In June 2021, Attorney Hee-jae Choi of Hwaum Law Office provided legal advice to Startup Company A regarding the preparation of a Stock Option Grant Agreement.
To grant stock options, the company’s Articles of Incorporation must contain provisions regarding the grant of stock options, and the actual grant generally requires a special resolution of the shareholders’ meeting. In addition, under the Korean Commercial Act, the number of stock options that may be granted generally may not exceed 10% of the company’s total number of issued shares.
However, companies certified as venture businesses under the Act on Special Measures for the Promotion of Venture Businesses may grant stock options covering up to 50% of their total issued shares, subject to the applicable requirements.
In preparing the Stock Option Grant Agreement, Hwaum included not only essential provisions, such as adjustments to the exercise price, but also tailored the agreement to Company A’s specific needs. At the company’s request, Hwaum incorporated detailed provisions concerning the vesting period, vesting schedule and exercise intervals, cliff period, and vesting percentages, including when and in what proportion the stock options could be exercised.
By preparing a customized agreement specifically designed for Company A, Hwaum helped the company structure its stock option program in a manner aligned with its business and management objectives.
Author: Attorney Hee-jae Choi