Google float faces surprise threat

13 April 2012

ONLINE search company Google is facing an unexpected legal hitch to its planned flotation with the revelation that it may have illegally issued more than 23m shares of its stock to hundreds of employees and consultants.

Google has offered to buy back the affected shares and outstanding stock options for a total of $25.9m (£14m), including interest payments, but that may not satisfy everyone. The potential-liability arises from the company neglecting to register 23.2m shares of common stock and 5.6m outstanding stock options with securities regulators which may be in contravention of federal and state laws.

While the possible securities violations appear unintentional and probably the result of bureaucratic bungling, it raises the possibility of disaffected parties moving to block the company's float in which it is expected to raise $3.3bn. In a prospectus offering to take back the shares, Google acknowledged the risk, warning that it may be sued by some people if they reject its buyback offer.

The stock in question is owned by 1105 current and former employees and consultants to the firm.

The options, carrying exercise prices ranging from 30 cents to $80 a share, are held by 301 people.

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