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Does my company's stock plan need to be signed to become legally binding or is it enough if the company's board approved it?

Los Angeles, CA |
Filed under: Business

My company has a written stock plan but he document was never signed by the Company Secretary (or any Officer). Is it still valid even though it was not signed? That Secretary left the company some time ago so does the new Secretary sign it, or does an officer who was present when it was voted on sign? Is it okay if nobody signed but the Corporate minutes reflect it was voted on and approved? Does the stock plan have to be scrapped and the company need to start over?

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Attorney answers 4


Assuming your company is a privately-held corporation, if the stock plan has a designated administrator, and the resolution approves the stock plan, the award of each grant of equity to the designated individuals and the empowerment of the administrator to perfect so, I don't see anything holding you back.

Before I tell you everything is okay, you might review what the secretary needed to sign, and why. This might be able to clarify whether this signature is necessary and whether you can now sign it, ignore the requirement or re-do the efforts as a precaution.

This isn't brain surgery by any means, but if your grants weren't conveyed correctly and you proceed anyways, you'll subject the recipients to unnecessary tax consequences if there's any appreciation in the underlying equity's value.

For legal advice and representation, consult an attorney. This response was provided for informational and marketing purposes only, and should not be relied upon as legal advice. No communication with the author of this comment through this website can establish an attorney-client relationship, as the attorney-client relationship can only be established by the mutual understanding of its creation by both the client and the attorney, each party intending to create such a relationship.


This question is both 1) too complicated for AVVO, and 2) requires information which has not been provided, and if it were provided would be too voluminous for this site. There are many types of "stock plans." The entire written plan, the company's bylaws, the company's financial statements, a tax opinion letter, the corporate minutes would all have to be reviewed in order to determine the validity of the plan. The fact the plan was voted on and approved (you do no state by whom?) is one key factor, but not the only factor. Have a business/tax attorney review the relevant documents.

Hope this helps!!

Phillip M. Smith Jr.
Los Angeles Tax & Business Attorney
Licensed in the United States Tax Court

Call: 323-292-4116 or 562-505-1004

THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mr. Smith is licensed to practice law throughout the state of California with offices in Los Angeles County. He is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court. His phone number is 323-292-4116 or his email address is


I agree with attorney Smith. There are too many unknowns for an answer on AVVO. You want your corporate attorney to review the plan, the by-laws and other pertinent corporate data to give you the right answer.

Please note that I am answering this question as a service through Avvo but not as your attorney and no attorney-client relationship is established by this posting. An attorney-client relationship can only be established through signing a Fee Agreement and paying the necessary advanced fees.


You need to have a corporate attorney review your corporate by-laws, the written stock plan, and other relevant documents before they can give you proper advice.

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