Here I am starting with ESOP for
private companies because there are lots of information available for ESOP by
listed public companies but least available for private companies or unlisted
public companies. In today’s economic scenario of india most of the small or new
entrepreneurs are getting funding from strategic investors by entering into
shareholders agreement, and as a part of it they agree to offer shares to their
employees and that’s how a small company i.e. a private company or an unlisted
public company offers ESOP.
Checklist for issue of ESOP in
private company or unlisted public company:
1. Formation
of Compensation Committee;
2. Authorisation
to compensation committee for drafting ESOP scheme;
3. Compensation
Committee will draft the scheme and present it to the board for their approval
4. After
approving the scheme board will call EGM for approval of scheme by Shareholders;
5. Approval
of ESOP Scheme by Shareholders
6. After
approval of ESOP scheme by the shareholders Compensation Committee will grant options
to the eligible employees;
7. Vesting
of Option;
8. Exercise
of Options;
9. Allotment
of Shares.
Resolution for issue of ESOP in private company or unlisted public
company:
"RESOLVED THAT pursuant
to the provisions of Section 81(1A) and all other applicable provisions, if
any, of the Companies Act 1956, and of the Memorandum and Articles of
Association of the Company the consent of the Company be and is hereby accorded
to the Scheme of Employees Stock Option Plan, 2012 (hereinafter referred to as
the "ESOP 2012") and the Compensation Committee of the Company be and
are hereby authorised to grant stock options and that the Board is authorised
to issue and allot in one or more tranches under the said ESOP 2012 at any time
for the benefit of the present and future eligible employees of the Company
(except the promoters & directors) such number of equity shares or
securities convertible into equity shares as may be appropriately provided.
RESOLVED FURTHER THAT the issue
of securities to any non-resident indian employee(s) of the Company shall be
subject to such approvals, permissions or consents as may be necessary from
Reserve Bank of India or any other relevant authority in this regard.
RESOLVED FURTHER THAT the new
equity shares to be issued and allotted by the Company in the manner aforesaid
shall rank pari passu in all respects with the existing equity shares of the
Company.
RESOLVED FURTHER THAT the Board
of Directors of the Company be and is hereby authorised to do all such acts,
deeds, matters and things as it may in its absolute discretion deem fit or
necessary or desirable to give effect to the aforementioned issue under ESOP.”
For further details regarding
drafting of scheme, technicalities in drafting of scheme and grant of option,
vesting etc. contact writer at nikita.1.singh@gmail.com
·
The information
given in this blog is the personal understanding of the writer and shall not be
used as a conclusive material. The content stated/mentioned here is subject to
changes by respective government/authorities in the applicable laws. The writer shall not be liable for any direct or
indirect damages caused to any person acting solely on/based upon the
information provided herein.
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