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Employee Stock Option Plan


An employee stock ownership plan is a plan that gives workers ownership interest in the company. It gives benefits to both the company and the shareholders. Employees get an option to own some shares of the company, on behalf of that company gets to retain the employees for a longer period.
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Overview

An ESOP is typically established to help with strategic planning in a Private Limited Company by allowing employees the opportunity to buy shares of the company.

Companies can use ESOPs to keep Employees focused on company success and share price appreciation because ESOP shares are part of the employee compensation package. These plans allegedly motivate employees to do what's best for the company.

The shares offered to the employees are offered at a discounted share price. The company decides shares to offer to each employee, and the proportion of those shares will be offered to employees for each year of service.

After completion of the vesting, if the employee decides to resign or retire, the company may buy back the shares from the employee. Depending on the plan, the money from the purchase is paid to the employee in a single amount or in equal recurring installments.



Benefits of Closing a Company

Process of Closing a Company

Step 1: Conduct a board meeting for approval of ESOP
Step 2: Conduct a shareholders meeting for approval of ESOP
Step 3: Form an ESOP Compensation Committee
Step 4: Filing of Form-PAS-3.

Employee Stock Option Plan

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  Entrepreneur Friendly

We make the process so easy and fast that you will not even feel the headache of all the paperwork, and our professionals will provide you all the promised deliverable within a given span of time.

  Experienced Professionals

All our professionals are qualified and specialized in that particular work. Making sure no mistakes are done at the time of filings with the authorities so that company won’t have to pay any penalties due to mistakes.

  One Stop for All Your Requirements

We support you throughout the journey of your business, from the incorporation, Accounting and taxation support, Secretarial compliance support, and Legal support.

  Cost-Effective

We believe that cost plays a vital role in any company’s growth stage, that’s why we do not surprise our clients with hidden charges, you pay what you see in the initial proposal.


Frequently Asked Questions


How does an employee stock ownership plan work?
After the option period, an organisation grants ESOPs to its workers in exchange for purchasing a predetermined number of shares of the firm at a specified price (a certain number of years). Before an employee may exercise his option, he must first go through the pre-defined vesting period, which means the employee must work for the company until a portion or all of his stock options can be exercised.
The term Permanent Employee has not been explained in the enabling legal provisions of ESOP nor has it been defined under the Companies Act per se. Considering the practical aspects, in case of both Listed and Unlisted Companies, an employee who has satisfactorily completed the probation period can be considered to be a Permanent Employee.
A Startup Company, as recognized by the Department for Promotion of Industry and Internal Trade (DPIIT), is exempted from the restriction of participation in an Employee Stock Plan of the promoters (founders) and directors, holding more than 10% of the capital, for a period ten (10) years from the date of its incorporation or registration with the DPIIT.
Yes. A Private Company can grant ESOPs to its permanent employee, who is also a shareholder of the Company Further, a Director cannot be made allotment of shares pursuant to ESOPs if he is holding (directly or indirectly along with his relatives) beyond 10% of the paid up capital of the Company.
Yes. The scheme can cover both existing and future employees of the company who join after the approval of the scheme.
Yes. A Step down subsidiary is also a subsidiary to the extent permissible by law and an Indian Company can grant ESOPs to employees of its Subsidiary Company, in India or outside India.
ESOPs can be granted only to permanent employees who are on the payroll of the company. Since a consultant as full time Professionals is not on the payrolls of the company, they are not eligible for ESOPs.