[Code of Federal Regulations]
[Title 26, Volume 5]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.422-5]

[Page 921-922]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--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

[[Page 922]]

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]