ESOP
An ESOP, or Employee Stock Ownership Plan, grants employees ownership in the company they work for through shares of stock. Here's a quick breakdown
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What is an ESOP?
An Employee Stock Benefit Plan (ESOP) is a plan that gives employees ownership interest in a particular company. It gives the option of buying stock to the employees. It helps the company to keep their employees focused on the goal of the company. It gives a clear vision to the employees to understand what is best for the shareholders as they are the shareholders of the company.
Process of Setting Up ESOP
Step 1: Share requirements + documents
Share your requirements and the list of documents mentioned below.
Step 2: Drafting and sharing the ESOP scheme
Our professionals will draft the Employee Stock Option Plan scheme
Step 3: Passing board resolution
A board meeting (Directors) needs to be conducted and a resolution needs to be passed to Set-up the ESOP
Step 4: Approving the ESOP Scheme in shareholders meeting
A shareholder meeting needs to be called to review and approve the ESOP scheme by shareholders in the meeting.
Step 5: Grant options to eligible employees
The scheme would be provided to only employees who meet the required criteria and options will be granted to those who are eligible for the scheme.
Step 6: Exercise of options by the employees
Employees would be given the choice of accepting ESOPs.
Step 7: Board resolution for allotment of shares
A resolution would be passed to brief out about the allotment of shares to the employees.
Step 8: Filing of e-form PAS-3
We will help in filing of e-form PAS -3 which needs to be filed within thirty days of allotment.
Step 9: Issue share certificates to allottees
A share certificate will be issued to the allottees.
Step 10: Sharing deliverables
We will share the ESOP Scheme, Extracts of Board Meetings and Shareholders Meetings, Filed e-form, Challan, and Share Certificates.
Documents Required for Setting up an ESOP
- Corporate Identification Number (CIN) /name of the Company
- Details for ESOP scheme of the Company
Key Deliverables
- ESOP Scheme
- Extracts of Board Meeting and Shareholders Meeting
- Filed e-Form and Challan
- Share Certificates
Why choose Wazzeer?
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One platform for all your requirements
Incorporation is just the first step. Wazzeer supports you throughout your journey as an entrepreneur. Log in to get things done efficiently. A dedicated Account Manager offers the required human touch and acts as an advisor to you.
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Experienced professionals
Our professionals have at least 5 years of experience and have incorporated thousands of companies among them. The rich experience ensures that the process is smooth and right in the first go.
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Defined process
Over the last few years, doing over 500 incorporations, we have defined every step of the process. A virtual process is in place enabling us to deliver hassle free experience for you.
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Cost Effective
You pay what you see in the proposal. No surprises or hidden charges.
Frequently Asked Questions
When can a company buy back the ESOP?
If an employee leaves the organisation or happens to retire before the designated vesting period. In that case, a company is required to buy back the ESOP within 60 days at a fair market value.
What’s a vesting period?
When an employer offers ESOPs, they remain in a trust fund for a particular period. This period is called the vesting period.
How long does an ESOP last?
An ESOP can last for five years.
How much is my ESOP worth?
ESOPs are taxable as in the hands of employees. The value is the difference between the fair market price of the stock on the day the option is exercised and the price at which it is exercised.
Can I sell my ESOP shares?
Yes, ESOPs shares can be sold in the market after taking permission from the company.
What happens to ESOP when I quit?
If you leave the company after completing four years, your stock options would already be vested at the time of leaving the company. Typically, vested stocks have two categories: non-qualified stock options (NQSOs) and incentive stock options (ISOs).
Why would a company ESOP?
Instead, ESOPs are most commonly used to provide a market for the shares of departing owners of successful closely held companies, to motivate and reward employees, or to take advantage of incentives to borrow money for acquiring new assets in pretax rupees.
List the benefits of ESOP
ESOP benefits include:
- Provides a sense of ownership
- Raising new equity capital.
How does ESOP work?
An ESOP (Employee stock ownership plan) refers to an employee benefit plan which offers employees an ownership interest in the organization.
An organisation gives ESOP to it’s employees for buying certain shares of the company at an allotted prices, which are lower than the market value. However, an employee can’t exercise ESOP until the vesting period gets over.