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Can I offer stock options to employees without violating securities laws in Georgia? What are the requirements?
Offering Stock Options to Employees in Georgia
Georgia law allows corporations to issue rights, options, or warrants with respect to the shares of the corporation, whether or not in connection with the issuance and sale of any of its shares or other securities [1.1]. Therefore, it is possible to offer stock options to employees in Georgia.
Requirements
The board of directors of the corporation must determine the terms upon which the options are issued, their form and content, the consideration for which they are to be issued, and the terms and conditions relating to their exercise, including the time or times, the conditions precedent, and the prices at which and the holders by whom the options may be exercised [1.1].
The terms and conditions of the options may preclude or limit the exercise, transfer, or receipt of such options or invalidate or void any options. The terms and conditions may also be made dependent upon facts ascertainable outside the documents evidencing the options, if the manner in which the facts shall operate upon the exercise of options is clearly and expressly set forth in the document evidencing the options or in the resolution [1.1].
The corporation must have authorized and unissued shares sufficient to satisfy the options if and when exercised. If at the time the corporation issues options, the corporation does not have authorized and unissued shares sufficient to satisfy the options if and when exercised, the granting of the options is not invalid solely by reason of the lack of sufficient authorized but unissued shares to honor the exercise of the options [1.1].
The terms and conditions of options may include provisions that preclude or limit the exercise, transfer, or receipt of such options by, or invalidate or void any such options held by, any person that is a beneficial owner of a specified amount of the outstanding equity securities or percentage of the outstanding voting power of the corporation, or by any transferee of such person, except that such provisions shall not affect any person whose beneficial ownership at the date of adoption of any such provision exceeds such specified amount or percentage, unless the amount of outstanding equity securities beneficially owned by such person is subsequently increased [1.1].
The board of directors may authorize one or more officers of the corporation to designate officers and employees of the corporation or of any of its subsidiaries to be recipients of options to be issued by the corporation and determine the number of options to be received by such officers and employees, provided that the resolution authorizing such officer or officers shall specify the total number of options such authorized officer or officers may award. The board of directors may not authorize an officer to designate himself or herself as a recipient of any options [1.1].
Exemptions from registration of securities
Georgia law provides exemptions from registration of securities [2.1]. However, it is important to note that the exemptions may not apply to all situations and it is recommended to consult with a legal professional to ensure compliance with all applicable laws and regulations.
Conclusion
In summary, corporations in Georgia can offer stock options to employees as long as the board of directors determines the terms and conditions of the options, the corporation has authorized and unissued shares sufficient to satisfy the options, and the options comply with the provisions of Georgia law [1.1]. It is also important to consider any applicable exemptions from registration of securities [2.1].
Source(s):
Jurisdiction
Georgia, Georgia