There is an ESOP company that's securities are traded on NASDAQ. The company wants to know if that gets them out of offering a put option. Under the ESOP regs 54.4975-8(B)(1)(iv), they use the term "publicly traded" to be exempt from the put option. However, IRC Section 409(h)(1)(B) exempts securities that are"readily tradeable" and that was added in 1978 so does that supercede the regs that were issued in 1977? If Section 409(h)(1)(B) supercedes the regs, does anyone know where I can find a definition of "readily tradeable?" The concern is that their securities are very thinly traded even though they are listed on NASDAQ.

According to RIA, "Securities are not 'readily tradable' if they are not 'publicly traded' or are subject to a trading limitation at the time of distribution."
RIA's source: "S Rept No. 95-1263 (PL 95-600) p. 86."