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Can I offer stock options to employees without violating securities laws in North Carolina? What are the requirements?
Offering Stock Options to Employees in North Carolina
To offer stock options to employees in North Carolina without violating securities laws, you may be able to rely on the exemption provided by NCGS 78A-16(11), which exempts interests in employees’ stock or equity purchase plans. However, if the stock options are not issued pursuant to such a plan, you may need to comply with the Invest NC exemption under NCGS 78A-17.1.
Under the Invest NC exemption, an offer or sale of a security by an issuer is exempt from registration if the offer or sale is conducted in accordance with certain requirements. These requirements include, among others, that the issuer of the security is a business entity formed under the laws of North Carolina or registered with the Secretary of State, and that the transaction meets the requirements of the federal exemption for intrastate offerings in section 3(a)(11) of the Securities Act of 1933 and/or SEC rule 147.
Additionally, NCGS 55-6-24 allows corporations to issue rights, options, or warrants for the purchase of shares of the corporation. The board of directors or officers of the corporation who are designated by the board of directors shall determine the terms upon which the rights, options, or warrants are issued, their form and content, and the consideration for which the shares are to be issued.
It is recommended that you consult with a legal professional to ensure compliance with all applicable securities laws and regulations.
Source(s):
- [1.1] Exempt securities.
- [2.1] Rights, options, and warrants.
- [1.2] Invest NC exemption.
Jurisdiction
North Carolina