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Easy and efficient ESOP process with numbro

Get advisory in the selection of incentive plan along with end to end process support of an ESOP at numbro

Enjoy hassle free end to end process support right from structuring of the plan to the end of the life cycle of an ESOP only at numbro

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    Need to make your ESOP process easy?

    Registering a ESOP process is quick, easy, and can be done online with Numbro in 3 simple steps:

    STEP 1

    We educate you to the importance of a perfect ESOP in your company.

    STEP 2

    After complete understanding of the business and employee hiearchy , We propse the best possible ESOP plans

    STEP 3

    We will then Implement a choosen model and monitor them

    EMPLOYEE STOCK OPTION PLAN(ESOP)

    ESOP: As Thomas A. Edison rightly said, ‘There is no substitute for hard work’, rewarding such hard work is the least an employer could do. The employers or organizations in the past awarded cash bonuses to the employees who out-performed in their jobs. Later on, the scenario has evolved from cash bonuses to offering the company’s stake to the employees.

    In the recent past, various incentive options are framed based on the working conditions of the organizations. ESOPs have been growing rapidly in the recent past time and so, our government had urged to regulate such issue and included the issue of ESOPs in tax and corporate laws and also the accounting of such issue of ESOPs is to be done according to the Ind AS framed by ICAI, the Chartered Accountants Chapter of India.

    The employee incentive schemes are pertinent to private and public companies and some options can only be issued by public limited corporates only. The different types of employee incentive schemes introduced are:

    • Employee Stock Option Plan (ESOP)
    • Employee Stock Purchase Plan (ESPP)
    • Stock Appreciation Rights (SAR) – cash or equity-settled
    • Restricted Stock Units
    • Phantom stock

    Experts would recommend the above plans after a thorough study of the corporate structure, business model, cash flows, the management about which incentive plan would be effective.

    We at Numbro would help you to manage the ESOP administration in it’s entirety as the compliances to be followed for an ESOP program are not trifle to handle.

    What We Deliver:

    • Advisory in the Selection of Incentive Plan – Based on the work environment of the organization, nature of the business model and type of resources.
    • Preparation of ESOP Policy – Is important to come into terms with the employees to have a win-win situation that is, both the employer and the employee are benefitted out of the scheme and is very transparent to keep it legally enforceable and understandable
    • Preparation of Valuation Reports – As valuations are made mandatory as per the corporate laws. We would help you attain the price at which ESOPs are to be issued, ESOP to be accounted in the books, taxation of it.
    • Preparation of ESOP letters – ESOPs are granted to employees on fulfilment of certain conditions. A grant letter offered is a piece of evidence to the employee for the shares rewarded to them. Such a grant letter is to be drafted Judiciously to avoid exploitation of the scheme announced.
    • ESOP Accounting – Accounting of the ESOPs has to be done based according to the prescribed standards. Understanding and adhere to the standards is a skilful job of our experts.
    • ESOP Tax Planning – Selecting of right incentive plan helps the employer and employee to plan their taxes. ESOP tax planning is an activity where the ESOP plan is to be drafted holistically by considering the tax to be paid and the compliances associated in filing of taxes
    • ESOP Compliance with MCA – ESOP is governed by the companies act 2013.Hence proper compliances are to be done periodically to be compliant with the guidelines.

    Numbro Advantage

    • We provide you end-to-end process support, that is right from the structuring of the plan till the end of the life cycle of an ESOP.
    • Handholding for compliances according to Income Tax 1961, Companies Act 2013, FEMA and Ind AS.
    • Issuing of offer letters, grant letters and other letters at various stages
    • Make the process transparent to employees and employer

    FAQ's

    What is a stock option?

    stock option is a right given to the employee, to buy a specified number of shares within a particular time and at a specified price. It is a right given but not an obligation, so it is up to the employee to exercise the stock option rights given to him.

    When should I exercise an option?

    An option vests to the holder upon fulfilment of certain conditions set by the employer. Such vested options have a specified period within which they to be exercised. Yet, the employee can decide when to exercise such options vested upon him based on other external factors such as market price, taxability, investment goals, etc.
    To understand better about exercising strategies and tax planning, financial experts could help you better.

    Should I buy the shares when they vest?

    The shares are vested to the employee on fulfillment of conditions. You need not buy the shares as soon as they vest, but can be bought any time before they expire.

    Can I transfer or assign my options to another party or use it as collateral?

    Generally, you cannot assign your stock options as collateral. When you exercise the options and receive a share certificate in your name, you have a right to sell, transfer, donate, bequeath or dispose such shares according to the SEBI regulations.
    There are specific permissions to be obtained to transfer the ownership of the shares held. For further queries on such procedures, please consult our experts.

    What is the difference between ESOP and ESPP?

    ESOPs are options granted to employees to buy company shares at a pre-determined price. Employees have to wait until the options vest to him whereas ESPPs are a program where participating employees purchase company shares at a discounted price. Employees contribute to the plan through payroll deductions, which is accumulated between the offering date and purchase date. On the purchase date, the employer uses the accumulated funds to purchase the share on behalf of employees. Usually, the purchase price of the share can be discounted to as much as 15% lower than the market price.

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