[Advisory] Review of the possibility of granting stock options to employees of a subsidiary.

Startups often find it difficult to provide high salaries or similar monetary compensation to founding members and key personnel. In such cases, stock options (right to purchase shares) can be a useful tool to attract key personnel.

When stock options are granted to employees, the company may not be able to provide immediate substantial monetary compensation, but can reward them in line with the company's growth, and employees can be motivated to contribute to the company's growth. Because stock options affect the company's equity structure, the Commercial Code stipulates the conditions for their issuance. However, for startups and venture companies, if certain conditions are met, they can grant stock options with more relaxed issuance conditions through the “Special Measures Act for the Promotion of Venture Companies” (hereinafter referred to as the Venture Companies Act).

Fintech startup A inquired with Law firm Veat whether it could grant stock options on its parent company’s shares to the employees of its subsidiary. Veat, considering the provisions and legislative intent of the Venture Companies Act, clarified the conditions for granting stock options to the subsidiary's employees and then conveyed this information to A.

Thank you.

Law firm Veat