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

Yes, it is possible to offer stock options to employees in Ohio without violating securities laws, provided that certain requirements are met.

Requirements for Offering Stock Options in Ohio

According to OHRC Section 1107.09, a stock state bank may adopt and carry out plans for the offering or sale of, the grant of, or the grant of options on, the bank’s shares to any or all employees, officers, or directors of the bank or any of the bank’s subsidiaries or affiliates, or to other parties, or to a trustee on their behalf. For purposes of this section, “other parties” means any person that has provided, or will provide, a service or a benefit to the bank, as determined by the board of directors.

To offer stock options in Ohio, the following requirements must be met:

  1. Approval of the bank’s board of directors, the holders of a majority of the bank’s voting shares, and the superintendent of financial institutions is required.
  2. The plan must be adopted for any unissued shares, treasury shares, or shares to be purchased or granted.
  3. Shares otherwise subject to pre-emptive rights may be offered or sold under a plan only when released from pre-emptive rights.
  4. Shares authorized for the purpose of carrying out a plan adopted under this section shall be deemed released from pre-emptive rights.

Additionally, OHRC Section 1707.051 provides an exemption from securities registration requirements for offerings that meet certain conditions, including that the offering meets the requirements of the federal exemption for intrastate offerings in 17 C.F.R. 230.147A, the issuer is an OhioInvests issuer, and the offering expires not more than twelve months after the offering commences.

Therefore, to offer stock options to employees in Ohio, it is necessary to comply with the requirements set forth in OHRC Section 1107.09 and, if applicable, OHRC Section 1707.051.

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Source(s):
Jurisdiction

Ohio