Search

The ESOP Cheat Sheet!



If you are planning to start granting ESOPs to your employees, it is important to follow all the steps that are required under the Indian laws, before the ESOPs you are granting to employees can be considered to be validly granted. Just setting out the details in an employee offer letter is not enough! We have summarized the steps below for ease of reference:

1. Draft an ESOP Scheme;


2. Get the ESOP Scheme approved by the Board of Directors and the Shareholders of the Company;


3. File Form MGT-14 with ROC in case special resolution is passed for approval of the Scheme (Not required for private limited companies);


4. Identify eligible employees to whom ESOP can be granted;


5. Issue grant letters to eligible employees summarising the options granted and other necessary details;


6. Take the Board of Directors and Shareholders’ approval in case grant is to be made to:

a. an employee of a subsidiary or holding company; or

b. an employee equal to or above 1% of the issued share capital of the Company;


7. Maintain a record of ESOP in Form SH-6 (Register of ESOP); and


8. Make the necessary disclosure of ESOP in the director’s report, on a yearly basis.

73 views0 comments

Recent Posts

See All

Validity of post-termination negative covenants

1. Introduction A post-termination negative covenant refers to any clause in a contract which applies after the termination of the contract. Such contracts either restrict any party to the contract f

Data Security in Healthcare Wearable Technology

The current generation is often called the ‘tech-savvy generation’. This nickname is evident in the extent to which technology has been integrated into human lifestyle. Digital innovations have now en