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

Based on the documents provided, it appears that you can offer stock options to employees without violating securities laws in Washington, but you must obtain a permit from the director and comply with the requirements outlined in the documents. These requirements include obtaining approval from the holders of a majority of the bank’s voting capital stock, filing an application for a permit to sell stock, and complying with any conditions imposed by the director.

Requirements for Offering Stock Options to Employees

  • A corporation may issue rights, options, or warrants for the purchase of shares of the corporation. The board of directors shall determine the terms upon which the rights, options, or warrants are issued, their form and content, and the terms and conditions relating to their exercise, including the time or times, the conditions precedent, and the consideration for which and the holders by whom the rights, options, or warrants may be exercised [2.1].
  • The articles of incorporation, bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction [2.2].
  • Any issuance of shares must be approved by the board of directors. Shares may be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed, or other securities of the corporation. A good faith determination by the board of directors that the consideration received or to be received for the shares to be issued is adequate is conclusive insofar as the adequacy of consideration relates to whether the shares are validly issued, fully paid and nonassessable [2.4].
  • An association may purchase stock issued by it in an amount not to exceed the amount of earned surplus or undivided profits available for dividends on its stock if the purchase is with the prior consent of the director, or pursuant to a put option contained in a plan which has been approved by the director establishing an employee stock ownership plan for the association and its employees pursuant to the provisions of the act of congress entitled “Employee Retirement Income Security Act of 1974”, as now constituted or hereafter amended, or Section 409 of the Internal Revenue Code of 1954, as now constituted or hereafter amended [3.2].
  • The stock of an association may be reduced by resolution of the board of directors approved by the vote or written consent of the holders of a majority in amount of the outstanding stock of the association to such amount as the director approves [3.6].
  • No issued and outstanding stock of an association shall be sold or offered for sale to the public, nor shall subscriptions be solicited or taken for such sales until the association or the selling stockholders have applied for and secured from the director a permit authorizing the sale of the guaranty stock [3.8].

Therefore, to offer stock options to employees without violating securities laws in Washington, you must obtain a permit from the director and comply with the requirements outlined in the documents. These requirements include obtaining approval from the holders of a majority of the bank’s voting capital stock, filing an application for a permit to sell stock, and complying with any conditions imposed by the director. Additionally, the board of directors must determine the terms upon which the rights, options, or warrants are issued, their form and content, and the terms and conditions relating to their exercise. The articles of incorporation, bylaws, or agreements among shareholders may impose restrictions on the transfer or registration of transfer of shares of the corporation. Finally, any issuance of shares must be approved by the board of directors and the consideration received or to be received for the shares to be issued must be adequate.

Source(s):
Jurisdiction

Washington