Google, the online search engine preparing an initial public offering, is facing potential violation of federal securities laws after revealing that 23.2 million shares issued to employees and consultants had not been registered with the US Securities and Exchange Commission.

The company admitted in a regulatory filing that the shares, along with 5.6 million outstanding stock options were not registered with the SEC. The company is offering to buy back the shares and options for a total of $25.9m, including interest. Google will fund the buy-back with its existing cash balances.