Board Resolutions: Qualified ESPP Adoption

Summary

These board resolutions templates are designed to be used by a company’s board of directors to adopt an employee stock purchase plan (ESPP) that satisfies I.R.C. § 423. This template contains drafting notes and alternate clauses. To qualify for tax-preferred status, ESPPs must be formally adopted by the sponsoring corporation prior to the granting of any purchase rights under the plan and approved by the stockholders of the sponsoring corporation within the period commencing 12 months before and ending 12 months after the ESPP is adopted by the sponsoring corporation’s board. The resolutions may be inserted into the minutes of a meeting of the board or included in a unanimous written consent of the board, depending on applicable corporate laws of the relevant jurisdiction and the company’s charter, bylaws, or other corporate documents. These resolutions contemplate that the stock that is subject to the ESPP will be stock of the sponsoring corporation. If the sponsoring corporation and the corporation whose stock is being offered under the plan (the issuing corporation) are different, these resolutions may need to be modified, and it may be necessary for the issuing corporation to also adopt complementary resolutions to the extent necessary to address matters relating to the issuing corporation’s stock. For more information on ESPPs, see Qualified Employee Stock Purchase Plan Design and Compliance and Qualified ESPP Drafting Checklist.