For stock options in Korea to be exercisable, thus valid options, the option must be approved, in most cases, at a general shareholders meeting of the Korean company. If approval of the shareholders is obtained the articles of incorporation of the Korean company should, inter alia, note:
- An intention that a stock option may be granted in specified cases;
- The number of shares to be issued or transferred in the case of exercising the stock option;
- Qualifications of a person to whom a stock option is to be granted;
- Exercising period of the stock option; and
- An intention that the granting of the stock option may be revoked by a resolution of the board of directors in specified cases. Korea Commercial Act art. 340-3(3)1.
Additionally, the company granting the options should execute an agreement with the individual granting the options and the stock option should, only, be given to authorized recipients.
If your company in Korea intends to grant stock options or have received stock options in Korea please consult with an attorney that deals with these type of matters. I have seen a recent incident that could have been avoided if the company and the employee, simply, had a counsel that was not, only, aware of Labor and Employment Law.
Sean Hayes, IPG’s Co-Chair of the Korea Practice Team, may be contacted at: SeanHayes@ipglegal.com
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