Your address will show here +12 34 56 78
ESOP, Start up Lessons, Startup Funding Paperworks
The shareholdings of the company decide the ownership of that Private Limited Company. In order to introduce new investors or transfer the ownership of the company, you need to transfer the shared of that private limited company.


The Procedure for Share Transfer
  1. Shareholder should decide to sell his share to the existing shareholders or any other investor. After deciding he needs to give notice, in writing, to the Board of directors about the transfer of shares of the company.
  2. The shareholder determines the price of the shares, which cannot be less than the face value. After price determination, notice is given to the shareholders about the availability and price of the shares. Post which the payment is made by the individual acquiring the shares (either an existing shareholder or a new investor).
  3. Then the company needs to file form MGT-14 to ROC.
  4. Share Certificate is issued. If it is given to an existing shareholder then he needs to surrender his old certificate.
Documents Required
  • MOA, AOA and Certificate of Incorporation
  • Name of Shareholder
  • Name of Father/Spouse
  • Residential address of shareholder
  • Email ID
 
  • Percentage of Shares
  We at Wazzeer can help you with the process.



Wazzeer is vouched by Entrepreneurs as the most reliable Legal and Accounting Partner. We would be super excited to help you. Let’s Connect! 🙂
0

ESOP, Uncategorized
ESOPs refer to plans that give employees the right to purchase a certain number of the company’s shares instead of salary. This provides the employee with a virtual stake and helps to reduce the risk of the founder. This blog will help you understand the procedure to issue ESOP


The Process has been mentioned below
  1. Special Resolution has to be passed by the Board of directors to create ESOP pool. In ESOP pool you need to mention that how many shares are allotted for ESOP. 
  1. File form MGT-14 to ROC (It provides the information of how many ESOP the company is issuing or to say that the company has ESOP of this percentage). 
  1. Form ESOP Committee. ESOP committee can be a subset of the board of directors or all the directors can be the part of it. 
  1. Draft the ESOP Scheme, in which you need to mention the rules and regulation regarding ESOP. After drafting it needs to be approved by the shareholders of the company. 
  1. After approval and based on the ESOP scheme the ESOP Committee recommends the board which employee is eligible for ESOP. There shall be a minimum period of one year of the vesting period, which can be extended by the ESOP Committee but cannot be decreased, between the grant of options and vesting of the option. 
  1. The board of directors then decides whether to allow ESOP to the eligible employees, they can either accept it or reject it.   
  1. If Accepted, ESOP is granted to the employees.
This is the exact procedure to issue ESOP in India. 

Wazzeer is vouched by Entrepreneurs as the most reliable Legal and Accounting Partner. We would be super excited to see your startup kick starts seamlessly. Let’s Connect! 🙂
0

ESOP, Uncategorized
ESOP is not an unfamiliar term for the startup world. Initially, ESOPs were granted to grant reward or show acknowledgment to senior employees but now it is offered to reduce fund-shed or to provide a sense of ownership to employees. ESOPs refer to plans that give employees the right to purchase a certain number of the company’s shares instead of salary. This provides the employee with a virtual stake and helps to reduce the risk of the founder. This blog helps you understand everything you need to know before accepting ESOP.

Vesting period: First thing that you need to keep in mind is that ESOPs are NOT SHARES. They only allow you to buy shares at a discounted price after a certain vesting period, which is generally of 4 years. If by any means you quit or get fired before the vesting period, the ESOPs are lost.  

Tax calculations: ESOPs are taken as an employee’s gain and hence taxed accordingly. But it is important to understand that if you were to dispose of the shares, the difference between the sale price and the fair market value will be subjected to personal capital gains.  

Scope of the startup: 
You also need to take into consideration the scope of the company, whether it can stay in the market for more than 4 years. It is important to know the scalability of the idea and how consistent it can be. If a company whose performance is consistently bad can lead to a risk to the value of ESOPs. The best way to deal with this is to limit a number of stocks that you can buy.  

Awareness of chances: You should be aware of all your chances. You should not forget that you will be having the ESOPs of a startup and not a listed company. The company can go public and be acquired. If acquired then the ESOPs are transferred to the acquiring company and the ESOP holders will be allowed to encash a portion of their holdings.  

Money matters: ESOPs aren’t considered as CTC but you should remember that you will be sacrificing a part of your salary with ESOP. As you are not the direct owner you can always choose between a good CTC and CTC with ESOP.  

Agreement terms: You need to go through the agreement terms thoroughly before signing them. A few years ago Skype laid off a few employees. They were not allowed to keep an even vested portion of their stocks due to some clause in Management Partnership agreement, which was not noticed by any employee before signing them. It’s a summarization of an article by Anusha Kovvuri. 


Wazzeer is vouched by Entrepreneurs as the most reliable Legal and Accounting Partner. We would be super excited to see your startup kick starts seamlessly. Let’s Connect! 
0