What is Rule 701?
Rule 701 is a safe harbor from the registration requirements of the Securities Act of 1933 covering offers and sales of securities of an issuer to employees, consultants and advisors as compensation for services including, most importantly, under stock incentive plans. An issuer may rely on the exemption under Rule 701 for sales during any 12-month period, subject to a cap imposed under the Rule (for early-stage companies, the applicable cap is usually $1,000,000 in aggregate purchase price).
