New California Stock Option Regulations
Effective as of July 9, 2007, California has changed the requirements in the regulations underlying Section 25102(o) of the California Corporations Code. The 25102(o) amendments relax a number of the former key requirements of the Section 25102(o) exemption.
Highlights include:
- no minimum vesting (the old rules required vesting at a rate of at least 20% per year);
- no requirement to provide financial information, provided the plan complies with Rule 701 under the Securities Act of 1933, as amended;
- no more pricing restrictions (although this is less exciting now than it would have been before Internal Revevenue Code Section 409A was adopted); and
- Shareholder approval is now required within 12 months of the initial grant in California (as opposed to the old rule of within 12 months of its adoption in the first instance).
