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Can I offer stock options to employees without violating securities laws in Massachusetts? What are the requirements?

Based on the context documents, it appears that you can offer stock options to employees without violating securities laws in Massachusetts, as long as certain requirements are met.

Requirements for Granting Stock Options

According to MGL Chapter 167J, Section 18 and Section 19, a stock corporation may grant options to purchase, issue, and sell shares of its capital stock to its directors, officers, and employees without first offering the same to its shareholders, as long as the following requirements are met:

  • The consideration for the options must be not less than par value.
  • The terms and conditions of the options must be approved by the board of directors, by the holders of a majority of the stock entitled to vote with respect thereto, and by the commissioner.
  • The sufficiency of consideration as approved shall be conclusively presumed, in the absence of fraud.

Additionally, MGL Chapter 156, Section 14 allows corporations to create shares of stock with or without par value and issue its authorized shares without par value for such cash, property, tangible or intangible, services or expenses as may be determined from time to time by the board of directors, subject to the provisions of the agreement of association, articles of organization or amendments thereof.

Other Considerations

It is important to note that the issuance of any shares of the capital stock of the corporation upon the exercise of any such options shall require the prior approval of the commissioner and shall be subject to such conditions as the commissioner may impose [1.3]. Additionally, no corporation shall, directly or indirectly, vote upon any share of its own stock [2.4].

Therefore, it is recommended that you consult with a legal professional to ensure that all requirements are met and that the issuance of stock options to employees is done in compliance with Massachusetts securities laws.

I hope this helps!

Source(s):
Jurisdiction

Massachusetts