ManCo and management packages: definition, instruments and tax 2026

The term ManCo carries two distinct meanings, and mixing them up is an expensive mistake. In the world of regulated financial management, a ManCo is an AMF-authorised portfolio management company. In the private equity and LBO world, it refers to a holding company created by managers to hold their equity stake in the target — the vehicle at the heart of the management package. This guide addresses the second meaning, which is generating most questions in 2026 following the reform of article 163 bis H of the French General Tax Code.

If you are a CEO, senior executive or future shareholder in an acquisition transaction, understanding how a management package works, which instruments to choose, and how French tax rules apply since 15 February 2025 is now essential before signing anything.

A management package is a set of mechanisms allowing directors and key managers to access a company's capital on preferential terms, in exchange for their contribution to value creation. The ManCo is the legal structure — usually a SAS or holding company — through which they exercise this participation collectively. It is not mandatory, but is common whenever multiple managers are involved or when the amounts justify a clear patrimonial separation.

A management package groups all the mechanisms through which a company or its reference shareholders associate directors and key managers with capital performance. The dual objective is to align manager interests with those of investors, and to retain key talent over the life of the transaction.

In a typical LBO, the investment fund controls a majority of the capital while managers co-invest a fraction alongside the fund, often through a ManCo. Their instruments may be ordinary shares, preferred shares, BSA warrants, BSPCE founder warrants or AGA free shares, depending on the tax outcome sought and the nature of the company.

The ManCo brings organisational clarity: managers negotiate their collective stake with the fund, manage their participation from a single entity, and can structure their internal relationships (tag-along rights, exclusion clauses, shareholder agreement) without directly impacting the operating company's capital structure.

To avoid confusion, it is worth noting that a ManCo in the AMF sense is an authorised portfolio management company, subject to minimum capital requirements (€125,000), governance standards, internal control obligations and an activity programme approved by the market authority. This vehicle falls under an entirely different regulatory regime, with DORA and AIFM II obligations. If your project concerns that scope, the two subjects must not be conflated.

This guide now focuses on the manager-holding ManCo and the taxation of equity incentive instruments.

Five main instruments exist. The choice depends on the legal form of the company, the presence of an institutional investor, the intended holding period and the target tax regime.

Ordinary or preferred shares are the most direct form of capital entry. Managers purchase securities, often at a discount to the financial investors' entry price (justified by differentiated rights or liquidation preference clauses). The gain is in principle a capital gain, taxed under the securities capital gain regime.

BSPCE (bons de souscription de parts de créateur d'entreprise) are reserved for unlisted companies less than 15 years old that meet specific criteria. Since the reform under the 2025 Finance Act, their tax treatment has been revised: the flat rate applicable to gains now depends on the holding period and the beneficiary's status. For employees or executives who are subject to corporate tax, the rules have changed significantly — verify the exact 2026 situation with your adviser. See our dedicated article on BSPCE 2026: valuation and tax for details.

AGA (actions gratuites, free shares) allow shares to be granted without an immediate financial contribution, subject to a vesting period and potentially a holding period. AGA taxation is governed by specific rules: the acquisition gain is taxed as employment income above certain thresholds, with allowances for holding duration. Our article on AGA free shares tax 2026 sets out the applicable rules.

Classic BSA warrants and BSA air give the right to subscribe to shares at a pre-set price. The BSA air (autonomous interest right) is a variant that requires no initial cash outlay but generates a gain at exit proportional to performance. The BSA air tax treatment is sensitive, as the tax authority increasingly subjects it to the risk of reclassification as employment income.

This is the central point of vigilance in 2026. The 2025 Finance Act, followed by further expected clarifications through the 2026 Finance Act, has fundamentally altered the tax treatment of gains from management packages.

The principle: the gain realised on the sale or exercise of a management package instrument may be partially reclassified as employment income (wages or non-commercial income, BNC) rather than as a capital gain taxed under the favourable regime. The portion taxed as employment income is subject to progressive income tax and potentially social security contributions, which can represent a very significant additional tax cost.

The conditions for capital gain treatment are strict: the holding period must be at least two years, and the manager must have borne a genuine risk of capital loss (actual cash contribution at market value). An instrument with no cash outlay — typically the BSA air — will be presumed to generate employment income if the link between the gain and the role performed is deemed to be the predominant factor.

For transactions completed before 15 February 2025, the old regime remains applicable. For new transactions, the structure must be audited by a specialist tax adviser before anything is signed.

Caution note: the implementing provisions of this reform are still being consolidated and rescrit positions may evolve. The information above reflects the state of the law known as of 14 June 2026 and cannot replace a personalised analysis of your situation.

Consider a typical case: an industrial SME valued at €10 million in a secondary LBO. The fund acquires 80% of the capital for €8 million. Four managers co-invest through a ManCo SAS for 20%, i.e. €2 million (€500,000 each). They finance this contribution half in equity (€250,000 each) and half via an inter-associate loan or current account.

Five years later, the company is sold for €18 million. The managers' 20% share represents €3.6 million. After deducting their initial contribution (€2 million), the gross gain is €1.6 million.

Without reclassification, this gain is a capital gain taxed at the flat-rate withholding tax (PFU) of 31.4% (12.8% income tax plus 18.6% social levies following the 2026 CSG increase): estimated tax of approximately €502,400 for all four managers, i.e. €125,600 each.

With partial reclassification (for example, 50% deemed employment income for a manager in the 41% marginal tax band), the tax bill on the reclassified portion would be substantially higher, before any potential social security contributions. The difference can exceed tens of thousands of euros per manager.

This calculation illustrates why structuring decisions made upfront are critical.

Most directors entering a management package focus on the potential gain. They underestimate the risk that the tax authority will challenge the capital gain regime after the fact, during a tax audit.

The signals that attract scrutiny are well-known: absence of significant cash outlay, instruments without genuine capital loss risk, an overly direct correlation between the gain and operational performance attributable to the manager, upward ratchet mechanisms without equivalent downside exposure.

Since the article 163 bis H reform, the presumption has partially shifted: it is now for the taxpayer to demonstrate that genuine risk was taken. Files lacking solid evidence trails — no formalised shareholder agreement, no independent valuation at entry, undocumented financial flows — expose managers to reassessment covering multiple years.

This question arises systematically. Here are the main decision criteria.

A ManCo SAS is preferable when:

• multiple managers participate and want to organise their internal relations (shareholder agreement, pre-emption rights, exclusion clauses);
• the amounts at stake justify a clear patrimonial separation from personal assets;
• managers wish to reinvest dividends or gains in future transactions through the same entity (personal holding logic).

Direct participation may be sufficient when:

• a single manager is involved with a modest amount;
• the transaction is short in duration and the structure is simple;
• statutory constraints or the shareholder agreement do not require a dedicated vehicle.

The decision also depends on the taxation of dividends received during the holding period, the ManCo's corporate tax regime and the implications for the director's social security contributions. Our director wealth management service addresses these trade-offs within an overall patrimonial strategy.

1. Define the scope: who participates, for what amounts, with what differentiated rights. This negotiation takes place with the fund or reference shareholders before the protocol is signed.
2. Choose the legal form: SAS is almost universal for its statutory flexibility (preferred shares, ordinary shares, free organisation of voting and liquidation rights).
3. Draft statutes and shareholder agreement: good leaver / bad leaver clauses, tag-along and drag-along rights, ratchet mechanisms and forced exit conditions must be carefully drafted by a lawyer.
4. Value the instruments at entry: this is the most tax-sensitive element. An independent valuation — or at minimum a documented, market-consistent one — is essential to defend the capital gain regime during a tax audit.
5. Document all flows: every contribution, loan, repayment and distribution must be properly traced and accounted for in the ManCo's books.
6. Plan for the exit: the tax regime at exit depends on the disposal method (sale of ManCo shares, winding-up, contribution-disposal). The article 150-0 B ter contribution-disposal regime offers useful angles for securing the post-exit position.

A CEO of a mid-sized distribution company, in post for seven years, holds a stake through a ManCo SAS set up when a private equity fund entered five years ago. He holds classic BSA warrants subscribed at a market value validated by an independent firm.

At the time of a partial sale, he is considering disposing of his BSAs through the ManCo. Two questions arise: does the capital gain regime apply under article 163 bis H? And should the ManCo be dissolved or retained for reinvestment?

The analysis shows that the BSAs were subscribed at a price consistent with the valuation and that the executive bore a genuine loss risk (exercise price higher than the share value at the time of issue). The capital gain regime is defensible. For what follows, retaining the ManCo to carry future investments makes sense if the executive is considering further transactions within three to five years.

In this type of file, the line between defensible and exposed comes down to evidence — shareholder agreement, valuation, documented flows — that the accountant must have secured upfront, not discovered during an audit.

The article 163 bis H reform has shifted the balance of power in negotiations between managers and funds. Instruments requiring no cash outlay — popular precisely because they carry no apparent downside — are now the most exposed. BSPCE and AGA warrants, better framed legally, offer greater tax security provided their precise attribution and holding conditions are respected.

The ManCo remains a relevant tool, but its value lies in the organisational structure it enables — shareholder agreement, collective management, patrimonial logic — not in any intrinsic tax advantage. The tax outcome depends on the nature of the instrument, not the vehicle.

For executives considering entry into a management package, our practical advice is not to sign before having the structure audited by both an expert-comptable and a specialist private equity tax lawyer. Saving on fees upfront can prove very costly at exit.

See also our guide on holding company tax treatment to understand how the ManCo fits into an overall wealth strategy.

Updated 2026-06-14. This article is for information purposes and does not replace personalised advice. For your specific situation, please consult a chartered accountant registered with the Ordre des Experts-Comptables.