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ARTICLE · 23 JUNE 2021

Qualified ESPP Design And Compliance

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Employee stock purchase plans that satisfy the requirements of I.R.C. § 423 provide a tax-efficient way for a sponsoring corporation to grant to its employees.

United StatesEmployment and HR
Debra Hoffman
Debra Hoffman
Stephanie B. Vasconcellos
Stephanie B. Vasconcellos
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Employee stock purchase plans that satisfy the requirements of I.R.C. § 423 provide a tax-efficient way for a sponsoring corporation to grant to its employees-and the employees of its related corporations whose employees are (or may be) eligible to participate in the plan (participating corporations)-rights to purchase stock of the sponsoring corporation or its related corporations at a price that is less than the fair market value (FMV) of the underlying stock. This practice note describes in detail the process of designing and implementing an employee stock purchase plan that satisfies the requirements of I.R.C. § 423.

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Mayer Brown is a global services provider comprising associated legal practices that are separate entities, including Mayer Brown LLP (Illinois, USA), Mayer Brown International LLP (England & Wales), Mayer Brown (a Hong Kong partnership) and Tauil & Chequer Advogados (a Brazilian law partnership) and non-legal service providers, which provide consultancy services (collectively, the "Mayer Brown Practices"). The Mayer Brown Practices are established in various jurisdictions and may be a legal person or a partnership. PK Wong & Nair LLC ("PKWN") is the constituent Singapore law practice of our licensed joint law venture in Singapore, Mayer Brown PK Wong & Nair Pte. Ltd. Details of the individual Mayer Brown Practices and PKWN can be found in the Legal Notices section of our website. "Mayer Brown" and the Mayer Brown logo are the trademarks of Mayer Brown.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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