit of the already rich; now, any employee can share in the wealth.<\/p>\n
Europe, as a whole, seems determined to keep employee stock options at bay. Rules on employee share plans can be strict, and make it difficult for companies to gain many advantages from them. But the benefits to both employers and employees, as well as the countries themselves, are impossible to keep ignoring.<\/p>\n
The World Economic Forum identified the restrictions on share plans as a major roadblock to European tech growth last year. It was only a matter of time before everything changed.<\/p>\n
It seems like that time has finally come.<\/p>\n
Well\u2026 for France, at least.<\/p>\n
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France has now updated their laws to make employee share plans more widespread and available to startups and employees.<\/p>\n
One new initiative allows employers to offer share plans to their employees at much lower prices. This allows more employees to join, which in turn makes the share plan more impactful \u2013 employees can see bigger returns on their hard work and investment.<\/p>\n
And the new changes mean that employees\u2019 shares are priced at fair market value rather than a VC-determined valuation, which ensures that early employees are properly rewarded.<\/p>\n
France has also made two changes to encourage overseas companies to invest in both the people and the place.<\/p>\n
French employees working for overseas startups are now able to receive shares in their startup, regardless of where the startup is incorporated. At the same time, France has offered incentives to foreign companies to open offices within France itself. These two changes allow France to partner with overseas companies, and transform the country into one of the most startup-friendly countries in Europe, to the benefit of all.<\/p>\n
Well\u2026 all of the French, anyway.<\/p>\n
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The long and short of it is that Europe finally has a startup market that can potentially rival Silicon Valley. But if you\u2019re not French or living in France, you might be thinking \u2013 what does this have to do with me? Well, hopefully, a lot.<\/p>\n
French Digital Minister Cedric O said he hopes other countries in Europe will see the success of their initiative, and see the new rules go \u2018pan-European’. If France can prove they can successfully drive innovation in their technology sector then it will send a clear message to the rest of Europe that it\u2019s a straightforward path to success.<\/p>\n
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Ireland introduced an initiative in 2018, called the Key Employee Engagement Program (KEEP) to encourage employee share ownership. This was a step forward, but not by much. There is still a wide range of restrictions, which all but ensure that engagement has remained relatively small.<\/p>\n
But it is a step nonetheless, which shows that Ireland is ready to start moving in the right direction. Once Ireland sees the gains from the new initiatives start pouring into France, there will already be momentum to build on.<\/p>\n
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If you\u2019d like to see for yourself how the Global Shares stock plan administration software can help your company, book a one-on-one, no-obligation consultation today and we\u2019ll demonstrate our award-winning software.<\/p>\n