Issuers that are not required to file periodic reports under the Exchange Act may soon be able to exempt compensatory employee stock options from registration. The SEC has proposed amendments to Exchange Act Rule 12h-1 that would allow private, non-reporting issuers to take advantage of an exemption for compensatory employee stock options issued under employee stock option plans.

Private, non-reporting issuers use compensatory employee stock options to attract and reward employees of all levels. But, if an issuer has more than 500 holders of record of a class of equity securities, such as stock options, and assets in excess of $10 million, it must register the class or qualify for an exemption. The new rules provide an exemption for compensatory employee stock options. 

Comments to the proposed amendments must be received by the SEC by September 10, 2007.