Employee Stock Ownership Plan (ESOP)
What is 'ESOP'
An employee stock ownership plan (ESOP) is a type of employee benefit plan which is intended to encourage employees to acquire stocks or ownership in the company.
Types Of ESOPS
Employee Stock Option Scheme (ESOS)
Employee Stock Option Schemes are the most commonly used form for employee ownership. The option granted under the plan confers a right but not an obligation on the employee. Stock options are subject to vesting, requiring continued service over a specified period of time. Upon vesting of options, employees can exercise the options to get shares, by paying the pre-determined exercise price.
Employee Stock Purchase Plan (ESPP)
Employee Stock Purchase Plans allow Employee to purchase Company’s shares, often at a discount from Fair Market Value. The terms of the Plan determines the tenure and price for possession of the Company’s shares by the Employees. Usually, ESPPs are being framed for offering shares as a part of public issues.
Restricted Stock Units (RSU)
Under Restricted Stock Units Plan, an Employee is awarded with the right to receive shares on a pre-determined date subject to occurrence of a specified event or fulfillment of specified conditions. In such kind of incentive plans, the Employee becomes shareholder only upon occurrence of a specified event or fulfillment of specified conditions.
Stock Appreciation Rights (SARs)
Although, SARs are not technically employee stock options, companies often use them in a like manner. SARs provide employees with cash payments equal to the appreciation of the company’s stock over a specified duration. Thus, unlike other options, SARs provide employees with equity upside without exposure to any downside.
Phantom Stocks
Phantom stock is a form of long-term deferred compensation using the Company shares as the measuring device for calculating the value of the deferred compensation. It simulates the Company shares in everything except that does not represent true ownership. The Company simply credits these phantom shares on its books and as the value of the company shares rises and falls, so does the value of the phantom stock.
Our ESOP Services :
- Strategic Planning of ESOP Policy: Strategic discussion with key stake holders to design appropriate ESOP plan in alignment with corporate objective & management perspectives.
- Drafting Of Policy : Prepare the draft of ESOP policy in accordance with the Company Acts 2013, Rules. Drafting and vetting of resolutions, disclosures under SEBI Law, secretarial manual for ESOP and communication letters between Employees & the Company.
- Drafting Of Policy : Assistance in complying with various provisions under FEMA and SEBI Laws.
- Liasoning with regulatory authorities for obtaining requisite approvals under the scheme.
- Assistance in drafting resolutions, applications, disclosures, reports etc. involved in Employee Stock Option Plans.
- Implementation: Send options to the employees, directors and officers of the company for purchasing shares under ESOP.
ESOP Trust Formation
- Trust Creation and its Registration :
- Drafting of complete legal documentation for the purpose of establishment of ESOP Trusts.
- Facility to create and register Trust for proper implementation of ESOP Scheme.
What is 'ESOP'
An employee stock ownership plan (ESOP) is a type of employee benefit plan which is intended to encourage employees to acquire stocks or ownership in the company.
Types Of ESOPS
Employee Stock Option Scheme (ESOS)
Employee Stock Option Schemes are the most commonly used form for employee ownership. The option granted under the plan confers a right but not an obligation on the employee. Stock options are subject to vesting, requiring continued service over a specified period of time. Upon vesting of options, employees can exercise the options to get shares, by paying the pre-determined exercise price.
Employee Stock Purchase Plan (ESPP)
Employee Stock Purchase Plans allow Employee to purchase Company’s shares, often at a discount from Fair Market Value. The terms of the Plan determines the tenure and price for possession of the Company’s shares by the Employees. Usually, ESPPs are being framed for offering shares as a part of public issues.
Restricted Stock Units (RSU)
Under Restricted Stock Units Plan, an Employee is awarded with the right to receive shares on a pre-determined date subject to occurrence of a specified event or fulfillment of specified conditions. In such kind of incentive plans, the Employee becomes shareholder only upon occurrence of a specified event or fulfillment of specified conditions.
Stock Appreciation Rights (SARs)
Although, SARs are not technically employee stock options, companies often use them in a like manner. SARs provide employees with cash payments equal to the appreciation of the company’s stock over a specified duration. Thus, unlike other options, SARs provide employees with equity upside without exposure to any downside.
Phantom Stocks
Phantom stock is a form of long-term deferred compensation using the Company shares as the measuring device for calculating the value of the deferred compensation. It simulates the Company shares in everything except that does not represent true ownership. The Company simply credits these phantom shares on its books and as the value of the company shares rises and falls, so does the value of the phantom stock.
Our ESOP Services :
- Strategic Planning of ESOP Policy: Strategic discussion with key stake holders to design appropriate ESOP plan in alignment with corporate objective & management perspectives.
- Drafting Of Policy : Prepare the draft of ESOP policy in accordance with the Company Acts 2013, Rules. Drafting and vetting of resolutions, disclosures under SEBI Law, secretarial manual for ESOP and communication letters between Employees & the Company.
- Drafting Of Policy : Assistance in complying with various provisions under FEMA and SEBI Laws.
- Liasoning with regulatory authorities for obtaining requisite approvals under the scheme.
- Assistance in drafting resolutions, applications, disclosures, reports etc. involved in Employee Stock Option Plans.
- Implementation: Send options to the employees, directors and officers of the company for purchasing shares under ESOP.
ESOP Trust Formation
- Trust Creation and its Registration :
- Drafting of complete legal documentation for the purpose of establishment of ESOP Trusts.
- Facility to create and register Trust for proper implementation of ESOP Scheme.
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