In July, the Israeli Tax Authorities ("ITA") published new guidance on the administration of stock award programs under a Section 102 plan. The new guidance changes the process for how the issuing companies report grant information and deliver award documents to their Israeli trustees. If you are not familiar with an Israeli Section 102 plan, it is a type of stock award program that allows for preferential tax treatment if certain conditions are met. The Section 102 plans are administered in Israel through trustees.
The issuing companies must provide the following information and docu-ments to their Israeli trustee for all grants under the Section 102 plan:
- A copy of the issuing company’s board or committee resolution adopting the grant of stock awards under a Section 102 plan, along with the names of the grantees and award terms (e.g., number of shares, vesting schedule, termination date). The copy of the resolution must be delivered to the trustee within 45 days of the grant date.
- A copy of the signed stock award agreement from each grantee within 90 days from the grant date
- For restricted stock awards, the deposit of the actual shares within 90 days of the grant date