ManCo and management packages: definition, instruments and tax 2026

In a leveraged buy-out, a ManCo is the holding company, usually a SAS, that managers create to hold their stake in the target together. It organises their relations through a shareholder agreement and carries their management package. In asset management the same word means an AMF-authorised portfolio management company: two distinct realities.

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 companies registered with the trade and companies register for less than fifteen years and liable to corporate income tax in France. The company does not have to be unlisted: a listed company remains eligible if its market capitalisation is below 150 million euros. Article 163 bis G was further amended by Law no. 2026-103 of 19 February 2026, in a version in force since 21 February 2026 and applicable to warrants granted from 1 January 2026. The exercise gain is taxed at the 12.8% flat rate set out in 1° of B of article 200 A, or by election under employment income rules; that rate rises to 30% where the beneficiary has worked in the company for less than three years at the date of sale. The test is therefore length of service, not how long the securities were held. 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: for shares granted since 1 January 2018 there is no allowance for holding duration. The portion of the acquisition gain not exceeding the annual limit of 300,000 euros is reduced by a 50% allowance, while the excess is taxed under ordinary employment income rules with no allowance. 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 (accord d'investissement rapide, or rapid investment agreement) is a contractual variant in which the investor pays the funds immediately: it is the valuation and the conversion into shares that are deferred, not the cash outlay. 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. Article 163 bis H, created by article 93 of the 2025 Finance Act, was amended by article 24 of Law no. 2026-103 of 19 February 2026. The version in force since 21 February 2026 applies to securities disposed of, sold, converted or leased from 15 February 2025 onwards, whatever the date the instruments were acquired.

The principle: a net gain earned in consideration for duties as an employee or director is taxed under ordinary employment income rules. The capital gains regime of article 150-0 A applies only by way of derogation, subject to conditions, and within a limit equal to three times the ratio between the company's real value at the date of sale and its real value at acquisition, less the price paid. Any fraction above that limit stays taxed as employment income. It bears a 10% flat-rate employee contribution (article L. 137-42 of the Social Security Code), to the exclusion of ordinary social security contributions and with no employer contribution.

The conditions for capital gain treatment are strict: the securities must carry a risk of losing the price paid to acquire them and must have been held for at least two years. That holding condition does not apply to free shares granted under articles L. 225-197-1 to L. 225-197-5 of the Commercial Code, which need only carry a risk of losing their 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.

The timing test is not the date the package was set up, nor the date the instruments were acquired, but the date the securities are disposed of, sold, converted or leased: a package structured before 15 February 2025 but unwound after that date falls under the new regime. 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.

Article 163 bis H creates no presumption. It makes employment income taxation the default treatment for a gain earned in consideration for duties, and makes access to the capital gains regime conditional on objective tests, a risk of loss and two years of holding except for free shares, together with a quantified cap. 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 and 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 28 August 2026. 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.