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Preferential Tax Treatment of Danish Equity Compensation Awards

The Danish Parliament recently adopted new Section 7P of the Danish Tax Assessment Act to provide, effective July 1, 2016, preferential tax treatment for certain share-based compensation granted to Danish recipients. Similar in concept to ?Ç£incentive stock options?Ç¥ in the United States, under the new legislation, share-based compensation meeting certain requirements is not subject to taxation until the shares acquired in connection with the award are subsequently sold by the recipient. At the time the shares?áare sold, any gain is taxable as capital gains rather than as employment income. In order for Section 7P to apply, the following conditions must be met: Both the employer and employee must agree for Section 7P to apply in the award agreement. The award agreement must specify the nature of the award (e.g., shares, conditional shares, options, terms for receiving the shares, etc.). The value (using Black Scholes for options) must not exceed 10… Continue Reading

Ninth Circuit Holds Disgorgement Remedy Applies Regardless of Personal Misconduct of Issuer?ÇÖs CEO or CFO

The U.S. Court of Appeals for the Ninth Circuit reversed a district court?ÇÖs ruling interpreting Section 304 of the Sarbanes-Oxley Act (?Ç£SOX?Ç¥) in an enforcement action filed by the SEC alleging that defendants participated in a scheme to defraud investors by overstating revenue by millions of dollars. SOX 304 requires reimbursement of certain types of compensation, such as bonuses or equity-based compensation received by CEOs and CFOs, within 12 months of the public issuance or filing of financial statements that are required to be restated due to a reporting error that is a result of ?Ç£misconduct.?Ç¥ Previously, the SEC had sought to apply SOX 304 against CEOs and CFOs who were alleged to be personally involved in the wrongdoing leading to the restatement. However, in this case, ?Ç£it is the [misconduct of the issuer of the financial statements] that matters and not the personal misconduct of the CEO or CFO.?Ç¥… Continue Reading

September 2016