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

Offering Stock Options to Employees in Wisconsin

In Wisconsin, offering stock options to employees may be subject to securities laws. The relevant statutes are found in Chapter 551 of the Wisconsin Statutes, which governs the registration and sale of securities.

According to WIST 551.02, a security is defined as “any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase any of the foregoing.”

Therefore, stock options may be considered securities under Wisconsin law and may require registration or exemption from registration under Chapter 551.

Requirements for Offering Stock Options

If you wish to offer stock options to employees in Wisconsin, you should consult with a securities attorney to ensure compliance with state and federal securities laws.

Under WIST 551.41, securities must be registered with the Wisconsin Department of Financial Institutions unless they are exempt from registration. Exemptions from registration include private offerings to a limited number of investors, offerings to accredited investors, and offerings of securities issued by certain types of entities.

Additionally, under WIST 551.23, any person who offers or sells securities in Wisconsin must be registered as a broker-dealer or be exempt from registration.

Therefore, to offer stock options to employees in Wisconsin, you may need to register as a broker-dealer or ensure that the offering is exempt from registration under Wisconsin law.

Conclusion

Offering stock options to employees in Wisconsin may be subject to state and federal securities laws. To ensure compliance, it is recommended that you consult with a securities attorney to determine whether registration or exemption from registration is required.

Jurisdiction

Wisconsin

• General