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

Offering Stock Options to Employees in New York

To offer stock options to employees in New York without violating securities laws, the following requirements must be met:

  1. The stock options must be offered through an authorized individual retirement plan established and maintained by one or more financial organizations [1.1].
  2. The financial organization offering the stock options must be authorized to do business in the state of New York, and is licensed or chartered by the state department of financial services, is chartered by an agency of the federal government, or is subject to the jurisdiction of the securities and exchange commission [1.1].
  3. The offeror must make full and fair disclosure to offerees of the material information set forth in the registration statement filed with the attorney general at his New York city office [3.1].
  4. If the offeror holds a shareholders’ meeting, reasonable measures must be implemented to verify the identity of shareholders participating and voting by means of electronic communications [2.3].

Additionally, it is important to note that shareholders may be personally liable for wages due to laborers, servants, or employees [2.1]. Furthermore, preemptive rights may apply to equity shares and voting shares [2.4].

Conclusion

To summarize, offering stock options to employees in New York requires compliance with certain requirements, including offering the options through an authorized individual retirement plan, making full and fair disclosure to offerees, and implementing reasonable measures for electronic communications. It is also important to be aware of potential personal liability for wages due to employees and preemptive rights for equity and voting shares.

Source(s):
Jurisdiction

New York