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Jul 26, 2012

Stock Options in Korea: Granting and Exercising Share Options in Companies in Korea

For stock options to be exercisable, thus valid options, the options must be approved, in most cases, at a general shareholders meeting.  If approval of the shareholders is obtained the articles of incorporation of the Korean company should note:

    
1. 
An intention that a stock option may be granted in specified cases;

    
2. 
Categories and the number of shares to be issued or transferred in the case of exercising the stock option;

    
3. 
Qualifications of a person to whom a stock option is to be granted;

    
4. 
Exercising period of the stock option; and



    
5. 
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 you intend to grant stock options or have received stock options in exchange for a lower salary 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.  Yes again, one of the big boys with way too focused teams.
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SeanHayes@ipglegal.com
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.
www.ipglegal.com