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CEP Exam L1 > Law > Flashcards

Law Flashcards

1
Q

What approval is needed for ISO plan? When?

A

What approval is needed for ISO plan? When?

SH approval within 12 months BOD approval

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2
Q

What approval is needed for ESPP plan? When?

A

What approval is needed for ESPP plan? When?

SH approval within 12 months BOD approval

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3
Q

Who can be on the Compensation Committee?

A

Who can be on the Compensation Committee?

Non-employee directors

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4
Q

What is the Book Section for Form 4?

A

What is the Book Section for Form 4?

Selected Issues 2.2.5 – Reportable and Non-Reportable Transactions

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5
Q

What kind of transactions are required on Form 4 within 5 business days?

A

What kind of transactions are required on Form 4 within 5 business days?

Select 10b5-1 and 401k

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6
Q

What kind of transactions are required on Form 4 within 2 business days?

A

What kind of transactions are required on Form 4 within 2 business days?

Grant (except ESPP), exercise option, withholding, sale, and material amendments including repricing

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7
Q

What kind of transactions are required within next Form 4 or 5?

A

What kind of transactions are required within next Form 4 or 5?

Option cancellation, vesting, ESPP purchase, non-material amendment, transfer @ divorce

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8
Q

Do RSUs always have vesting rights upon vesting?

A

Do RSUs always have vesting rights upon vesting?

Not if deferral has been filed. Voting rights only for issued stock.

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9
Q

How long does SH approval last for evergreen provision?

A

How long does SH approval last for evergreen provision?

10 years for evergreen position

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10
Q

What is short-swing profit?

A

What is short-swing profit?

Requires a company to take back “statutory profits” that a Sec 16 person makes on non-exempt sales and purchases of company stock within 6 month of each other

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11
Q

How do you calculate a short-swing profit?

A

How do you calculate a short-swing profit?

a. Transactions – look forward and backward six months
b. Take highest sale price and lowest purchase price, in order.

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12
Q

Why is Section 16 important?

A

Why is Section 16 important?

It defines insider trading and who is subject

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13
Q

Who is considered to be a Sec 16 officer?

A

Who is considered to be a Sec 16 officer?

President, Financial and Accounting Officers, VP, Officer with policy-making, Officer of parent or sub with policy-making, BOD, 10% owners

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14
Q

Who is an affiliate?

A

Who is an affiliate?

a. 10% owner, or
b. Sec 16, or
c. Director

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15
Q

What is Form 144?

A

What is Form 144?

Notice of Proposed sale of Securities which must be filed with SEC if >5k shares sold within 30 month or if aggregate sales price > $50k

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16
Q

What is Rule 144

A

What is Rule 144

a. Rule 144 provides a safe harbor exemption from registration under the 1933 Act for persons who wish to resell restricted securities.
b. Restricted Securities with “registration status” under 1933 or “affiliate status” 1934

17
Q

For transactions to be reported on Form 4 within 5 business days, when are they subject to reporting?

A

For transactions to be reported on Form 4 within 5 business days, when are they subject to reporting?

Within two business days of “deemed execution” date, which is earlier of (1) date on which broker or plan admin notifies person or (2) the 3rd business day following trade date.

18
Q

What is Rule 701?

A

What is Rule 701?

Non reporting companies can use to offer unregistered stock to employees or service providers

19
Q

What is the most important characteristic of restricted stock awards as opposed to other types of awards?

A

What is the most important characteristic of restricted stock awards as opposed to other types of awards?

Voting Rights

20
Q

During any 12 month period, aggregate sales price of securities sold on Rule 701 cannot exceed greatest of what 3 items?

A

During any 12 month period, aggregate sales price of securities sold on Rule 701 cannot exceed greatest of what 3 items?

$1 million, 15% of total assets of issuer, 15% of outstanding amount of securities being offered and sold on Rule 701

21
Q

What is Regulation T?

A

What is Regulation T?

Allows broker same day sale transactions

22
Q

What must the optionee provide to broker for a same day sale?

A

What must the optionee provide to broker for a same day sale?

Notice of exercise and irrevocable instructions

23
Q

What is the 1933 Act? Why is it important?

A

What is the 1933 Act? Why is it important?

1933 Act requires that securities be registered before sold

CEP Exam L1 (2 decks)

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