# Common stock valuation

URL: /systems/legal-and-corporate/valuation-409a · Id: `capability:valuation-409a`

> Common stock valuation gets an independent appraisal of common stock before options are granted, refreshed yearly or after a financing.

Common stock valuation gets an independent appraisal of common stock before options are granted, refreshed every 12 months or after a financing.

## Contract
| Clause | Terms |
| --- | --- |
| Starts | The first option grant, a new round, or 12 months since the last valuation. |
| Prepared from | Financials from the [Ledger](/systems/ledger) and the cap table in [Equity](/systems/equity). |
| Done by | An independent appraiser. |
| Signs | The board adopts the value ([Governance](/systems/legal-and-corporate/floor/governance)). |
| Result | A strike price recorded as a [Decision](/business/nouns/decision). A grant below it is refused. |
| While held | Not used. Options exist only in a [Startup](/business/nouns/startup) with its own [Company](/business/nouns/company). |

## Verbs
| Verb | Object | Event |
| --- | --- | --- |
| [Decision.create](/business/nouns/decision/create) | [Decision](/business/nouns/decision) | `Decision.created` |

## Interfaces
- [API](/code/api/reference)
- [SDK](/code/sdk/reference)
- [CLI](/code/cli/reference)
- [MCP](/code/mcp/reference)

## Example
A contract-analytics API prepares option grants for its first three hires. The appraisal sets common stock at $0.42 a share, the board adopts it, and all three grants price at that strike.