[Code of Federal Regulations]
[Title 26, Volume 5]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.422-5]

[Page 832]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
DEFERRED COMPENSATION, ETC.--Table of Contents
 
Sec. 1.422-5  Stockholder approval of incentive stock option plans.

    This section addresses the stockholder approval of incentive stock 
option plans required by section 422(b)(1) of the Internal Revenue Code. 
(Section 422 was added to the Code as section 422A by section 251 of the 
Economic Recovery Tax Act of 1981, and was redesignated as section 422 
by section 11801 of the Omnibus Budget Reconciliation Act of 1990.) The 
approval of stockholders must comply with all applicable provisions of 
the corporate charter, bylaws, and applicable State law prescribing the 
method and degree of stockholder approval required for the issuance of 
corporate stock or options. If the applicable State law does not 
prescribe a method and degree of stockholder approval in such cases an 
incentive stock option plan must be approved:
    (a) By a majority of the votes cast at a duly held stockholders' 
meeting at which a quorum representing a majority of all outstanding 
voting stock is, either in person or by proxy, present and voting on the 
plan; or
    (b) By a method and in a degree that would be treated as adequate 
under applicable State law in the case of an action requiring 
stockholder approval (i.e., an action on which stockholders would be 
entitled to vote if the action were taken at a duly held stockholders' 
meeting).

[T.D. 8374, 56 FR 61160, Dec. 2, 1991]