For stock options in Korea to be exercisable, thus valid option contracts, the option must be approved, in most cases, at a general shareholders meeting of the issuing Korean company. If approval of the shareholders is obtained the articles of incorporation, for the option to be valid, should, among other things, 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 you 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 counsel that was not, only, aware of Labor and Employment Law in Korea. This matter is much more than a Labor Law matter and, thus, a more nuanced counsel is, often, necessary.
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.
Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.
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