The Stock Purchase Business Process

Stock Administration enables you to create and manage your company's employee stock purchase plan in compliance with several IRS and SEC rules. These rules include the Section 423 annual maximum purchase amount, share discount amount, purchase holding periods, and offering holding periods.

Employee stock purchase plans allow eligible employees to purchase company stock, often at a discounted price. Employees enroll in a company's plan during certain periods or intervals, authorizing the company to place payroll deductions in a trust to purchase company stock. If the collected funds are in a foreign currency, they must be converted into the stock currency for purchase. Most stock purchase plans are qualified IRC 423 stock purchase plans in which employees participate, including those who are not administered by HR.

The stock purchase price is determined based on your plan rules. At predetermined periods, the stock is purchased for participating employees. The value of the stock and the amount of funds collected determine the amount of stock purchased, and employees can sell or transfer these shares. When employees sell shares, any ordinary income is sent to payroll.