While a company’s story often begins with a small group of people, its growth rarely happens on its own. To attract, retain, and engage talent in creating value, French startups frequently use BSPCEs.

But a BSPCE is not a share. It is an option that allows, under certain conditions, the purchase of shares at a predetermined price. And between the granting of BSPCEs and the ability to resell shares at a profit, there are several important steps to understand.

BSPCE: What Exactly Are They?

BSPCEs (Bons de Souscription de Parts de Créateur d’Entreprise) allow an employee or executive to purchase shares in their company at a predetermined price (the exercise price), according to the terms set forth in a grant plan.

In other words, receiving BSPCE warrants does not mean immediately becoming a shareholder. Rather, it is an opportunity to acquire an equity stake at a later date, provided certain conditions are met and the beneficiary actually decides to exercise the warrants.

This distinction is essential: as long as the BSPCE warrants have not been exercised, the holder has no shares, no voting rights, and no right to dividends.

Allocation, vesting, exercise: three distinct stages

One of the main sources of confusion surrounding BSPCE stems from the fact that people often confuse allocation with exercise.

In practice, several steps occur in sequence.

1. Grant: the initial promise

Granting refers to the moment when the company awards BSPCE options to an employee or executive.

At this stage, the beneficiary does not yet receive shares: they receive a potential right to acquire them later, at a price set in advance. This grant is generally part of a BSPCE plan adopted by the company and supplemented by an individual grant letter.

This documentation specifies, in particular:

• the number of BSPCE options granted;
• the exercise price;
• the vesting conditions;
• the validity period of the BSPCE options;
• the consequences of leaving the company.

The grant thus marks the starting point of the process, but it is not sufficient to become a shareholder.

2. Vesting: The Gradual Acquisition of Rights

Following the grant, a vesting period generally begins.

During this phase, the BSPCE options gradually become exercisable subject to certain conditions (time, performance, and/or events). A distinction is then made between:

• “vested” BSPCE options (acquired), which can in principle be exercised;
• unvested BSPCE, which remain unavailable.

Vesting is most often based on the condition of continued employment with the company for a certain period. Some plans also include operational or financial targets, or even the occurrence of specific events.

Vesting is a crucial step because it effectively determines access to the shares. As long as a BSPCE is not vested, it generally cannot be exercised.

The beneficiary’s departure may also have a significant impact. Depending on the plan’s provisions:

• unvested BSPCE options may be forfeited;
• vested BSPCEs may have to be exercised within a limited timeframe;
• certain special rules may apply depending on the circumstances of the departure (“good leaver” / “bad leaver”).

Focus on the Exercise Period 

When can BSPCE options be exercised?

In principle, BSPCEs become exercisable as they vest. However, the exact period during which they can be exercised depends entirely on the plan established by the company.

Most plans set a deadline beyond which BSPCE options expire if they have not been exercised. Often, this maximum period is ten years, but this is not a hard-and-fast rule.

Some companies also establish specific exercise windows. The goal is generally to simplify administrative procedures or to coordinate exercises with certain capital transactions.

The departure of an employee or executive is often a critical moment. Many plans then impose a shorter timeframe for exercising BSPCE options that have already vested. In some cases, unvested BSPCE options are forfeited immediately. So-called “good leaver” or “bad leaver” clauses may also modify the applicable rules depending on the circumstances of the departure.

These issues are sometimes underestimated, even though they can have significant financial consequences.

How do you exercise your BSPCE options?

To exercise their BSPCE options, employees must:

1. complete and sign an exercise form (also known as a subscription form)
2. pay the exercise price (depending on the situation, various payment methods may be accepted, including offsetting against salary or bonuses, etc.)

The subscription of new shares obtained through the exercise of BSPCE options is then recorded in the company’ssecurities register, while the beneficiary will have anindividual shareholder account opened in their name.

Why exercise your BSPCE options?

A BSPCE remains an option: the holder is under no obligation to exercise it.

The economic benefit of exercising the option arises when the estimated value of the shares exceeds the originally set exercise price. The idea is to purchase shares at a historically low price and eventually resell them at a higher price.

In certain transactions, it is possible to avoid paying the exercise price upfront through so-called “cashless” mechanisms, in which the exercise and resale of the shares occur almost simultaneously. However, this type of arrangement requires a liquidity transaction and an appropriate legal framework.

Shareholder—and then what?

Exercising your BSPCE options doesn’t just mean hoping for future capital gains. It also means becoming a shareholder, with the rights—but also the obligations—that come with that status.

In unlisted companies, shares are often subject to restrictions: approval clauses, preemptive rights, lock-up agreements, or rules set forth in a shareholders’ agreement. Above all, liquidity is never guaranteed. Owning shares in a startup does not mean it will be easy (or even possible) to sell them quickly.

In practice, liquidity generally stems from a specific liquidity event: an initial public offering (IPO), a company acquisition, or a secondary offering organized with investors. Some scale-ups also establish liquidity windows that allow employees or former employees to sell a portion of their shares as part of a fundraising round.

Liquidity Events

1. Initial Public Offering ( IPO): Theoretically, this is thequintessential liquidityevent,since on this occasion, a portion of the company’s equity becomes publicly traded and thus accessible to a considerable number of potential investors (making it easier to find buyers for one’s shares). In practice, an IPO requires the company to have reached a certain stage of development and can involve complications and prolonged delays ( Deezer, among others, had to try twice).
2. Company acquisition: M&A (Mergers & Acquisitions) transactions represent a definite liquidity opportunity for BSPCE holders, because if they have exercised their options or decide to do so, their shares will, in principle, also be included in these transactions. Depending on the terms set forth in the plan or mini-agreement, employees may even consider exercising their BSPCE options before the vesting period has expired, pursuant to acceleration clauses.
   
3. Secondary market transactions ( see below):these involve the direct resale of shares by the BSPCE beneficiary after exercise (excluding the cases mentioned above).

Liquidity Windows

Since the liquidity events mentioned above remain highly exceptional, many founders are implementing mechanisms designed to reduce the time-to-liquidity.

During fundraising rounds, an increasing number of founders negotiate with new investors to have them agree to “provide liquidity” to employees by dedicating a portion of the invested funds to repurchasing shares held by the employees.

Apart from these cases, the issuing company may also providefor “breathing room” liquidity windows, which can be exercised when personal life events occur in employees’ lives (marriage, birth of a child, purchase of a primary residence, etc.).

Secondary Market Transactions (Over-the-Counter)

While it may be more difficult to find a buyer for unlisted securities, this remains a possibility worth considering. New liquidity initiatives are gradually being implemented in this regard:

• intra-company: some companies choose to set up internal stock s (via a dedicated interface or, for smaller organizations, by establishing conditional resale rights), thereby allowing their employees to trade their shares among themselves;
• inter-company: new players such as Caption are helping to establish new marketplaces that facilitate connections between potential investors and employee shareholders, while enabling the latter to better understand and optimize the resale price of their shares.

However, the sale of shares subscribed through the exercise of BSPCE options is often subject to specific conditions (listed in a “Mini-pact” or contractual agreement): holding periods (prohibition on selling shares before a specified date), leaver clauses (application of a discount to the sale price of the shares in the event of departure before the expiration of a certain period or for certain reasons), preemptive rights and/or approval clauses (an obligation to first offer to sell one’s shares to existing shareholders or to submit the proposed sale for their approval).

It is nevertheless important to keep in mind that liquidity is an essential element of the startup ecosystem’s vitality: the proceeds from the sale of a company’s shares can enable new entrepreneurs to emerge and thus help foster the next generation of startups.

Conclusion

BSPCEs are often presented as a simple employee incentive tool. In reality, their operation is more nuanced: between the grant, vesting, exercise, and, potentially, the resale of the shares, several important decisions must be made.

Understanding these different stages helps avoid the most common misconceptions, particularly the idea that the grant of BSPCE options is equivalent to already owning shares or realizing a gain.

In practice, the “right time” to exercise rarely depends on a single factor. It generally involves weighing several factors: the plan’s rules, your personal situation, the company’s liquidity outlook, the cost of exercising the options, and the potential tax implications.

Hence, a useful habit before making any decision is to carefully review the applicable documentation and not hesitate to seek professional guidance when the stakes are high.