Startup Founder Unit Subscription Warrants (BSPCE) remain the preferred solution for startups. Here’s why!
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Our latest study, published in March 2026 and conducted in partnership with FLIT Network (French Lawyers in Tech), Fed Légal, AndCo, and The Galion Project, demonstrates the widespread adoption of employee stock ownership by French Tech companies: 90% of participants report that they have already implemented an employee stock ownership plan or are considering doing so.
Employee stock ownership is often a key tool for attracting, retaining, and aligning the team with value creation. But with BSPCE, BSA, bonus shares (AGA), and stock options, it’s easy to get confused: who is eligible, which companies qualify, and what are the tax and social security implications?
In this guide, we’ll help you compare these mechanisms and identify, in a practical way, which program is right for your situation (to be evaluated on a case-by-case basis, as conditions and regulations may vary).
Motivating employees to perform well, retaining them, and attracting new talent are key challenges for any business leader. To support entrepreneurs, French law provides them with numerous profit-sharing tools, such as:
As diverse as they may be, these mechanisms share the same goal: to expand employee ownership. They help retain employees, encourage them to contribute to the company’s growth, and attract or retain key talent.
Despite their shared purpose, BSPCEs operate quite differently from other employee stock ownership mechanisms.
A BSPCE grants its holder the right to subscribe for shares at a price that is either fixed or determinable in advance. The beneficiary receives the warrant free of charge and may then choose whether or not to exercise it, depending, in particular, on the company’s valuation.
Conversely, with stock subscription warrants (BSA), the beneficiary must, in principle, purchase the warrant to obtain the right to subscribe for shares at a price set in advance (a difference in economic logic that should be carefully considered).
A free share grant (AGA) involves receiving shares free of charge, but the beneficiary does not become the owner until after a vesting period and a holding period, subject to legal requirements. (Governed by Articles L225-197-1 et seq. of the Commercial Code)
Stock options grant the right to purchase or subscribe to shares during a specified period, at a price set at the time the option is granted. (Governed byArticles L225-177 et seq. of the French Commercial Code)
AGAs and stock options may be perceived as more “burdensome” to implement (governance, monitoring, costs/expenses depending on the case), which explains why some startups turn to BSPCEs when they are eligible. This should be evaluated based on your company’s structure and timeline.
Only corporations may use these employee stock ownership mechanisms: simplified joint-stock companies (SAS), limited partnerships with share capital (SCA), or public limited companies (SA).
Other corporate forms, such as limited liability companies (SARLs), cannot use these schemes to reward their employees.
However, there are additional conditions; the nature of the company alone is not sufficient. Only companies that meet the following conditions may grant BSPCE options:
1️⃣ Be a corporation;
2️⃣ Have been registered with the RCS for less than 15 years as of the date of BSPCE grant;
3️⃣ Be subject to corporate income tax in France (or, in certain cases, in an equivalent EEA country);
4️⃣ Be unlisted OR, if listed, be traded on a market with a market capitalization of less than 150 million euros;
5️⃣ Have its capital held directly and continuously: either by individuals; or by legal entities that are themselves at least 75% owned by individuals. Historically, this threshold was at least 25%, but since the 2026 Finance Act, it has been 15% for issuances made on or after January 1, 2026.
6️⃣ Not have been created as part of a merger, restructuring, expansion, or takeover of a pre-existing business.
7️⃣ BSPCE options may only be granted to certain categories of beneficiaries: employees, executives treated as employees, certain directors/board members, and, under certain conditions, employees and executives of subsidiaries in which the company holds at least a 75% stake.
These conditions must be carefully verified for your company (and documented), as ineligibility would invalidate the plan.
BSPCEs were initially reserved for employees and executives subject to the employee tax regime. The program was then gradually expanded, notably by the Macron Act of August 6, 2015, and subsequentlyby the PACTE Act of May 22, 2019.
Now, a company may also grant BSPCE options to: employees and executives of its subsidiaries in which it holds at least a 75% stake; as well as to members of the board of directors, directors, members of the supervisory board, and, depending on the company’s legal form, members of any equivalent statutory body, provided they are subject to the tax regime applicable to employees.
With regard to stock options and free share grants (AGA), beneficiaries may include: salaried employees, certain corporate officers, and, under certain conditions, employees and executives of affiliated companies or subsidiaries.
These schemes are governed, in particular, by Articles L.225-177 et seq. and L.225-197-1 et seq. of the Commercial Code.
Finally, stock subscription warrants ( BSA) can be granted more freely. They may be awarded to employees, executives, investors, or, more generally, third parties.
This flexibility represents a major difference from BSPCEs, for which the circle of beneficiaries is strictly regulated by law.
Whether they are BSPCE, bonus shares, BSA, or stock options, their issuance must first be authorized by the shareholders at an Extraordinary General Meeting (EGM). It is this meeting that sets the terms of allocation.
For a BSPCE plan, the exercise price is set in advance: this is a key factor because it determines the potential gain in the event of an increase in the company’s valuation.
For BSA warrants, the exercise price is also set in advance, but the beneficiary must, in principle, pay the subscription price for the warrant (a significant difference in practice).
In the case of free share grants (AGA), the grant of shares is subject to a vesting period during which the beneficiary does not immediately become the owner of the shares. At the end of this vesting period, the shares are definitively vested in the beneficiary, subject to any conditions set forth in the plan (continued employment with the company, performance targets, etc.). The law generally requires a minimum vesting period of one year.
The company may also establish a holding period during which the shares may not be transferred. When such a holding period exists, the combined duration of the vesting and holding periods must be at least two years. However, following legislative changes in recent years, it is no longer mandatory to include a lock-up period if the vesting period is at least two years.
Unlike stock options or BSPCEs, the definitive vesting of free shares is not contingent upon the beneficiary paying an exercise price.
For stock options, a plan is required that specifies the beneficiaries, number of options, price, exercise period, conditions, etc.
When issuing BSPCE warrants, the issuing company is not liable for any specific employer contributions at the time of allocation or exercise of the warrants, which is one of the main advantages of this scheme for issuing companies, particularly startups and growing companies.
In contrast:
Recipients of BSPCE warrants are not subject to any taxation at the time of the warrants’ grant or upon their exercise. Taxation applies only upon the sale of the shares subscribed for through the exercise of BSPCE warrants. The net gain realized is then subject to the specific tax regime provided for in Article 163 bis G of the General Tax Code.
For BSPCE options granted on or after January 1, 2018:
The overall tax rate is therefore higher once social security contributions are taken into account.
Conversely, in the case of free share grants (AGA), beneficiaries may be taxed on both the gain upon acquisition and the capital gain upon the sale of the shares.
The gain on acquisition is, subject to certain limits and depending on the date the shares were granted, taxed either under the regime applicable to capital gains on securities or under the rules applicable to wages and salaries. The capital gain realized upon the resale of the shares is subject to a flat-rate withholding tax of 12.8% (excluding social security contributions), unless the taxpayer opts for the progressive income tax scale.
Similarly, stock option recipients may be taxed on the acquisition gain (also referred to as an employment benefit or excess discount, depending on the circumstances), generally under the rules for wages and salaries, and then on the capital gain from the sale of the shares, which is subject to the rules for capital gains on securities.
However, the exact terms of taxation for AGAs and stock options depend on numerous factors, including the date of grant of the securities, the holding period, and compliance with the conditions set forth in the applicable regulations.
BSPCEs constitute a particularly attractive equity participation scheme, both for the beneficiaries and for the issuing company.
For beneficiaries, the financial benefit lies primarily in the fact that the exercise price of the underlying shares is set at the time the warrants are granted and, in principle, cannot be changed thereafter. Thus, if the value of the company’s shares increases, the beneficiary may realize a capital gain upon the sale of the shares acquired by exercising the BSPCE. It should be noted, however, that no gain is guaranteed: the realization of a capital gain depends on changes in the company’s valuation.
For the issuing company, issuing BSPCE options is generally less costly than other employee stock ownership mechanisms, particularly free share grants (AGA), due to the absence of a specific employer contribution applicable to BSPCE options. This flexibility largely explains the scheme’s success among startups and growing companies.
Finally, the tax and social security regime for BSPCEs is often considered particularly attractive in France, both for the issuing company and for the beneficiaries, although comparisons with the regimes applicable in other European countries should be made with caution, depending on the relevant legislation.
There is no single “best” scheme in absolute terms. The right choice mainly depends on: BSPCE eligibility, the intended beneficiaries (employees vs third parties), the timeline (vesting/liquidity), and the tax/social security impacts at the time of implementation.
No. BSPCE are limited to joint-stock companies (sociétés par actions). If your structure is an SARL, you’ll need to consider other solutions (often a conversion or a different instrument), to be validated with counsel.
Yes in practice, but you must meet the eligibility conditions, in particular those related to the shareholder structure and the applicable thresholds/criteria (French Tax Code, art. 163 bis G).
BSPCE are designed for “contributors” and certain categories provided for by law. To involve third parties, BSA (warrants) are often used, but it depends on your objective and the legal framework. This should be validated case by case.
Because two schemes can look economically similar (a promise of upside) but lead to very different outcomes after taxes/social charges, depending on the timing, duration, beneficiary status, and the rules in force.
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