Hawaii Administrative Rules
Title 16 - DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
Chapter 38 - SECURITIES - REPEALED
Subchapter 6 - STATEMENTS OF POLICY RELATING TO REGISTRATION OF SECURITIES
Section 16-38-11.4 - Options and warrants
Current through August, 2024
Options and warrants and other acquisitions or conversion rights granted to or reserved for officers, directors, promoters, or insiders shall be fully justified, reasonable in number and method of exercise, and meet the following requirements:
(1) A complete explanation for the basis and reason for the issuance shall be provided;
(2) The total number of underlying shares subject to options does not exceed ten per cent of the shares to be outstanding if all shares being offered are sold;
(3) The rights are not exercisable during the effectiveness of the public offering nor for a period of eleven months from date issued, and the exercise price thereafter of not less than the percentage amounts provided in the following schedule:
| Period at which exercise privilege may take place | Per cent of public offering price at which rights may be exercised |
| After 1 year from issuance | 107% |
| 2 years from issuance | 114% |
| 3 years from issuance | 121% |
| 4 years from issuance | 128% |
(4) The rights are not exercisable after the expiration of five years from the date of issue; and
(5) Options or warrants to dealers or underwriters do not exceed the limitations imposed by section 16-38-11.2 relating to maximum commissions allowable as compensation in whole or in part for the sale of securities and shall be nontransferable. Options or warrants issued to all shareholders pro rata, or in connection with qualified stock options to employees which meet the requirements of the United States Internal Revenue Code, or other employees' options pursuant to a stock purchase or profit-sharing plan, shall not be subject to the restrictions provided in this section if they are justified and reasonable in number and method of exercise.
