How can I grant stock options to employees and consultants?

Friday, October 19, 2007

Fred Greguras, Fenwick & West, http://www.fenwick.com/

Your start-up should adopt a stock option plan at the time of incorporation that satisfies federal and state tax and securities laws requirements. In California, the plan is often referred to as a “25102(0) plan” based on the California Corporations Code provision. Adopting such a plan will enable the corporation to grant tax favorable options (“incentive stock options”) and avoid securities law violations because the plan will have a securities law exemption under state and federal law. If the plan is not created in accordance with securities laws, granting an option to an employee or other service provider requires the individual to qualify for the same type of securities law exemption as for an investor (“accredited investor”).

Return to Library of Business Information