10 Important 409a Valuation Compliances to Know

Finance Tech Brief By HackerNoon

This story was originally published on HackerNoon at: https://hackernoon.com/10-important-409a-valuation-compliances-to-know.
In this article, we will discuss some of the important considerations in the 409A valuation in order to comply with the law.
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409A valuation derives its name from the Internal Revenue Code (IRC) section 409A. It is necessary for financial reporting and compliance with certain regulatory provisions. The value is then used to establish the cost of purchasing a share, employee stock options, ESOP, performance shares, and other equity compensation instruments granted to executives and employees. Undervaluing company stock may create an unfair situation for employees over time. Failure to comply with the 409A requirement can create a lot of problems for companies and their employees.