An ESOP is an employee benefit plan that gives workers ownership interest in the company that is floated by the Company to encourage the employee ownership in the Company. ESOPs give the Employer Company, the selling shareholder, and participants receive various benefits like tax benefits, making them qualified plans.
All the employees of a company can opt for ESOP when offered by their Company and they fit in its criteria. Generally, the employee should be a permanent employee of the company except for the director.
|1.||Prepare the draft of Employee Stock Option Plan in accordance will section 62(1) of the Companies Act, 2013 and rules made thereunder.|
|2.||• Prepare notice of board meeting along with draft resolution(s) to be passed in the board meeting.
• Send notice of board meeting to all the directors
Ø at least 7 days before the date of board meeting; or
Ø in such manner as prescribed under section 173(3) of the Companies Act, 2013 and clause 1 of the Secretarial Standard-1.
|3.||Convene board meeting and pass the necessary resolutions:
• Issuance of shares to through Employee Stock Option Plan.
• Employee shall be entitled to participate in the Employee Stock Option Plan of the Company once approved by the Board of Directors.
• Determination of price of shares to be issued pursuant to ESOP as per applicable accounting policies.
• Authorization to Director/Company Secretary to sign the documents.
• Fix the day, date, time and venue for calling general meeting.
• Approval of notice for calling of general meeting for passing special resolution for issuance by Employee Stock Option Plan.
|4.||Prepare draft minutes of the board meeting and circulate, within a period of fifteen days from the date of conclusion of that meeting, to all directors, by hand/speed post/registered post/courier/e-mail or by any recognized electronic means, for their comment(s).|
|5.||File e-Form MGT-14 within 30 days of passing of board resolution with the Registrar of Companies,|
|6.||Send notice of general meeting to all directors, shareholders, auditors, secretarial auditors and Debenture Trustee, if any, of the company at least 21 days before the date of general meeting. However, notice may be given at a shorter period of time if consent in writing is given thereto, by physical or electronic means, by not less than ninety five percent of the members entitled to vote at such meeting in case the matter is considered in Annual General Meeting, however, if the matter is taken in Extra Ordinary General Meeting, then shorter notice of general meeting may be given subject to consent of majority members entitled to vote and who represent not less than ninety-five per cent of such part of the paid-up share capital of the company as gives a right to vote at the meeting.
The explanatory statement annexed with the notice of general meeting will have the following disclosures in accordance with the rules as prescribed under the Companies Act, 2013.
|7.||Convene general meeting and pass special resolution (ordinary resolution in case of private company) for issue of shares to employees under employee stock option plan.|
|8.||Prepare draft minutes of shareholders’ meeting and for finalisation, send the draft minutes to the chairman of that meeting.|
|9.||File e-Form MGT-14 with the Registrar of Companies within 30 days of passing of special resolution along with attachment of documents.|
|10.||Send options to the eligible employees for obtaining shares under employee stock option plan.|
|11.||Employees can vest the option of Employee Stock Option Plan. There shall be minimum period of one year between the grant of option and vesting of option.|
|12.||Prepare notice of board meeting along with draft resolution(s) to be passed in the board meeting.|
|13.||Convene board meeting and pass resolutions for allotment of shares under Employee Stock Option Plan.|
|14.||Prepare draft minutes of the board meeting and circulate, within a period of fifteen days from the date of conclusion of that meeting, to all directors, by hand/speed post/registered post/courier/e-mail or by any recognised electronic means, for their comment(s).|
|15.||File the e-Form PAS-3 with the Registrar of Companies within 30 days of allotment along with attachment.|