We advise multinational companies on
cross-border labor law, employee and employer taxation, securities,
foreign exchange, cross-border data privacy, and e-commerce regulations
relating to the offer of equity compensation to employees worldwide. Some of the
matters are as follows:
Securities.
Since equity compensation programs by their nature
involve the offer of company stock to employees, local
securities laws must be considered. We guide our clients
through securities compliance requirements, including
registering the equity compensation programs, drafting
prospectuses, and completing any on-going reporting
requirements. We advise clients on securities compliance
requirements in all jurisdictions.
We have prepared securities disclosures, prospectuses, notices,
and registration filings in Australia (Australian Securities and
Investments Commission class order registration), Belgium
(prospectus filing), Canada (provincial filings), France
(prospectus filing), Germany (prospectus filing) Israel (application for prospectus
exemption), Italy (financial intermediary negotiation), Japan
(Forms 6, 7, 7-2, 8, and 10 filings), Malaysia (information
memorandum), New Zealand (public companies exemption filing),
Philippines (Securities and Exchange Commission exemption
filing), and Thailand (exemption offering notice). In addition
to the countries in which we have completed these filings, we
advise clients on the securities implications related to the
offer of stock awards in China and the European Union.
Foreign
Exchange. Most equity compensation programs
involve the transfer of funds across borders. We guide our
clients through the intricacies of the local exchange control
restrictions that affect the transfer of funds and securities by
the parent company, employer, and employee. In addition, we
obtain the necessary exemptions or approvals from the regulatory
authorities to allow the remittance of funds abroad and the
receipt of the benefits from the programs.
We have advised
clients on foreign exchange compliance requirements in all
jurisdictions. Some of the countries where we have assisted
clients most frequently include Argentina, Brazil, Chile, China,
India, Pakistan, Russia, South Africa, Thailand, and Vietnam.
Data Privacy.
Data privacy is an important and often confusing area of the
law. Because employee information is almost always collected,
stored, and transferred in the administration of equity
compensation programs, the local data privacy laws must be
addressed. We work with clients to structure the administration
of these programs so that they comply with the local data
privacy laws and, where necessary, obtain the appropriate
approvals.
We have advised clients on data privacy considerations implicated
by the offer of equity compensation programs in more than 90
countries. Some of the countries where there are more
burdensome requirements and where we have assisted clients with
data privacy concerns include Argentina, Australia, Austria,
Belgium, Canada, Czech Republic, Denmark, Finland, France,
Germany, Hong Kong, Hungary, Ireland, Italy, Japan, Luxembourg,
Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden,
and the United Kingdom.
Employment
Law. Because equity compensation programs
are provided to employees, local employment laws must be
considered. We work with clients in the drafting and offering
of equity compensation programs so that the parent company
and the employer can mitigate the negative consequences of these
laws.
We have advised clients on the labor and employee acquired
rights implications of equity compensation plans in all
jurisdictions. Some of the more problematic jurisdictions where
we have advised clients include Australia, Belgium, Brazil,
Canada, Denmark, France, Germany, Italy, Spain, South Korea, and
the UK.
Taxation of the
Local Entity. The taxation of the local entity and the
allocation of costs for offering equity compensation
programs is often a significant internal issue for clients. We
provide clients with alternatives to: (i) mitigate the tax consequences to the local subsidiary or
branch that result from extending equity compensation programs to its employees;
(ii) arrange for the costs of the programs to be allocated to the
appropriate entity;
and (iii) mitigate the tax consequences that result from the local
subsidiary or branch reimbursing the parent company for the cost of such programs.
Recent projects concerning local entity tax
include mitigating the consequences due to the elimination of
tax-favored programs in India and Italy. With regard to India,
we have worked with companies on means to pass-through the
fringe benefit tax from the employers to the employees.
Taxation of
Employee. The taxation of equity compensation is
always a concern of our clients and their employees. We
help clients find solutions to potentially onerous tax
obligations by structuring their equity compensation
programs to take advantage of the local tax regulations and to
minimize the employees' tax liabilities wherever possible. In many countries,
we are able to provide clients with alternatives, such as
adopting subplans, that allow the company and its employees to
take advantage of preferential tax treatment.
Employer Tax Withholding and Reporting. One of the
concerns with offering equity compensation programs is the
scrutiny that can be imposed by the local tax authorities. We
work with our clients to determine whether the parent company or
the local subsidiary is obligated to withhold income tax or social insurance contributions on the
benefits received by the employees. We also help to establish
the administrative procedures necessary to report the benefits and to remit the taxes or contributions owed
to the local agencies.
Program Design.
Global programs must provide the flexibility necessary to
give the company the tools it needs to comply with the legal
and statutory requirements of multiple countries. We work with
clients to draft comprehensive program documents that address
their current needs, but also anticipate future developments in
the local law. In addition, we work with clients in modifying
existing U.S. programs to create the flexibility needed to offer
these programs abroad.
Employee
Communications. An important aspect of any equity
compensation program is the manner in which the program and its
benefits are communicated to the employees. We assist clients
in drafting employee communication materials, which include
offer letters, program summaries, agreements, enrollment forms,
and tax supplements. Relying on our considerable experience, we
are able to help clients communicate unfamiliar concepts in
terms that are understandable for the local employees. In
addition to drafting these documents, we assist clients in
preparing translations into local languages.
E-Commerce.
An understanding of electronic commerce issues is increasingly important in the
administration of equity compensation programs. We also
understand that the traditional paper-intensive practice of
administering these global programs is financially and
administratively burdensome. We work with clients in
structuring the administration of these programs so that they
can take advantage of their e-mail and intranet systems to
communicate the benefits of the programs to employees and to
facilitate the electronic grant acceptance, program enrollment,
and exercise of the benefits.
Exchange
Offers. We have assisted numerous clients with the
exchange of underwater stock options and underwater stock
appreciation rights for new stock awards. Such exchanges
implicate tax, securities, labor, and other laws around the
world. The timelines for these projects are very short and
require the preparation of an exchange offer document
for submission to the U.S. Securities and Exchange Commission.
For these exchange offers, we have drafted employee
communications for each of the affected countries. We also
provide clients with a detailed explanation of the tax
consequences and other legal implications of the exchange offer
and complete the necessary filings in each country.
