Step 1: Check the Articles for any specific provision on issue of share under ESOP. Check the Articles to understand if any specific provision has been provided with respect to issue of share under ESOP.
Step 2: Hold Board Meeting
Action to be taken in the Board Meeting:
1. Authorization for issue of shares under ESOP
2. Formation of Compensation Committee
3. Calling of General Meeting for approval of shareholder by way of ordinary resolution
4. Issue notice of General Meeting
Step 3: Issue Notice of General Meeting
Notice of General Meeting shall be sent at-least 21 clear days and explanatory statement shall disclose the following details:
- Brief description of scheme and total no. of ESOP to be granted.
- Appraisal process
- Vesting requirements
- Exercise price or pricing formula
- Exercise period
- Lock in period
- Scheme implementation through company or trust
Step 4: Hold General Meeting
Hold General Meeting for approval of shareholders by way of Ordinary Resolution:-
a) Authorization for issue of shares under ESOP
b) Formation of Compensation Committee
c) Approval of shareholders by way of separate resolution is required in case of:
(i) grant of option to employees of subsidiary or holding company
(ii) grant of option to identified employees, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant of option.
Step 5: Hold Compensation Committee Meeting
a) No ESOP shall be offered unless the company constitutes a Compensation Committee for administration and superintendence of the ESOP.
b) The Compensation Committee shall be committee of Board of Directors consisting of majority of Independent Directors.
Step 6: Hold Board Meeting
- Company shall allot the shares under ESOP.
2. Issuance of share certificates
3. Authorization for stamping of shares
Step 7: Filing of Form PAS-3
After allotment of shares, intimation of such allotment shall be filed with Registrar of Companies within 30 days of such allotment.
Step 8: Maintenance of Register
Company shall maintain a register of ESOP in SH-6 at registered office of the company or such other place as Board may decide.
———————–Article collation credits: ABIZA———————————————