Legal review regarding compensation payment to non-registered directors and stock option grant.

Law firm Veat received a request from an engineering startup (hereinafter “the client”) and conducted a legal review regarding compensation payments to non-registered directors and the granting of stock options.

The Law firm Veat Startup Consulting Team first clarified the scope of directors as stipulated in the Commercial Code with respect to the payment of director’s compensation. Regarding director’s compensation, Article 188 of the “Commercial Code” stipulates this, but whether a company’s employees and executives are directors in the legal sense is determined based on whether they are recognized as employees. The Law firm Veat Startup Consulting Team determined whether the client’s non-registered directors were directors under the Commercial Code through a review of precedent and legal interpretation regarding employee status and employer status.

Furthermore, because the compensation-related matters may differ depending on whether one is a director under the Commercial Code, we provided legal advice to the client, through a clear analysis, so that the client could pay appropriate compensation to the non-registered director and resolve legal issues smoothly.

Additionally, the Law firm Veat Startup Consulting Team analyzed the differences between the “Venture Business Act” and the Commercial Code to determine whether stock options could be granted to non-registered directors and to review the requirements for granting stock options.

What is a Stock Purchase Option?

A stock purchase option is a performance-based compensation system for employees who contribute or can contribute to the establishment, management, and technological innovation of a company, and incentivize them to be committed to their duties through the future gain from purchasing shares.

To grant stock purchase options, the procedures stipulated in the Commercial Code must be followed, and the eligibility of employees who may receive them must be met. Also, there is a limited total amount that can be granted, so related regulations must be observed. 

Both the Commercial Code and the Venture Business Act deal with stock purchase options, but there are differences in the requirements, so we recommend seeking the assistance of a startup specialist lawyer who has handled numerous related cases.

Law firm Veat has grown with numerous startups and provided various legal consultations. By growing with startups that have different business models, Law firm Veat provides legal advice tailored to each startup’s characteristics and issues, and helps startups operate their businesses successfully. At the same time, Law firm Veat also continuously monitors and analyzes the latest legal information and precedents to further grow.

From early-stage startups to unicorn companies, we will help startups effectively resolve the various legal challenges and problems they face based on the experience and know-how accumulated through collaboration with startups at various stages. 

If you need regular startup legal advice, please refer to the following information and contact Law firm Veat.

Thank you.

Law firm Veat