61-1-14(1)(g) – Employee Benefit Plan Exemption


(1) The following securities are exempted from Sections 61-1-7 and 61-1-15:

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(g) an investment contract issued in connection with an employees' stock purchase, option, savings, pension, profit-sharing, or similar benefit plan;

Division Policy Positions

The Division has taken the position that 1) participation in an employee stock purchase or option plan and 2) the issuance or exercise of the underlying securities pursuant to the plan constitute two separate securities or transactions which must comply with the provisions of § 61-1-7 of the Act. This exemption only covers the plan. A separate exemption or registration must be used to cover either the issuance of securities or exercise of options under the plan. The transaction exemption R164-14-27v is most commonly used and is also self-executing.

This exemption is for employee investment contract, option, pension, profit sharing, and other benefit plans. In Utah only employees may participate. The Division has taken the position that employees include officers and directors of the company. In some states, such as California, the plan can include independent contractors, consultants, and other non-employees. If the plan reads as such, the Division requires a letter from the company stating that in Utah only employees will benefit from the plan. Registration is not required for involuntary, non-contributory plans.