Contact us with your California corporate & securities law questions (949) 353-6347 or Contact us here

California's Phantom Stock Plan Exemption

Some issuers prefer not to issue actual shares to their employees but want their employees to share in any appreciation in the value of their shares.  A phantom stock plan is one way to achieve this result.  Of course, their are tax (including IRC § 409A), accounting, cash flow and other issues to be addressed before implementing such a plan.  This posting is focused on whether the award of an interest in a phantom stock plan by an employer must be qualified under the Corporate Securities Law of 1968.

Rule 260.105.5 answers the question by exempting from the issuer qualification requirement (Corp. Code § 25110) any transaction whereby an issuer allocates to its employees or employees of its parent or subsidiaries "units" representing a right eventually to receive cash (but not stock) measured by (i) dividends paid on shares of capital stock; (ii) the market value of shares of capital stock of the issuer; or (iii) both.

Share on:

ANY QUESTIONS REGARDING CALIFORNIA CORPORATE AND SECURITIES LAW? CONTACT US DIRECTLY

We offer expert advice with the intricacies of California law.

Our years of experience and expertise allow us to help clients navigate the business laws in California.

CONTACT US

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

ABOUT OUR AUTHOR

30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
Partner at Allen Matkins
(949) 353-6328
 Contact me
Learn More About Keith

nominee-badge

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

CATEGORIES

see all

RECOGNITION

YOUTUBE

FACEBOOK