Reward Your Team
with an ESOP.
Attract and retain top talent by making them stakeholders in your company's growth. Our legal experts handle ESOP Scheme drafting, MCA compliance, and Registered Valuer reports seamlessly.
The BharatFilings Advantage
Custom Scheme Drafting
We draft customized ESOP schemes detailing vesting schedules, exercise periods, and cliff clauses tailored to your startup's goals.
Registered Valuation
Options must be issued based on a fair market valuation. We connect you with IBBI Registered Valuers / Merchant Bankers.
100% MCA Compliance
From filing MGT-14 (Special Resolution) to PAS-3 (Return of Allotment) and maintaining the SH-6 Register, we handle it all.
Mandatory Rules for ESOP Issuance
Issuing shares to employees is strictly regulated under Section 62(1)(b) of the Companies Act, 2013 and Rule 12 of the Share Capital and Debentures Rules, 2014.
1. Who Can Receive ESOPs?
Not everyone is eligible to be granted options under a formal ESOP scheme.
- Permanent employees of the company working in India or outside India.
- Directors of the company (excluding Independent Directors).
- Exclusion: Promoters or directors holding >10% of equity shares cannot receive ESOPs (Unless it's a DPIIT recognized Startup for up to 10 years).
2. Vesting and Exercise Period
Options are not shares immediately; they are the "right" to buy shares in the future.
- Minimum Vesting: There must be a minimum of one year between the grant of options and the vesting of options.
- The company has the freedom to define the 'Exercise Period' and 'Exercise Price' in the scheme.
3. Shareholder Approval
Implementing an ESOP scheme dilutes existing equity, hence strict approvals are needed.
- The Board of Directors must first approve the ESOP scheme.
- A Special Resolution must be passed in the General Meeting by the shareholders.
- Separate resolution is needed if options equal to or exceeding 1% of issued capital are granted to a single employee.
4. Registered Valuation Required
You cannot issue shares at arbitrary prices without formal justification.
- The Fair Market Value (FMV) of the shares must be determined by a Registered Valuer for the purpose of accounting and taxation.
- This prevents tax evasion and ensures employees are taxed correctly on the "perquisite" value when they exercise the options.
How we implement your ESOP
We handle the entire process from conceptualization to the formal grant of options to your employees.
Scheme Drafting
Our legal experts consult with you to design the ESOP pool, vesting schedule, cliff period, and exercise terms into a formal draft.
Approvals & MGT-14
We conduct the Board Meeting and EGM. The Special Resolution approving the scheme is filed with the ROC via Form MGT-14.
Grant Letters
The company officially issues ESOP Grant Letters to the selected employees. We help maintain the mandatory Register of ESOPs (Form SH-6).
Exercise & PAS-3
When employees eventually exercise their options (post-vesting), we coordinate the valuation and file Form PAS-3 for allotment of shares.
ESOP Implementation Plans
Select the required service tier. We'll schedule a call with a Corporate Secretarial Expert immediately to verify your requirements. No payment required upfront.
Custom ESOP Drafting
Ideal for startups that only need the legal scheme drafted and will handle MCA compliances independently.
- Dedicated Legal Expert
- Consultation on Vesting & Cliffs
- Drafting the complete ESOP Scheme Policy
- Drafting of Employee Grant Letter Templates
End-to-End ESOP Compliance
Complete peace of mind. We draft the scheme, secure the valuation, and manage all MCA filings required for the grant.
- Everything in Drafting Plan
- Valuation Report from Registered Valuer
- Board & EGM Resolution Drafting
- Filing of e-Form MGT-14 with MCA
Important: The prices above are indicative Professional Fees.
Government ROC filing fees (MGT-14, PAS-3) are strictly extra. The Registered Valuer fee may vary if the company structure or capitalization is highly complex.
Required Documents
You will securely upload these documents directly to your encrypted client vault. Our system will guide you on the exact format required.
Company MOA & AOA
To verify existing capital clauses and AOA permissions.
List of Employees
Details of employees to whom options are to be granted.
Current Cap Table
Current shareholding pattern of the company.
Director's DSC
Digital Signature Certificate to e-verify the ROC forms.
Insufficient Authorized Capital?
Creating an ESOP pool means allocating shares for the future. If your company's current Authorized Share Capital is not large enough to accommodate this new pool, you must first increase your Authorized Capital before implementing the ESOP scheme.