Taking Stock

The SEC eases the financial burden of employee stock offerings.
1 min read

This story appears in the March 2000 issue of Entrepreneur. Subscribe »

Have you considered selling stock to your employees, but didn't want to incur the extra expense of filing with the U.S. Securities and Exchange Commission (SEC)? Now the SEC has made the process much easier.

According to Corey Rosen, executive director of the National Center for Employee Ownership, a now-defunct version of the 701 rule under the Securities Act of 1933 made private companies exempt from filing with the SEC only if they offered less than $5 million in stock or 15 percent of total company equity in any 12-month period. The latest change, however, liberalizes registration requirements by removing the $5 million ceiling and setting the maximum amount of securities that can be sold in a year at the greatest of:

  • 15 percent of the issuer's total assets, or
  • 15 percent of the outstanding securities of that class.

Rosen believes the 701 rule is particularly beneficial for companies with 401(k) plans who would like to offer company stock as one of the investment choices.

More from Entrepreneur

Grow Your Business at Entrepreneur LIVE! Join us on Nov. 16 in Brooklyn, NY, to learn from legends like Danica Patrick and Maria Sharapova, pitch our editors, meet with investors, and potentially walk away with funding!
Register here

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.