Senate Bill Would Allow Companies To Issue More Options Without Disclosure Under Rule 701

March 27, 2015

Senators Pat Toomey and Mark Warner recently introduced a bill to increase the amount of stock options and other equity compensation that a non-public company may issue to employees in unregistered offerings under Rule 701 without the enhanced disclosure required by the rule. The bill, ‘‘Encouraging Employee Ownership Act,’’ proposes to double the threshold for determining whether enhanced disclosure is required from $5 million to $10 million in aggregate sales price or amount of securities sold during any 12-month period. Senator Toomey noted that making it easier for companies to give employees an ownership stake was good for business, stating “As a former small business owner, I know that workers who really feel like part of the company can be the most efficient, effective and loyal employees.” Read the bill and related press release.

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