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Q: Rule 701 of the Securities Act of 1933 -- does it hint anything? ( No Answer,   1 Comment )
Question  
Subject: Rule 701 of the Securities Act of 1933 -- does it hint anything?
Category: Business and Money
Asked by: elebo-ga
List Price: $5.00
Posted: 03 Feb 2006 21:53 PST
Expires: 05 Mar 2006 21:53 PST
Question ID: 441229
Why would a private company issue information pursuant to the
requirements of Rule 701 of the Securities Act of 1933 to its
employees with unexercised stock options? Does it mean/hint 
something special will happen or is it just one of the 
normal procedure?
Answer  
There is no answer at this time.

Comments  
Subject: Re: Rule 701 of the Securities Act of 1933 -- does it hint anything?
From: antontodorov-ga on 04 Feb 2006 09:10 PST
 
Hi
I think that it is a normal procedure and there is nothing special to happen. 
Rule 701 promulgated under the Securities Act provides an exemption
from registration for certain issuers offering and selling stock
options (or other securities) to employees and consultants under
compensatory benefit plans. Rule 701 requires (among other things)
that any company issuing more than $5 million in stock options over a
12-month period provide detailed financial statements and other
disclosures to the option recipients. The Rule allows privately-held
companies to compensate their employees with securities without
incurring the obligations of public registration and reporting, while
ensuring that essential information is provided to employees.

Thus, to answer your question, the company does not want to violate
the provisions of the Securities act as far as the amount of options
(or smthg else) is too much to be considered exempt from the
requirements.

There is an interesting case with ... GOOGLE about it ...Have a look
http://www.sec.gov/litigation/admin/33-8523.htm

Rule 701 falls under section E - Exemption for Securities of Small
Business Investment Companies
For further info see the text of Rule 701 
http://www.law.uc.edu/CCL/33ActRls/rule701.html

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