Venture company stock purchase option (stock option) minimum tenure safety device establishment

Law firm Veat reviewed the stock option grant contract on behalf of venture company A (hereinafter referred to as "the client").

Stock options are an important incentive system that allows a company to secure excellent talent by granting employees the right to purchase shares at a specific price, and to reward employees in proportion to the company’s growth, thereby promoting the growth of the organization.

The conditions for granting stock options, the company's operating method, legal structure, and the company’s articles of incorporation are different for each company, so they must be systematically reviewed to ensure they are legally sound and appropriate for the company’s situation.

• Stock Option Grant Consideration

✔ The Commercial Code comprehensively covers regulations related to the company’s governing structure, and according to Article 167-3 of the Commercial Code, the grant of stock options must be based on the articles of incorporation, which can be amended through a special resolution of the general meeting of shareholders.

✔ The Venture Company Act is a special act aimed at promoting and protecting venture companies and contains regulations and support systems reflecting the special characteristics of venture companies. According to Article 16-4 of the Venture Company Act, a venture company can grant stock options for a certain period from the date of venture company certification, and must comply with specific regulations regarding the targets and conditions.

At the client’s request, we allowed stock options to be exercised even if a merger and acquisition occurred before the stock option exercise period, protecting employees from losing their stock option rights in complex M&A situations that often occur in startups.

In addition, we reflected the client’s request to set different minimum employment periods for each quantity in granting stock options. This is a way to encourage employees’ long-term employment and supports the company’s stable talent management.

Law firm Veat thoroughly reviewed the stock option grant contract to ensure it did not violate the Commercial Code, the Venture Company Act, and the client’s articles of incorporation, met all legal requirements, and reflected the client’s requests, such as M&A and other management situations, to ensure that the stock option system could be operated safely from a legal perspective.

Law firm Veat provides optimal expertise based on extensive experience in legal advisory services related to the Commercial Code, the Venture Company Act, and stock options for startups and venture companies, strictly complies with complex legal procedures such as amendments to the articles of incorporation and resolutions of the general meeting of shareholders, minimizes legal risks for startups and venture companies, and prevents legal disputes in advance, establishing itself as a reliable partner for the company’s growth and success.

If you require regular legal advisory services regarding various corporate legal issues that may arise in venture companies and startups, please refer to the following information and contact Law firm Veat.