On November 24, 2020, the U.S. Securities and Exchange
Commission (SEC) proposed changes to Rule 701 and Form S-8 under
the Securities Act of 1933. While most of the initial attention has
focused on the revisions that would allow equity compensation to be
granted to “gig economy” workers, certain other
revisions are broader in scope and apply to all private and public
companies relying on Rule 701 or Form S-8 to grant equity
compensation to service providers.
What are Rule 701 and Form S-8?
For a company to issue securities in the US, it must comply with
complex securities registration requirements or have an exemption
available. Rule 701 under the Securities Act provides the
most-often used exemption to permit private companies to offer
securities (such as stock options and restricted stock units) to
service providers (e.g., employees, consultants and directors). For
public companies, the SEC provides a simplified form of
registration statement (Form S-8) covering
